The luxury market has been among the most resistant to shifting to online shopping. Although e-commerce has been booming for years, many luxury brands have feared losing their prestige if they moved to the Internet. However, COVID-19 gave them a reason to reconsider this position.
Find out in this article how the luxury sector is changing thanks to e-commerce.
The growth of the online luxury market
Marketplaces are still growing as shoppers continue to seek safer and more convenient ways to shop as the pandemic continues.
A study led by Mirakl shows that online marketplaces have increased by 81% in gross merchandise value between 2019 and 2021, twice as much as the online commerce industry as a whole.
For the luxury sector, it all started with the launch of the online luxury retailer Net-a-Porter in London in June 2000. Part magazine, part virtual store, Net-a-Porter was just the first of many online multi-brand players that would enter the category. That same year, in Milan, Yoox, an online retail store, opened its doors, selling second-hand branded clothing to a category of consumers who had never had access to it before.
By aggregating the inventory of more than 250 independent boutiques, Italist, an online marketplace, allows online shoppers to acquire luxury items sold by boutiques in Milan, Florence, and Rome at Italian retail prices, up to 40% lower than global averages.
Other luxury marketplaces like Farfetch are also experiencing a growth spurt. Serving more than 190 countries and territories, Farfetch’s average order in the first quarter of 2021 reached $618, with the platform’s GVA growing by 60% compared to the previous year.
Key figures of the luxury sector
The fear to see its brand image and the quality of its services potentially damaged has led the luxury industry to be hesitant to fully invest in web technologies.
However, with the arrival of younger and more connected consumers than the previous generation, digital is increasingly playing an essential role as a purchase channel for the luxury market. More and more consumers turn to e-commerce to buy their luxury goods. As a result, digital was the fastest-growing sales channel, with a 22% increase in 2020.
Globally, online transactions currently represent only 12% of the luxury market, but they are growing at twice the rate of in-store sales. This could result in online shopping accounting for up to 30% of the market by 2025.
60% of luxury goods consumers from generations Z and Y say their purchase decision was influenced by an ad seen on social networks during the lockdown. This is also the case for a quarter of customers belonging to older generations.
As the luxury industry’s customer base gets younger, purchase habits are changing. Consumers around the world are increasingly influenced by the web, digital and new technologies, including when shopping in physical stores. Thus:
- 75% of luxury purchases were influenced by a digital channel.
- 20-25% of transactions were made online, and digital directly generates 13% of offline sales.
- 36% of luxury consumers say they will buy more online than before.
E-commerce trends in the luxury sector
Live stream shopping, for example, is a trend that comes from China with an audience of 560 million Internet users. With Single Days, 74 billion sales were generated in one day.
Applications such as Hero and Bam Buser, in addition to platforms such as YouTube, LinkedIn, Twitter, and Instagram, offer free streaming and content. This trend also concerns the fashion sector and Fashion Week. Amazon Prime, for example, streamed both seasons of the Savage x Fenty fashion show. These trends also go one step further, in a more private version, by booking an appointment with Gucci.
In 2021, social networks were the place to be for all luxury fashion shows. If luxury brands have been present on social media for years, the last few years have marked a milestone for them. Indeed, they are now visible on new, younger and more creative social networks like TikTok and Twitch. Burberry, for example, presented its new spring-summer 2021 collection on the Twitch platform, while Dior unveiled their latest fashion show in real-time via live stream on TikTok.
Read also: The best strategies and tactics to boost your e-commerce sales in 2022
Video games have also been adapted by the Balenciaga brand, which decided to go even further by presenting its Fall 2021 mixed collection via a video game called “Afterworld: The Age of Tomorrow”. In this game, the Internet users embody a character who evolves in an apocalyptic world. During the course of the game, they discover the new collection of silhouettes. It is an immersive experience that has highlighted the brand’s products in a more engaging way.
As we’ve seen, the luxury world has taken quite a turn in its digitalization. Whether it’s to address the challenges of the health crisis or the growing demand of the younger generation, there are still many innovations expected in this sector.
If you operate in the luxury sector and are looking for your digital partner, do not hesitate to contact us.