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portal to e-commerce intelligence
LUXURY
on
theWEB
Exclusive Rankings, Data and Analysis
of the World’s Largest Luxury E-Retailers
Special Report: Luxury on the Web
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Table of Contents
5
Luxury merchandise:
A new path to e-commerce growth . . . . . . . . . . . . 6
Sales of luxury products on the web are experiencing a
major growth spurt. And while the bulk of the largest
luxury e-retailers are American, Latin American and Chinese merchants are growing much faster.
Who are the luxury leaders online? . . . . . . . . . . 10
The largest online luxury players dominate, as they operate
well-established, recognized brand names that wealthy
consumers admire. Smaller and younger e-retailers,
however, are putting up an aggressive fight.
Which luxury products sell best online? . . . . . . 17
Luxury e-retailing is dominated first and foremost by
designer apparel merchants, though high-end jewelry and
accessories are also frequently purchased on the web.
Who buys luxury merchandise online? . . . . . . . 22
The online luxury market is extremely attractive to wealthy
women, but many young professionals are showing they
have enough disposable income to purchase high-end
products on the web.
Marketing luxury online:
It’s all about social media . . . . . . . . . . . . . . . . . . . 25
The world’s top luxury e-retailers are slightly ahead of the
e-commerce industry in e-mail marketing and search
strategies, but they are light years ahead with social.
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Publisher: Jack Love
[email protected]
CEO/President: Molly Love Rogers
[email protected]
Vice President, Sales & Product Development:
Tom Duggan, [email protected]
312-572-6250
Executive Editor: Kurt T. Peters
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Editor in Chief: Don Davis
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©Copyright 2015, 2016 Internet Retailer® & Vertical Web Media LLC. All rights reserved.
Introduction from the Publisher
How global e-commerce is moving upscale
A
lot has been researched and written about
the growing income disparity between affluent and working class families in the United
States and elsewhere around the globe. And all of
the research leads to an inescapable conclusion—real
wages and disposable incomes of middle- and working-class families have stagnated for more than a
decade, while the rich have gotten a whole lot richer.
In short, all e-retailers have something to learn by
studying these high-growth luxury web sites. As
such, this first-ever, data-rich research report on luxury e-retailers fulfills the mission that Internet Retailer
has long maintained for all of our media products—
to provide unrivaled business intelligence in all areas
of e-commerce so that our subscribers can take their
e-retailing game to a higher level.
Like everyone else, the wealthy took a big hit when
the housing bubble burst in 2007 and the Great Recession followed. But unlike the rest of society, the finances of the rich recovered with remarkable speed,
dramatically expanding the income gap separating
those in the upper-income
strata from the hoi polloi.
This year, according to the
Spectrem Group, a market
research firm, the number
of millionaires in the U.S.
exceeded 10 million for
the first time—roughly
double the number that
existed in 1997.
This research report contains a detailed analysis of
the annual web sales, growth rates, market shares,
average orders, conversion rates and marketing
metrics of the 74 e-retailers around the globe who
dominate the online luxury market. The regional
segmentation of this market, the types of merchants that control it and the nature of merchandise included in online luxury are also analyzed and
compared. All 74 leading luxury e-retailers were
selected from our Top500guide.com database that
contains a wealth of current financial, operating
and marketing metrics of the world’s 3,000 largest
e-retail web businesses. While hundreds of these
top retail web sites sell some luxury products, our
research team picked the 74 e-retailers who primarily sell luxury items (see the description of the
selection criteria on page 5).
Such income disparity
is concerning to retailers targeting the mass market, but it is joyous news to retailers and makers of
luxury items. And it’s the online luxury merchants
that may be celebrating the most. In North America
and Europe, which have the highest concentrations
of wealthy consumers, luxury e-retailing businesses are growing considerably faster as a group than
the other leading retail web sites in those regions.
In the process, these luxury e-retailers are creating
new pathways to e-commerce growth by booking
average orders three times higher than other online
merchants, perfecting the digital merchandising of
their respected brands, and connecting with their
well-heeled shoppers by practicing excellent social
networking techniques.
Did we miss some competitors that should have
been included? Possibly. When it comes to publishing
annual rankings—and we expect this to be an annual research publication—the first effort always leaves
room for improvement. Nonetheless, this inaugural
ranking of luxury web sites reveals the leaders and
the trends of a big-ticket online market that is often
overlooked, and the data on these high-end web
merchants reveal a consistent story. It is this: Luxury
products sell well online, very well, and this market is
headed up, way up.
Jack Love
Publisher, Internet Retailer
3
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To call China’s e-commerce market enormous is
an understatement. This year, it’s expected to reach
$670 billion, according to eMarketer, or 40% of total
global e-commerce, making it larger than the next five
markets (the U.S., U.K., Japan, Germany, and France)
combined. And by 2019, Forrester predicts it could
reach $1 trillion as it continues to grow at an estimated
compound annual rate of 19.9%.
Yet within this enormous e-commerce marketplace,
only 1% of transactions are conducted with an
international credit card, such as Visa, MasterCard,
American Express or Discover. The other 99% of
transactions are being made via more popular Chinese
methods—a UnionPay debit or credit card, AliPay
(similar to PayPal), or WeChatPay (a payment platform
coupled with China’s most popular social network).
Combine this with the fact that very few
international retailers offer options to pay online with
anything other than a standard American credit card
means countless retailers are leaving money on the
table.
“China is the biggest e-commerce market that very
few international brands have prepared adequately
for because it has grown so fast,” says Gabriel Grisham,
Head of Growth at NihaoPay, a company that provides
retailers with an easily integrated e-commerce solution
to accept Chinese consumers’ preferred payment
methods. “While Chinese shoppers prefer going direct
and shopping on a brand’s flagship website, the biggest
pain point they have when shopping internationally is
paying for what they want,” Grisham says.
To fill the gap, these consumers turn to middlemen
to solve the problem. “Chinese middlemen or ‘daigou
shoppers’ are people who travel abroad to buy large
quantities of high-end products and return to China to
resell them,” Grisham explains. “This means retailers are
missing an opportunity to know who their customers
actually are, or how big the demand really is.”
According to Grisham, NihaoPay’s research found
that 9 out of 10 U.S. and European retailers don’t offer
a way for Chinese consumers to purchase directly
from their flagship websites. There are a number
of reasons, he says. First, the retailer may not be
aware of the how large the e-commerce demand is
from the Chinese market. Second, even if they are
aware, they may believe it to be too complex to adjust
their current payment systems to accept Chinese
payments. Finally, for those brands that don’t have
the logistics capabilities to ship their products to
Chinese consumers, they don’t think accepting Chinese
payments makes much sense.
While addressing the Chinese market can seem
daunting, there’s a simple first step: integrating
payment options popular with Chinese consumers on
a brand’s flagship website. That’s where NihaoPay can
help.
According to Grisham, implementing the payment
methods preferred by Chinese consumers into a
retailer’s current system can take as little as a couple
of weeks. And because Chinese consumers have dealt
with logistics issues for years, many have their own
solutions in place: a freight forwarder, a friend or
relative abroad, or they or someone they know will
be travelling abroad. ”Logistics is a very logical step
when the time is right and the data supports it,” says
Grisham. NihaoPay partners with several service
providers who can implement successful logistics
solutions into retailers’ platforms when the time is
right. Accepting payments from Chinese consumers,
Grisham says, is simply the first and most critical step,
and it’s easier than most assume.
“Rather than have a brand switch all of their
payment processing, which is an arduous task at best,
we just add UnionPay, AliPay and WeChatPay onto their
existing ecommerce checkout process, removing the
largest pain point for Chinese customers and allowing a
retailer to reach Chinese consumers directly,” Grisham
explains. “Everything else stays the same.”
“E-commerce in China is so big and moving so fast,”
he says. “Millions of Chinese consumers are hungry for
international brands and want to buy them directly
from the brand’s website. By simply implementing a
way to allow them to pay, these retailers now have a
way to address the Chinese market directly and tap into
incredible growth opportunities.”
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SECTION
1
Luxury merchandise:
A new path to
e-commerce growth
Sales of luxury products on the web are experiencing a major
growth spurt. And while the bulk of the largest luxury e-retailers are American, Latin American and Chinese merchants are
growing much faster.
By Jack Love
A
s visionary as he is, when Jeff Bezos pioneered e-retailing 20 years,
initially selling only books on his new Amazon.com website, it’s
a good bet he never envisioned websites that sell Rolex watches,
Hermes handbags, Tiffany jewelry or Diane Von Furstenberg gowns. The
web, it was thought, was for the sale of everyday items to the everyday
shopper.
Even now, the most common image of luxury merchandising involves a
boutique in a fashionable section of town with snobbish sales associates
like those in the film “Pretty Woman.” While the Rodeo Drives of the world
still exist, this image of luxury retailing no longer reflects reality. In fact, the
newest and fastest-growing segment of luxury merchandising is now found
on the web. The “carriage trade,” as the luxury market was once quaintly
described, has carved out a profitable and rapidly growing niche on the
Internet.
Luxury Websites Help Drive Global E-Commerce Growth
Top 74 Global
Luxury Web Sites
14.6%
Top 1000 Retail Web
Sites in US
Top 500 Retail Web
Sites in Europe
Top 500 Asia
E-Retail Sites
11.6%
9.5%
% 2014 Median
Web Sales Growth
13.5%
Source: Top500Guide.com
Measuring the precise size of the
global online luxury market is
extremely difficult, since hundreds,
perhaps thousands, of retail
websites around the world sell a
number of items that everyone
would consider luxury merchandise.
But none of these web merchants
break out their sales by the types of
goods they include, and most do
6
Average E-Retail Growth Rates
not primarily sell luxury products. To
identify the world leaders in luxury
and analyze the sales growth and
other trends in the online luxury
Top 1000 Retail Web
15.7%
Sites in US
market, Internet Retailer’s research
team analyzed every e-retailer
Top 500 Retail Web
15.6%
Sites in Europe
ranked in our Top500Guide.com
database, which contains detailed
Top 3000 Global
28.5%
rankings and scores of other
E-Retail Sites
financial and operating metrics
on the 1,000 largest e-retailers in
North America and the 500 largest
web merchants in each of the four other major regions of the globe where
we rank and detail the retail leaders on the web—Europe, China, Asia,
and Latin America—in all the 3,000 top
e-retailers around the globe.
Top 74 Global
Luxury Web Sites
18.9%
How we selected the
luxury web merchants
In doing so, they identified 74 leading web
retailers with high average order values
whose businesses consist of selling primarily
luxury brand products online—mostly highpriced designer apparel, luxury-branded
handbags and other accessories, premium
watches, and jewelry. In addition to those
retailers mentioned above, the lists includes
such other iconic luxury brands as Louis
Vuitton, Burberry, Neiman Marcus, Helzberg
Diamonds and Chanel, to name a few.
(See “How we selected the luxury web
merchants” for a full explanation of the
selection process used.)
To identify the web sites that make up the 74
leaders of the global online luxury market,
our researchers accessed six core e-commerce
databases of the Top500Guide.com—the Top
500 and Second 500 in North America, and
the Top 500 e-retailers in each of the Europe,
China, Asia and Latin America. In each of
these databases, they set the average order
filter at $300 and above, to identify those web
merchants with average orders that are at
least two to three times the median average
order of $125 recorded by the Top 500 web
merchants in America, the most matured of all
e-commerce markets.
They further trimmed the resulting list by
eliminating web sites that exceeded the $300
bar, not by selling luxury items to the rich,
but by focusing on goods that carry high
prices but are clearly not targeted solely to
affluent consumers. These include retailers of
computers and other electronic gear, home
appliances and furniture. Finally, the research
team scoured the list of all 3,000 e-retailers in
the core database to find sites that sell mostly
branded luxury items but which failed to make
the $300 cut-off used in the initial screen. G
Luxury sales surpass average
e-retailing growth rates
In comparing these 74 luxury websites to
all leading e-retailers around the globe, it’s
clear that sales of luxury products on the
web is experiencing a major growth spurt. In
2014, the combined sales of the 74 luxury
sites grew 18.9% to $11.5 billion. That
exceeds by more than 3 percentage points
the average growth rates in the U.S. and
7
The Global Picture: The Luxury E-Commerce Market
NORTH AMERICA
EUROPE
CHINA
# of Companies:
51
# of Companies:
6
# of Companies:
6
2014 Web Sales:
$7,595,560,873
2014 Web Sales:
$1,912,782,206
2014 Web Sales:
$1,280,094,493
Share of Global
Online Luxury Market:
66.2%
Share of Global
16.7%
Share of Global
11.2%
LATIN AMERICA
# of Companies:
6
2014 Web Sales:
$96,793,239
TOTAL ONLINE
LUXURY MARKET
Share of Global
0.8%
# of Companies:
74
2014 Web Sales:
$11,477,130,981
Share of Global
100.0%
ASIA
# of Companies:
5
2014 Web Sales:
$591,900,169
Share of Global
5.2%
Europe, where most luxury e-retailers are based. While it does not exceed
the average growth rate of 28.5% achieved by all 3,000 e-retailers in the
Top500Guide.com database, that global average is hugely inflated by a
handful of large e-retailers in China and elsewhere in Asia, which sell lowerpriced items and which last year achieved growth rates in the triple or high
double digits.
A much more meaningful measure of how luxury web merchants are
growing compared to the rest of the e-commerce field is found in an
analysis of median growth rates. Last year, the 74 luxury websites studied
achieved a remarkable median growth rate of 14.6%, with half of those
sites exceeding that number and half falling short of it. That exceeds the
median growth rates of the 3,000 largest web merchants on the planet, not
8
China & Latin America Grow Luxury E-Commerce Faster
32.7%
17.5%
19.4%
2014 Cumulative
Web Sales Growth
19.4%
18.9%
to mention the 1000 largest
e-retailers in the U.S. and
500 largest in Europe, which
recorded median growth
rates in 2014 of 11.6% and
9.5% respectively.
Regions where luxury
e-retailing thrives
This astonishing growth in
8.8%
the sales of luxury products
online is anything but
even around the globe. To
Europe
North
China
Asia
Latin
Total
paraphrase Willie Sutton,
# of Cos. 6
America
# of Cos. 6 (excl. China)
America
Online
# of Cos. 51
# of Cos. 5
# of Cos. 6
Luxury
the infamous bank robber of
Market
# of Cos. 74
the 1930’s, luxury websites
sell the lion’s share of their
products to consumers in North America, because that’s where the big
money is. Fully 51 of the 74 luxury sites identified by Internet Retailer are
American-based, and they account for about two-thirds of global online
sales of luxury merchandise. Europe and China follow, but by quite a
distance, accounting for 16.7% and 11.2% respectively of the worldwide
sales of the luxury e-retailers studied.
Now, however, the hegemony that American web merchants have in
the luxury market is being challenged. Luxury web merchants in Europe,
China and even Latin America grew faster in 2014 than their counterparts
in America. Of all of America’s rivals for the hearts, minds and clicks of
well-heeled consumers, Chinese e-retailers present the most formidable
challenge. Last year, the six Chinese online luxury merchants in the
study grew at a combined 32.7%, nearly double the growth rate of the
Americans. And given the fact that China is the world’s largest and fastest
growing e-commerce market, China’s share of the online luxury market is
certain to rise dramatically above the current 11%. This is particularly true
because of the Chinese government’s plan to shift more of the country’s
GDP to consumer spending and because Chinese consumers are infatuated
with Western luxury products and brands. G
9
SECTION
2
Who are the luxury
leaders online?
The largest online luxury players dominate the market, as
they operate well-established, recognized brand names that
wealthy consumers admire. Smaller and younger e-retailers,
however, are putting up an aggressive fight.
T
o quickly grasp the competitive dynamic of the global online luxury
retailing market, you need look no further than the ranking of the 10
largest competitors in the field and compare that list to the 10 fastest
growing competitors in online luxury. The most striking thing about that
comparison is that not a single competitor—not one—appears on both lists.
And the leader is…Neiman Marcus
Does that suggest that the largest luxury e-retailers are more established,
have well recognized brand names and got a relatively early start in
online retailing to leverage those brands? The answer is yes. In fact, the
world’s leading online luxury e-retailer is Neiman Marcus, the Dallas-based
department store chain that was one of the first luxury retailers to go online,
launching its site in 1999. Last year, the Neiman Marcus web business,
which also includes its wholly-owned e-commerce site BergdorfGoodman.
The World’s Top 10 Luxury Web Sites
Retailer
URL
Home Market
Neiman Marcus
Richemont SA
Ralph Lauren Media
Gilt Groupe
Estee Lauder
Coach Inc.
LVMH (LouisVuitton)
RueLaLa.com
Blue Nile Inc.
Kela.cn
NeimanMarcus.com
Net-a-Porter.com
RalphLauren.com
Gilt.com
EsteeLauder.com
Coach.com
LouisVuitton.fr
RueLaLa.com
BlueNile.com
Kela.cn
North America
Europe
North America
North America
North America
North America
Europe
North America
North America
China
Rank at
Home Merchant Type
43
31
59
68
73
82
56
84
85
35
Retail Chain
Web Only
Brand Manufacturer
Web Only
Brand Manufacturer
Brand Manufacturer
Brand Manufacturer
Web Only
Web Only
Retail Chain
Category
Apparel/Accessories
Apparel/Accessories
Apparel/Accessories
Apparel/Accessories
Health & Beauty
Apparel/Accessories
Apparel/Accessories
Apparel/Accessories
Jewelry
Jewelry
1. Internet Retailer estimate.
2014 web sales
Growth
$1,148,500,000 1
$844,404,600 1
$780,000,000 1
$670,000,000 1
$603,750,000 1
$500,000,000
$481,557,000 1
$480,000,000 1
$473,516,000
$350,000,000 1
11.5%
25.7%
26.2%
11.7%
15.0%
24.5%
15.0%
9.1%
5.2%
5.9%
10
10 Fastest Growing Luxury Web Sites
Retailer
URL
Home Market
Gallerist
Ritani LLC
Real Real Inc.
Secoo.com
Signet Jewelers
Rent the Runway
Fifth Avenue
Bob’s Watches
Shangpin.com
Yoogi’s Closet
Gallerist.com.br
Ritani.com
TheRealReal.com
Secoo.com
Kay.com
RentTheRunway.com
5Lux.com
BobsWatches.com
Shangpin.com
YoogisCloset.com
Latin America
North America
North America
China
North America
North America
China
North America
China
North America
Rank at
Home Merchant Type
239
367
239
155
125
282
70
611
43
645
Web Only
Brand Manufacturer
Web Only
Retail Chain
Retail Chain
Web Only
Web Only
Web Only
Web Only
Web Only
Category
Apparel/Accessories
Jewelry
Apparel/Accessories
Apparel/Accessories
Jewelry
Apparel/Accessories
Apparel/Accessories
Jewelry
Apparel/Accessories
Apparel/Accessories
1. Internet Retailer estimate.
2014 web sales
Growth
$7,022,075 1
$50,000,000
$105,100,000 1
$75,000,000 1
$275,000,000 1
$80,100,000 1
$228,626,002 1
$17,000,000
$298,780,991 1
$15,661,675
197.6%
117.4%
91.1%
87.3%
67.6%
66.9%
59.3%
53.1%
50.0%
49.7%
com, generated $1.15 billion in sales, 36% more than the next largest
competitor on the list, Net-a-Porter.com, a European-based web-only
merchant of luxury fashions.
Accounting for a remarkable 10% of the combined worldwide sales of the
74 luxury web sites in the study, Neiman Marcus might well be considered
the Amazon of luxury e-retailing. Before the web, it was perhaps better
known for its iconic catalog than for its stores, and at the dawn of the
e-retailing era, Neiman embarked on a brilliant strategy of leveraging its
brand and catalog online. Today, its web site boasts a 5-year CAGR of
13.9%, a conversion rate of 3.14% (well above average for the luxury
market) and an average ticket of $410. Further, it is America’s 43rd largest
e-retailer.
While it lacks Neiman’s brand recognition, the web-only Net-a-Porter.com is
also a well-established luxury merchant with a retail web business that
dates back to 2000. And it has global ambitions. Earlier this year, Richemont
SA, Net-a-Porter’s majority owner, purchased another high fashion pure
play, American-based Yoox.com, which ranks 24th on the e-luxury list and
211th in the Top 500 Guide ranking of leading American e-retailers. The
merger of the two will help Net-a-Porter close much of the sales gap with
NeimanMarcus.com.
The other e-retailers on the top 10 luxury list share many of the same
attributes of Neiman and Net-a-Porter—seasoned web operations that
own or market well-established brands, such as Ralph Lauren, Coach, Louis
Vuitton and Estee Lauder. Each one ranks among the top 100 e-retail sites
in their home markets. As a group, they fairly represent the three types of
organizations that control the e-retailing business—web-only retailers, retail
chains and consumer brand manufacturers. All but three (Gilt.com, RueLaLa.
11
com and Kela.cn) have been online for at least 15 years. But their most
distinguishing characteristic is their impressive share of the online luxury
market. Together, these top 10 luxury e-retailers account for a commanding
55% of total sales of the world’s 74 leading luxury web sites.
Aggressive e-retailers challenge a top-heavy market
While the top 10 luxury web merchants control more than half of the
market now, that may not be the case in the next few years. That’s because
as a group they are growing at only 15.4%, well below the average 18.9%
growth of all luxury e-retailers surveyed. By comparison, the 10 fastestgrowing e-retailers on our luxury list grew last year by an average of 65%,
increasing their combined share of the global e-luxury business from 7% to
10% in just one year.
Growth is not the only thing that differentiates the top growers from the
top sellers. The fastest growing web sites in the luxury market are relative
upstarts in e-retailing. Brazilian luxury fashion merchant Gallerist.com,
the world’s fastest growing luxury e-retailer, was launched only in 2011.
Top 3 Luxury Web Sites by Region
Retailer
URL
Rank at Home
Merchant Type
Category
2014 web sales1
Growth
North America
Neiman Marcus
NeimanMarcus.com
43
Retail Chain
Apparel/Accessories
$1,148,500,000
11.5%
Ralph Lauren Media
RalphLauren.com
59
Brand Manufacturer
Apparel/Accessories
$780,000,000
26.2%
Gilt Groupe
Gilt.com
68
Web Only
Apparel/Accessories
$670,000,000
11.7%
Europe
Richemont SA
Net-a-Porter.com
31
Web Only
Apparel/Accessories
$844,404,600
25.7%
LVMH (LouisVuitton)
LouisVuitton.fr
56
Brand Manufacturer
Apparel/Accessories
$481,557,000
15.0%
Farfetch
Farfetch.com
93
Web Only
Apparel/Accessories
$290,367,672
12.7%
Kela.cn
Kela.cn
35
Retail Chain
Jewelry
$350,000,000
5.9%
Zbird.com
Zbird.com
37
Web Only
Jewelry
$323,000,000
30.0%
Shangpin.com
Shangpin.com
43
Web Only
Apparel/Accessories
$298,780,991
50.0%
China
Asia
Enigmo Co. Ltd.
Buyma.com
75
Web Only
Apparel/Accessories
$235,346,546
16.9%
L Brands
LaSenza.com
115
Retail Chain
Apparel/Accessories
$130,521,417
0.7%
Beams Co. Ltd.
Beams.co.jp
154
Retail Chain
Apparel/Accessories
$90,000,000
1.0%
64
Retail Chain
Apparel/Accessories
$39,294,607
10.8%
Latin America
Daslu
Loja.daslu.com.br
21Diamonds
21Diamonds.com.br
106
Web Only
Jewelry
$21,750,000
17.6%
Medalhão Persa
MedalhaoPersa.com.br
140
Web Only
Jewelry
$14,837,383
17.8%
1. All web sales figures are Internet Retailer estimates.
12
Web-Only Merchants
Have Lion's
Share
of Online
Luxury
Similarly, Seattle-based Ritani.com, a
pure play web merchant specializing
in jewelry, was also launched in 2011
and last year became the secondBRAND
fastest growing luxury web site by
MANUFACTURER
increasing its sales 117%. In fact, all
30.5%
WEB ONLY
but two of the fastest growing luxury
44.0%
e-retailers were launched within the
last eight years. One of the exceptions
is Signet Jewelers, which owns the
Zales, Jared, and Kay jewelry web
RETAIL CHAIN
sites and stores, and which launched
24.4%
its first web site in 1998. The outlier
CATALOG /
is BobsWatches.com, which has been
CALL CENTER
Source:
Top500Guide.com
1.1%
selling pre-owned Rolex and other
luxury watches online since
And They're Growing Faster Than The Rest
1999.
Web Only
20.4%
Two other distinguishing
features of the fastest
15.5%
Retail Chain
growing luxury e-retailers
are their size and their
20.0%
Brand Manufacturer
origins. While all of the top
10 luxury sites are large
7.4%
enough to rank among the
Catalog/Call Center
Percentages are 2014
top 100 web merchants in
Web Sales Growth
their home markets, only
two of the fastest growers
can make that claim, and both are based in China, an explosive e-commerce
market that produces many anomalies.
As for origins, six of the 10 largest luxury e-retailers trace their lineage to
the major retail chains or brand manufacturers. The reverse is true for the
fastest growers. Seven of the fastest growing luxury web sites come from
the ranks of web-only retailing, whose members often grow faster online
than retail chains and brand manufacturers simply because web retailing is
their sole focus. With the exception of Signet Jewelers, none of the fastest
growing competitors in online luxury owns a well-known luxury brand. Yet,
given their incredible growth their message to the big brands sitting atop
the online luxury market might be this: Don’t rest on your solid gold names
because we’re coming after you.
13
The balance of power in luxury e-retailing is changing
The differences between the top online luxury e-retailers and their smaller
but faster growing competitors highlight a significant change in the overall
e-luxury market. There are no market share studies that go back a decade
ago, but given the launch dates of the 74 leading luxury e-retailers, it’s fairly
likely that the old line luxury chain retailers and branded manufacturers
dominated the online market back then even more than they do today.
When exactly this balance of power in online luxury began to change is hard
to determine, but it clearly has changed. Today, 44% of all web sales of the
74 global leaders in luxury e-retailing is generated by web-only merchants;
that compares to 31% and 24% respectively for luxury brand manufacturers
and chain retailers. It’s also likely that the pure-play share of this market
will increase in future years, given the fact that the 37 pure play websites
included the list of 74 leading online luxury merchants continue to grow
faster than their competitors. G
14
The world’s largest luxury e-commerce players
Luxury
Rank E-Retailer
Home Market
Home
Rank Merchant Type
Category
2014 web sales
Growth
Average
Order
1
NeimanMarcus.com
North America
43 Retail Chain
Apparel
$1,148,500,000 1
11.5%
$410 1
2
Net-a-Porter.com
Europe
31 Web Only
Apparel
$844,404,600
25.7%
$202 1
3
RalphLauren.com
North America
59 Brand Manufacturer
Apparel
$780,000,000 1
26.2%
$195 1
4
Gilt.com
North America
68 Web Only
Apparel
$670,000,000 1
11.7%
$360 1
5
EsteeLauder.com
North America
Beauty Products
$603,750,000 1
15.0%
$138 1
6
Coach.com
North America
Accessories
$500,000,000
24.5%
$230 1
7
LouisVuitton.fr
Europe
Accessories
$481,557,000 1
15.0%
$650 1
8
RueLaLa.com
North America
84 Web Only
Apparel
$480,000,000 1
9.1%
$150 1
9
BlueNile.com
North America
85 Web Only
Jewelry
$473,516,000
5.2%
$1,669 1
10
Kela.cn
China
35 Retail Chain
Jewelry
$350,000,000 1
5.9%
$500 1
11
Zbird.com
China
37 Web Only
Jewelry
$323,000,000
1
30.0%
$540
12
Shangpin.com
China
43 Web Only
Apparel
$298,780,991
1
50.0%
$330 1
13
FarFetch.com
Europe
93 Web Only
Apparel
$290,367,672 1
12.7%
$400 1
14
Signet Jewelers2
North America
125 Retail Chain
Jewelry
$275,000,000 1
67.6%
$200 1
15
Tiffany.com
North America
Jewelry
$256,000,000 1
5.8%
$350 1
16
Buyma.com
Asia
Apparel
$235,346,546 1
16.9%
$360 1
17
ToryBurch.com
North America
Apparel
$230,000,000
18
5Lux.com
China
19
BrooksBrothers.com
North America
20
KateSpade.com
21
75 Web Only
34.5%
$246
Apparel
$228,626,002
1
59.3%
$490 1
170 Retail Chain
Apparel
$187,084,800 1
16.0%
$155 1
North America
Apparel
$172,501,150 1
15.0%
$400 1
Barneys.com
North America
183 Retail Chain
Apparel
$165,910,680 1
20.0%
$450 1
22
Gucci.com
Europe
145 Retail Chain
Accessories
$161,489,580 1
13.2%
$400 1
23
Jomashop.com
North America
203 Web Only
Jewelry
$140,664,000
34.3%
$475
24
Yoox.com
North America
211 Web Only
Apparel
$130,909,663
25
LaSenza.com
Asia
115 Retail Chain
26
Ross-Simons.com
North America
27
Bluefly.com
28
70 Web Only
12.1%
$240
Apparel
$130,521,417
1
0.7%
$436 1
228 Retail Chain
Jewelry
$112,933,137 1
6.0%
$250 1
North America
229 Web Only
Apparel
$111,145,361 1
10.0%
$300 1
TheRealReal.com
North America
239 Web Only
Apparel
$105,100,000 1
91.1%
$130 1
29
JamesAllen.com
North America
252 Web Only
Jewelry
$96,825,600
1
8.0%
$4,300 1
30
Burberry.com
Europe
Apparel
$92,706,728 1
25.9%
$448 1
31
Beams.co.jp
Asia
154 Retail Chain
Apparel
$90,000,000 1
1.0%
$300 1
32
Ashford.com
North America
263 Web Only
Jewelry
$89,442,906
25.3%
$326
33
GoldwinWebStore.jp
Asia
161 Web Only
Apparel
$84,552,205 1
10.9%
$404 1
34
RentTheRunway.com
North America
282 Web Only
Apparel
$80,100,000 1
66.9%
$140 1
35
Secoo.com
China
155 Retail Chain
Apparel
$75,000,000 1
87.3%
$200 1
36
Store-US.HugoBoss.com
North America
Apparel
$72,225,000 1
7.0%
$100 1
37
LorealParisUSA.com
North America
Beauty Products
$69,900,000 1
12.1%
$70 1
1. Internet Retailer estimate. 2. Signet owns multiple jewelry web sites, including Kay.com, Jared.com and Zales.com. 3. DVF.com is the URL for fashion designer Diane Von Furstenberg. 4.
Helzberg.com is the web site of Herzberg Diamonds. Source: Top500Guide.com
15
(continued on next page)
The world’s largest luxury e-commerce players (cont’d)
Luxury
Rank E-Retailer
Home Market
Home
Rank Merchant Type
Category
2014 web sales
Growth
Average
Order
38
KimonoIchiba.com
Asia
233 Catalog/Call Center
Apparel
$51,480,000 1
8.2%
$300 1
39
ArmaniExchange.com
North America
Apparel
$51,477,000 1
6.2%
$220 1
40
Ritani.com
North America
Jewelry
$50,000,000
41
Ice.com
North America
374 Web Only
Jewelry
$48,100,000
42
Lafayette148NY.com
North America
Apparel
$47,924,000
43
SecretSales.com
Europe
316 Web Only
Apparel
44
Tumi.com
North America
45
DiamondNexus.com
North America
46
EileenFisher.com
North America
47
Loja.daslu.com.br
Latin America
48
Dexclusive.com
North America
49
BlissWorld.com
50
117.4%
$5,500
6.9%
$300 1
8.2%
$630
$42,256,627 1
14.3%
$252 1
Accessories
$41,600,000
1
27.6%
$290
414 Web Only
Jewelry
$39,600,000
1
2.0%
$565 1
Apparel
$39,500,000
11.0%
$354
Apparel
$39,294,607
10.8%
$300 1
444 Web Only
Jewelry
$34,472,282
North America
450 Retail Chain
PeruvianConnection.com
North America
51
DVF.com3
52
64 Retail Chain
1
1
23.2%
$274
Beauty Products
$33,117,900
1
10.0%
$275 1
Apparel
$32,443,229 1
5.0%
$312 1
North America
Apparel
$28,350,000 1
32.6%
$250 1
Gemvara.com
North America
487 Web Only
Jewelry
$28,245,725 1
20.0%
$1,000 1
53
21Diamonds.com.br
Latin America
106 Web Only
Jewelry
$21,750,000 1
17.6%
$1,450 1
54
BobsWatches.com
North America
611 Web Only
Jewelry
$17,000,000 1
53.1%
$5,650 1
55
Adiamor.com
North America
636 Web Only
Jewelry
$16,000,000
2.7%
$1,250 1
56
YoogisCloset.com
North America
645 Web Only
Accessories
$15,661,675
57
Whiteflash.com
North America
664 Web Only
58
MedalhaoPersa.com.br
Latin America
59
Ziamond.com
60
1
49.7%
$900
Jewelry
$14,900,000
1
4.6%
$5,000 1
140 Web Only
Jewelry
$14,837,383 1
17.8%
$250 1
North America
674 Web Only
Jewelry
$14,264,000 1
7.9%
$750 1
usa.Hermes.com
North America
Accessories
$12,800,000 1
19.6%
$220 1
61
Helzberg.com
North America
745 Retail Chain
Jewelry
$11,350,000
16.8%
$250 1
62
BrianGavinDiamonds.com
North America
757 Web Only
Jewelry
$10,784,000
0.6%
$3,000 1
63
CasadasAlianças.com.br
Latin America
184 Retail Chain
Jewelry
$10,697,129 1
12.6%
$350 1
64
WorldJewels.com
North America
766 Web Only
Jewelry
$10,450,000 1
3.3%
$1,800 1
65
Fashionphile.com
North America
770 Web Only
Accessories
$10,200,000 1
17.4%
$600 1
66
UGallery.com
North America
832 Web Only
Artwork
$8,411,508
1
30.0%
67
Angara.com
North America
855 Web Only
Jewelry
$7,726,169
1
5.0%
$700 1
68
Gallerist.com.br
Latin America
239 Web Only
Apparel
$7,022,075 1
197.6%
$250 1
69
ItsHot.com
North America
Jewelry
$5,441,099 1
6.0%
$225 1
70
Allurez.com
North America
948 Web Only
Jewelry
$5,000,000
11.1%
71
Bluemercury.com
North America
957 Retail Chain
Beauty Products
$4,787,211 1
10.0%
$75 1
72
Chanel.com
China
Beauty Products
$4,687,500
1
25.0%
$400 1
73
PoshMommyJewelry.com
North America
Jewelry
$4,446,779 1
5.0%
$250 1
74
E-Closet.com.br
Latin America
341 Web Only
Apparel
$3,192,045 1
20.5%
$300 1
4
1
$1,050
$1,800
1. Internet Retailer estimate. 2. Signet owns multiple jewelry web sites, including Kay.com, Jared.com and Zales.com. 3. DVF.com is the URL for fashion designer Diane Von Furstenberg. 4.
Helzberg.com is the web site of Herzberg Diamonds. Source: Top500Guide.com
16
SECTION
3
Which luxury products
sell best online?
Luxury e-retailing is dominated first and foremost by designer
apparel merchants, though high-end jewelry and accessories
are also frequently purchased on the web.
T
o get an idea of how far e-commerce has progressed in just the last
several years, consider this: The best-selling and fastest-growing
segment of the web-based luxury market is designer apparel. Not long
ago, it was thought that apparel was not a good market for e-commerce,
because, some argued, customers wanted to touch the fabric, see its colors
first-hand, and try on the garment before buying it.
That notion was dismissed several years ago. Last year, 12.2% of total web
sales for the 1,000 largest e-retailers in North American was generated by
websites specializing in apparel, while dozens of other sites without that
focus sold some apparel online as well. And when it comes to selling luxury
products online, apparel takes center stage.
Designer apparel dominates the e-luxury market
Designer Apparel Tops Luxury Sales Online
Growth Rate
Designer Apparel
19.7%
Luxury Accessories
19.3%
Jewelry
17.6%
Cosmetics
14.5%
10.8%
21.6
61.4%
6.2%
For this chart only, Artwork is included in Accessories.
It account for 0.1% of total luxury web sales.
Share of Total
A breakdown of
the sales of the
world’s leading 74
luxury sites by type
of merchandise sold
shows that high-priced
designer apparel
commands a market
share that is five times
apparel’s share of the
total e-commerce
market. That’s not a
typo; it’s a fact. Fully
61% of all sales on
17
the world’s 74 leading luxury websites is generated by the 33 luxury web
merchants that sell designer apparel as their primary merchandise offering.
With an average order of $303—or 43% higher than the average ticket
of all apparel e-retailers—the apparel websites on the list of 74 leading
luxury e-commerce businesses defy the conventional wisdom about the
merchandise best suited for e-retailing. Not only do they succeed on the
web; they dominate the online luxury business, both in terms of market
share and in terms of growth. The apparel businesses on the list of leading
luxury websites grew 19.7% last year, more than any other principal luxury
merchandise category. And despite their much higher average ticket, the
33 luxury apparel websites achieve an impressive conversion rate of 2.54%,
nearly as high as the 2.85% average conversion rate of the 137 apparel
merchants ranked among
America’s Top 500 e-retailers. In
Luxury Sites Achieve Huge Average Tickets
short, luxury apparel is one of
the best product segments that
$732
Average Ticket
e-retailing offers.
$350
Median Ticket
This list of luxury apparel sites
includes some well-known
$212
designer brands, including
Ralph Lauren, Tory Burch, Hugo
$125
Boss, Armani, Eileen Fisher and
Diane Von Furstenberg. And
74 Luxury Web Sites
Top 500 American Web Sites
it includes such well-known
apparel retail chains as Barneys,
Burberry, Brooks Brothers and
Neiman Marcus. Neiman Marcus, the world’s leading luxury merchant on
the web, also leads the apparel segment of online luxury, controlling a
remarkable 16% share of this prized segment of luxury e-retailing.
Jewelry—The most competitive segment of e-luxury
Jewelry, the second largest merchandise segment of the online luxury
market, accounts for 21.6% of all web sales of the world’s top 74 e-luxury
websites. It has almost as many competitors (28) as the luxury apparel
segment, but they pursue a market with one-third as much revenue as
luxury apparel. Not surprisingly, this segment of the online luxury market
produces the highest average ticket ($1,392) and the lowest conversion
rate (1.3%) of all major merchandise segments. After declining in 2013, all
online sales of jewelry came back strong last year. The 28 larger and biggerticket jewelry websites included in the list of leading global luxury e-retailers
18
had a comeback as well, growing their combined sales by 17.6%.
The leader in the online jewelry category is Blue Nile, one of the oldest pureplay web merchants in the category and the perennial leader of the webbased jewelry market. With $474 million in online sales last year, Blue Nile
towers over the next two largest competitors in web-based jewelry sales,
both of which are based in China. They include second-ranked Kela.cn, a
retail chain with $330 million in online jewelry sales; and third-ranked Zbird.
com, a web-only jeweler with $323 million in sales.
Signet Jewelers, which operates
the largest jewelry chains in North
America and the United Kingdom,
Average Conversion
was the fastest growing e-retailer
3.32%
Median Conversion
in the jewelry business in 2014,
growing its web sales by 68%
1.97%
2.48%
last year alone. But most of that
growth came from Signet’s 2014
1.80%
acquisition of Zales, a chain that
generated $109 million online
Top 500 American Web Sites
74 Luxury Web Sites
in 2013, enough to become the
210th largest e-retailer in the U.S.
The other major chain in jewelry
e-retailing is Tiffany, which ranked fourth among jewelers on the top luxury
e-retailing list with web sales of $256 million last year.
Luxury Sites Have Much Lower Conversion Rates
Despite the fact that three of the top five jewelry websites on the global
luxury list are owned by retail chains, web-only merchants last year
accounted for nearly 59% of the sales generated by the 28 jewelers
on the luxury list. Furthermore, while the eight retail chains and brand
manufacturers ranked among the world’s largest online jewelers boast
more recognizable brand names, they have an average ticket of just $297,
less than one-quarter of the average ticket for all 28 jewelers on the list. By
comparison, the 20 web-only jewelers on the luxury e-retailer list achieved
a stunning average ticket of $1,830, belying the notion that name brands
automatically yield higher average orders.
One of those pure-play luxury jewelers holds the most unassuming URL of
all global leaders in luxury, BobsWatches.com. That e-retailer boasts the
highest average ticket of all luxury merchants—$5,650. It achieves that top
perch by selling pre-owned Rolex and other high-end watch brands on a
website that’s been in operation since 1999. While BobsWatches.com ranks
19
Top Luxury E-Retailers by Type of Merchandise
Product Segment
Segment Leader
2014 Web Sales
2014 Growth
2014 Share of Segment
Apparel
Neiman Marcus
$1,148,500,000 1
11.5%
16.3%
Luxury Accessories
Coach Inc.
$500,000,000
24.5%
40.9%
Beauty & Health
Estee Lauder
$603,750,000 1
15.0%
84.3%
Jewelry
Blue Nile Inc.
$473,516,000
Artwork
UGallery
$8,411,508 1
15.0%
19.1%
30.0%
100.0%
1. Internet Retailer estimate
only 16th among the world’s top jewelry websites, it is clearly on a path
to improve that position. As recently as 2010, Bob’s Watches was a tiny
e-retailing business with annual sales of just $375,000. Then it launched
its unique “Rolex Exchange,” which is modeled after the New York Stock
Exchange and allows sellers and buyers to offer and bid for pre-owned Rolex
time pieces. Since that launch, Bob’s Watches has grown dramatically. Last
year alone, the site increased sales by 53% to $17 million.
Accessories—The luxury brands they carry
Of all the luxury brands owned by the world’s largest luxury e-retailers,
the accessories segment of the market has the highest concentration of
brands most luxury shoppers know. Only seven of the 74 top-ranked luxury
e-retailers are categorized as merchants of accessory items, but five of those
own brands that are among the best known names in luxury retailing—
Louis Vuitton, Gucci, Hermes, Coach and Tumi.
All told, accessories account for nearly 11% of total sales of the top 74
online luxury retailers included in this study, and the seven competitors in
the segment grew at the healthy clip of 19.3% last year. However, the two
leading luxury brands of handbags—Coach and Louis Vuitton—dominate
this segment of the online luxury market, accounting for 80% of its total
sales. Last year, these two changed positions as Coach took the top spot
from Louis Vuitton by out-growing it 24.5% to 15%. Still, less than $20
million in online revenue separate the two, and none of the other five
competitors in the group seem ready to challenge these leaders anytime
soon. Gucci.com, which ranks third in the accessories segment, generated
revenue of $161 million online, or $320 million less than second-ranked
Louis Vuitton.
Estee Lauder owns the web market for luxury beauty products
The smallest segment of the global online luxury market consists of highend fragrances and other beauty products. Together, the five beauty
product websites included among the global leaders in luxury accounted
for just 6% of total sales generated last year by the world’s top 74 luxury
20
e-retailers. They grew last year at just 14%, the slowest growth rate for any
merchandise category in the luxury market. Their average ticket of $192
is also the lowest of any other luxury product category, since fragrances
and make-up products typically are lower in price than the other types of
merchandise included in luxury.
Nonetheless, these e-retailers are included in this online luxury report largely
on the strength of their well-known luxury brands, such as Chanel, L’Oreal
and Estee Lauder, and because their average tickets are nearly double
the average order of all 52 e-retailers included in the beauty merchandise
category of the America’s 1,000 largest web merchants.
The only competitor that operates a major website in this segment of the
global luxury e-retailing list is Estee Lauder, the $11 billion producer of highend cosmetics and other beauty products. Estee Lauder launched its first
e-commerce website 18 years ago, and it now operates 14 websites around
the world, including those for its other major brands, such as Clinique,
Bobby Brown, and Aveda. While these websites last year generated $604
million of online sales—5.5% of the company’s total sales—the web is Estee
Lauder’s fastest growing sales channel. Last year, sales from that channel
grew by 15%, double the growth rate for the company as a whole. That
fact is not lost of the company’s management team, which is expanding
its web business with a bigger investment in mobile commerce and global
e-retailing.
Given Estee Lauder’s long-term success in the online cosmetics business, it’s
a wonder the other four online competitors in this segment haven’t tried to
emulate it. The fact that they haven’t come close to doing so is evidenced by
Estee Launder’s astonishing 84% share of total sales of all five competitors
in this segment of the luxury market. G
21
SECTION
4
Who buys luxury
merchandise online?
The online luxury market is extremely attractive to wealthy
women, but many young professionals are showing they have
enough disposable income to purchase high-end products on
the web.
S
ince designer apparel, jewelry and luxury accessories account for well
over 90% of the sales of leading luxury e-retailers, it would follow
that the customers who shop these sites most often are women. And,
in fact, women account for 55% of shoppers on luxury websites, which is
higher than the female share of sales for America’s 500 largest web sites,
where buyers are evenly divided between women and men.
Women shoppers account for only 55% of luxury e-retail shopping
What is surprising is that women make up “only” 55% of the sales of
the world’s top luxury web sites, considering the mostly female-oriented
product lines of these web businesses and the preponderance of female
models that adorn most
luxury websites. Even
Online Luxury: Where Women Rule
a cursory examination
Online Shopper
of the products sold
Demographics
and the merchandising
methods used by luxury
websites might lead most
Women
Men
Men
Women
observers to conclude
55.06%
44.94%
49.65%
50.17%
that women easily
account for two-thirds or
more of the traffic and
transactions of online
Top 500 U.S. Web Sites
Luxury Web Site Shoppers
luxury retailers.
Yet, women make up
22
56% of the shoppers at leading designer apparel sites, 55% of accessory
sites, 60% of beauty product web sites and 53% of jewelry sites. Why
aren’t these percentages even higher given the fact that the products on
luxury web sites are overwhelmingly aimed at women?
One likely answer is that a fair percentage of luxury sales online is purchased
as gifts by men for women, while the reverse happens relatively infrequently.
It is quite likely that many men prefer to shop online for those luxury gifts
rather than buying them in high-fashion shops that seem foreign to them
and are populated mostly by female shoppers. In addition, a growing
number of products
designed for men
Online Luxury Market Is Surprisingly Youthful
now appear on the
product pages of luxury
Online Shopper
Demographics
sites. Many e-retailers
categorized as jewelers,
for example, are selling
high-priced watches for
44 or Younger 45 & Older
men, not just diamond
52.20%
47.80%
51.69%
48.38%
rings for women. Luxury
web sites specializing
in designer handbags
also carry high-priced
Top
500
U.S.
Web
Sites
briefcases, suitcases and
wallets that are aimed at
male shoppers. The same
is true for luxury apparel,
which was once the exclusive province of female shoppers. Today, most web
sites specializing in designer apparel display a growing component of men’s
fashions as well.
Because the male audience for luxury web sites is surprisingly high, it
behooves managers of luxury e-retail businesses to insure that their web
marketing, merchandising and content is not so tightly focused on women
that they fail to capitalize on the significant opportunities they have in
pursuing male shoppers.
Online luxury is surprisingly youthful
If the relatively high male make-up of the online luxury shopping market is
mildly surprising, the age demographic of shoppers on the world’s largest
luxury websites is wildly surprising. Given the very high average tickets that
luxury merchants command online, one might expect that their shopper
23
Online Luxury Market Is Surprisingly Youthful
Online Shopper
Demographics
52.20%
47.80%
demographic would
be skewed to an older
clientele that has the
type of disposable
income required to shop
luxury brands.
51.69%
48.38%
That expectation,
however, is not the
reality. Slightly more than
52% of shoppers on the
world’s 74 leading luxury
Top 500 U.S. Web Sites
web sites are 44 years of
age and younger. That
youthful orientation
contrasts sharply with
the age breakdown of shoppers at America’s 500 largest e-retailers, which
get 48.4% of their business from shoppers who are 44 and under.
Furthermore, the age breakdown of shoppers on luxury websites is
consistent across most types of merchandise. The percentage of shoppers
in the 44 and under age group is 53% at luxury web sites specializing in
designer apparel, 54% at websites selling luxury accessories, and 53% at
jewelry websites. The one exception to the youthful luxury shopper rule are
the five luxury e-retailers that specialize in beauty products. For those sites,
the 44 and under age group contributes just 47.2% of online sales.
No surprise—The wealthy buy luxury online
There’s only one demographic of luxury web shoppers that fits the
stereotype—wealth. Fully 53% of shoppers at the world’s 74 largest luxury
web sites have household incomes exceeding $60,000, and 24% boast
a family income above $100,000. Compare that to the family incomes
of shoppers on America’s 500 largest web sites. There the percentage of
web shoppers with family incomes exceeding $60,000 is $48.8%, while
the percentage of shoppers with family incomes of more than $100,000 is
21.2%.
The message that these demographics convey is that the luxury market
is extremely appealing to the aspirations of young professionals. They’re
wealthy enough to purchase status symbols such as designer clothes
and Louis Vuitton handbags, but they’re a decade away from buying a
Mercedes. G
24
SECTION
5
Marketing luxury
online: It’s all about
social
The world’s top luxury e-retailers are slightly ahead of the
e-commerce industry in e-mail marketing and search strategies, but they are light years ahead with social.
W
hen it comes to marketing, the world’s 74 leading luxury e-retailers
are extremely aggressive, easily outperforming the average
marketing practices of America’s Top 500 web merchants, who
as a group are the world’s biggest and best practitioners of digital retail
marketing. That probably should not come as a surprise. These 74 web
merchants possess some of the most valuable brand names on the planet,
and since they sell products with
Leading Luxury Sites in
extremely high margins, it’s relatively
Paid Search Spending
easy for them to justify major marketing
2015 monthly paid
investments. They do not fail to leverage
Internet Retailer
search spending
these advantages by relying heavily on
Neiman Marcus
$672,000
all forms of digital marketing to connect
Blue Nile Inc.
$592,000
with their base of wealthy and extremely
Signet Jewelers (Kay.com)
$462,000
loyal buyers and also to recruit new
L’Oréal Group
$390,000
buyers among youthful shoppers who
Tiffany & Co.
$374,000
aspire to own luxury branded products.
Top 5 Share of Total Luxury SEM Spend
40.3%
Luxury Search Spend per Web Sales
0.054%
Top 500 Search Spend per Web Sales
0.047%
Paid search spending figures provided by ROI Revolution Inc.
Source: Top500Guide.com.
Luxury brands are well-suited for
digital marketing
Prior to the advent of e-retailing and
digital marketing, companies with high-priced luxury brands invested their
marketing dollars by publishing their promotional catalogs, advertising in
specialty magazines directed at wealthier consumers and sponsoring events
that attract a high percentage of upscale enthusiasts. It was difficult for
them to justifying advertising on the primary electronic medium of the
day—network television—because they would doubtless be paying for
25
access to millions of consumers who were never going to be their potential
customers.
Digital marketing is different, because it can be highly targeted to those
consumers who are potential luxury
shoppers. And from the beginning
Luxury Sites Use Facebook
of the digital age, merchants of
More Aggressively…
luxury products jumped on the digital
Top 5 Luxury Sites on Facebook
# of FB Likes
marketing bandwagon, beginning with
L’Oréal Group
19,459,093
its two initial forms—e-mail marketing
Burberry Ltd.
18,035,514
and paid search. And while nearly all
LVMH (LouisVuitton)
17,677,024
major e-retailers followed suit, luxury
Ralph Lauren Media
8,324,375
web merchants as a group take a back
Hugo Boss
7,610,118
seat to nobody when it comes to e-mail
Top 5 Share of Total FB Likes
60.0%
marketing and SEM.
Luxury Likes per Total Luxury Web Sales
1.03%
Top 500 Likes per Total Web Sales
0.27%
...Connect More Often With
Shoppers Via Twitter…
Top 5 Luxury Sites Using Twitter
# of Followers
Burberry Ltd.
3,576,381
Tiffany & Co.
1,186,395
Ralph Lauren Media
1,058,010
DVF.com (Diane Von Furstenberg)
811,001
Kate Spade
779,952
Top 5 Share of Total Luxury Twitter Followers
59.1%
Luxury Followers per All Luxury Web Sales
0.11%
Top 500 Followers per Total Web Sales
0.03%
...And Get Wider Viewership
of YouTube Videos
Top 5 Luxury Sites On YouTube
# of Views
L Brands
201,150,258
Burberry Ltd.
54,999,158
L’Oréal Group
23,419,101
Ralph Lauren Media
13,855,497
Hugo Boss
11,692,645
Top 5 Share of Total YouTube Views
85.8%
Luxury YouTube Views per Web Sales
3.10%
Top 500 YouTube Views per Web Sales
2.06%
The 34 leading luxury web merchants
included in the Top 500 Guide, Internet
Retailer’s annual ranking of America’s
largest e-retailers, are top-tier e-mail
marketers. In 2013, the most recent
year for which comprehensive data is
available on retail e-mail marketing,
these 34 luxury e-retailers performed
a median average of 15 promotional
e-mail blasts per month. By comparison,
the median average number of monthly
e-mail efforts for all 500 top American
e-retailers that year was just 10. While
no e-mail data is available for American
e-retailers ranked below 500 or for any
foreign web merchants, this limited
comparison is nonetheless significant
because America’s 500 largest web
merchants are among the most prolific
retail e-mailers in the world.
When all 74 luxury web merchants
included in our ranking of luxury
sites are compared to America’s 500
largest merchants on search marketing
spending, the luxury merchants have a
26
slight edge here as well. The world’s top luxury e-retailers last year spent
.054% of annual web sales on paid search, compared to .047% for all
Top 500 American e-retailers. While the SEM difference between the two
groups is small, the 74 luxury merchants come from around the globe, while
the Top 500 are all based in North America, which leads the world on paid
search marketing.
Luxury e-retailers are social media marketing stars
If the world’s top luxury e-retailers are slightly ahead of the e-commerce
industry in the two oldest forms of digital marketing, they are light
years ahead in the newer forms of digital marketing, all of which are
based on social networks. As in the case of e-mail and SEM, this study
compared the social media marketing efforts of the world’s 74 largest
luxury web merchants with that of America’s 500 largest e-retailers,
which as a group outspend all other retailers around the globe in social
media promotions.
Because they have a well-established relationship with a small and fairly
homogeneous segment of retail shoppers—those in the top 10% and those
aspiring to get there—luxury merchants like to think of their buyers as part
of their branded family. That mindset sets their social media marketing
priorities, and particularly their heavy reliance on Facebook. The 74 luxury
e-retailers in this study have on average 1.03 Facebook likes per every $100
of online sales, nearly four times FB likes-to-sales ratio of America’s Top
500 e-retailers. What’s the message that these luxury merchants seem to
be telling other online retailers: One reason for the above average growth
of online luxury may be attributable to their mastery of Facebook as a
marketing and branding tool.
The same might also be said of the luxury group’s use of Twitter. The total
number of Twitter followers for all 74 luxury web merchants in our study is
equal to 0.11% of their combined annual sales. By comparison, the Twitter
follower-to-sales ratio for America’s 500 largest web merchants was 0.03%,
or less than one-third the relative Twitter following of the online luxury
retailers.
The top luxury merchants also have a higher average viewership of their You
Tube videos than do the American merchants ranked in the Top 500 Guide.
This is perhaps the most surprising outcome of the social marketing analysis
of the leading luxury web sites, if only because America’s 500 largest
e-retailers are leading the worldwide trend of posting marketing videos on
You Tube. Despite that, the 74 leading luxury e-retailers boast a YouTube
27
viewer-to-sales ratio of 3.1%, fully 50% higher than the ratio maintained by
the Top 500 American e-retailers.
Does superior social media marketing equal faster growth?
Documenting the luxury e-retailers’ superiority in the use of social networks
for marketing purposes is a lot easier than explaining it. An argument can
be made that this outcome is the result of the affinity luxury buyers have
to luxury brands, which translates into a greater connection with those
brands via social networks. Others might argue that luxury merchants are
by definition niche marketers who naturally rely more on social media
marketing because mass media marketing is a less efficient use of their
marketing budgets.
Still, the fact remains that many e-retailers outside the luxury segment
possess powerful brands as well and could better connect with the followers
of those brands if they applied the same level of social media marketing that
the luxury brands employ. Similarly, most e-retailers ranked in the American
Top 500 are every bit as oriented to niche markets as their counterparts
in luxury retailing, and therefore are every bit as likely to benefit from the
social network exposure that the luxury brands achieve.
There is but one caveat with a blanket conclusion that social media is the
primary driving force behind the above-average sales growth of the luxury
web sites. It is that only two of nine luxury web merchants that are ranked
among the top five luxury users of Facebook, Twitter and You Tube are
growing at rates exceeding the average growth of all e-retailers. Those
two are Ralph Lauren Media, which ranks among the top five in all three
social media categories and grew last year by 26%; and DVF.com (Diane
Von Furstenberg), which ranks among the top five luxury brands on Twitter
and which grew last year by 33%. While this does not diminish the overall
positive impact that social media marketing has on all luxury e-retailers, it
does suggest that there is a limit to the benefit websites get from social
media exposure. G
28

Internet Retailer Publication

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