After a slow introduction into e-commerce, luxury goods have become one of the fastest-growing online categories, according to eShopWorld.
Many believed luxury goods couldn’t be sold online. They said it was too risky and shoppers wouldn’t buy, but the cynics have been proven wrong.
According to a December 2016 report from Euromonitor, global digital luxury sales will increase at a compound annual growth rate (CAGR) of 8pc during 2016 to 2021 versus 2pc for in store.
This growth is a result of sales of lower-end luxury goods such as cosmetics, and younger shoppers who are accustomed to buying most of their purchases online. While most luxury sales still occur in store, shoppers are increasingly moving online.
An April 2016 survey by Ipsos for Google of affluent luxury goods buyers in Japan and western Europe (France, Italy and the UK) found that 76pc of respondents researched online before buying. Search engines were the most popular way to research luxury goods (71pc), followed by images found via brand sites, Google image search, social media (49pc) and in-store research (44pc).
When it comes to the most popular luxury websites, fashion brands are at the top. According to a May 2017 Hitwise survey of US online shoppers, the most popular luxury websites were Michael Kors (18.6pc), Ralph Lauren (17.6pc) and Coach (16.3pc). Millennials made up around one-third of visits or more and frequented the websites of Marc Jacobs and Christian Louboutin (tied with 45pc), followed by Versace (44pc) and Gucci (41pc).
Bain and Farfetch forecast that millennials will make up 40pc of the global personal luxury goods market by 2025. US millennial luxury buyers are the most likely to have made their first luxury purchase digitally (14pc), and represent the largest luxury buyer segment at 48pc, compared with 26pc of Gen X and 25pc of baby boomers.
Buying luxury online
88pc of consumers cite quality as the most common reason for buying luxury products, according to a 2015 Deloitte survey. In China, this figure was higher – 93pc. The second most popular response was that luxury goods make the buyer feel happy or confident, followed by 56pc of respondents who said they bought items as a status symbol.
The Google-Ipsos survey found that 87pc of affluent consumers in Japan and western Europe preferred in-store purchases of luxury goods because they want to see or touch the product (65pc) or are afraid of buying counterfeit goods (22pc).
Those who preferred to buy luxury goods online cited convenience (40pc), better deals (33pc) and less stress than in store (31pc).
According to a February 2018 McKinsey & Company study (using Forrester and Euromonitor data), the biggest luxury categories for online sales were beauty products, ready-to-wear apparel and accessories such as handbags. The study noted that watches and jewellery are less likely to sell online because of their higher price points.
The rise of influencers
An increasing number of luxury brands are enlisting the help of social influencers to promote their products globally.
From January to April 2017, Gucci generated $227m from influencer marketing, representing year-on-year growth of 157.1pc.
According to a March 2017 survey by Econsultancy, and Fashion and Beauty Monitor, nearly three-quarters of luxury brands in the US and the UK use influencer marketing, compared with just over half of non-luxury marketers.
Influencer agency HelloSociety found that luxury campaigns featuring influencers on Instagram and Pinterest have higher engagement rates and more actions taken than campaigns do on average – 30pc higher engagement and 3.8 times more likes on Instagram, and 17pc more engagements and 32pc more ‘repins’ on Pinterest.
In China, for example, influencers are big business, and western brands are now recruiting them for their campaigns. Chinese influencer Mr Bags, with more than 2.7m followers on Weibo and WeChat, generated nearly $200,000 in Valentine’s Day sales for Givenchy, reported eMarketer.
A 2016 report from R3 Worldwide and data analytics agency Bomoda found that Gucci was the number-one influencer-based brand on WeChat, while Dior and Chanel were most successful when it came to Weibo.
It is clear that social is emerging as a channel for luxury; it provides accessibility and the ability to reach more people with engaging content.
Check out the infographic below for more insights from eShopWorld.
A version of this article originally appeared on eShopWorld’s blog.