We went to the Walpole Society's conference on selling luxury brands online hel at the RAC club. The Walpole Society promotes the interests of the British luxury goods world. Its members include our clients Smythson and the Real Flower company. Online is one of two special areas for luxury markets, the other being China.
The penny has dropped
First off, the man from Barclays (the sponsors) told us that 75% of wealthy consumers use web for research and purchase and that they spent more time than any other group online. Not too earth shattering, but a sound introduction. Guy Salter - the Society's Deputy Chairman - characterised this universe as moving from the experimental to the penny-dropping, but with that comes the anxieties. At the end of the day, the devil is in the detail & execution. That said, Forrester reasearch (across 178 CEOs of luxury brands) revealed that only one third were selling online and amazingly, half of those who were not had no immediate plans. A quick show of the 300+ hands in the room revealed that pretty much EVERYONE was now transacting online - with one exception.
Google's take on luxury
Peter Fitzgerald, whom we knew when he was at Amazon and now Industry Leader for Retail at Google gave us Google's take. 84% of ultra-affluents (how do I become of these?) and 98% of millionaires have their purchase decisions influenced by the web. Interestingly, rich people make their purchases, then use the web to feel good about their decisions after the event: 33%
used it to validate their purchase post sale. Luxury web shoppers spend more (about $250k more per annum), are richer and younger. And Google thinks the UK is the most sophisticated online market (it spends 50% more per head than the USA) and digital ad spend is at 17% vs 9% across the pond.
"Where are the Ecommerce Directors on the Board?" he asked and exorted folk to be online, be part of the conversation and test. Google apparently launches something when it's 60% ready (and theories abound about Microsoft using customers as beta-testers). Nordstrom does 8% of its total sales - that's about $700m pa and Fitzgerald suggests that 6-12% of total sales
was about par for the course.
Getting religious about conversion
Regarding the testing part, Fitzgerald shared Google's own trial and error testing of its own Adwords (Google's online advertising platform) start page. Well, not so trial and error it seems. It mechanically tried different combinations of important elements of that page - and it's quite simple if you have a look - such as the header, blurb, image and button - and tracked everything using Website Optimiser, Google's A/B, split & mult-variate testing platform. By optimising the
combinations, Google reports a 56% increase in conversions, taking the politics out of design: "you have to monetise every pixel of your real estate."
He advised we all check out Google Insights for Search and Google Trends.
Ecommerce is not about the web
The very amusing Ian Jindal of Internet Retailer et al, chaired the next session of e-commerce practitioners with gusto. His view: one year, we all said "let's do e-commerce". You can go from late to great in 6 months, but that's not enough now. Brands' customers are being educated by fast-moving competitors and only one thing matters: sharp elbows and a willingness to
use them. It's about ruthlessly maximising £s per minute per pixel. Anyway, as we always say too, it's not about the website. It's about fulfilment, stock management, customer service etc, that is e-business simply has to be a business.
Ian's big question to his panel is how do you get sustainable advantage? E-commerce is hard work - you have translate and animate your products online, deal with complex stock issues across multiple channels and manage organisational silos and politics). And sadly, there's no magic wand (ie social media). At ASOS they simply can't innovate fast enough, so it has to
be about other stuff.
What do customers want in 2009?
People want simplicity, the panel agreed. 60% of visitors disappear at checkout and 90%+ don't come close. Customers want to feel like VIPs, so make it human and personal and as we're in the realm of automation, aspire to "the personal touch on an industrial scale". Take it further, let customers do the personalising themselves.
Exit panel one, enter panel two - the brands themselves...
Mulberry presented a very candid and informative case study (well done - have a free link as a leading purveyor of Luxury English Fashion). Nick Roberts, Mulberry's Retail Director, explained that Mulberry had been transactional since 2001, and was now on V3 of a bespoke e-commerce website which was now part of "Retail", not "Marketing", showing the corporate emphasis on web sales. It's now nearly the highest grossing store with 55% YOY sales growth (and it plans to double sales in the next few years) and there are no signs of slowing.
Mulberry attracts 140,000 unique visitors per month, with a 1.5% conversion ratio and a £200 average order value. Investment in the site is constant, but measured and must be profitable (which it is, much more so than a store) and it's ran as a retail store with a fully-costed budget). Mulberry dispatches an email per month to its 60,000 database, always communicating
in the "luxury way" and a call to action. Google ad spending for small businesses can be very expensive, and Mulberry puts 35% of its online marketing budget into PPC (the rest on goes on social media and email). It spends a lot of time managing communications with the blogging community - a practice we can only commend.
The audience seeemd to ponder the issue of cannibalisation between online and off (irrelevant in the main as consumers will demand a choice out of convenience, if nothing else). Would it matter if Prada came next to Gucci in a search result or price comparison engine? Not in the least, said the lady from Burberry. Brands love to be next to each other - as they are in
Harrods, vogue and New Bond Street.
Brian Tickle, who runs Luxury Travel.com - owned in part by the Orient Express - is creating a portal to attract luxury travel customers. His problem was that he could do well in Google for "Cipriani Hotel" or even "Venice Hotel", but scaling oftier heights such as "luxury hotels in Italy" was extremely hard work. His new portal - content rich and search-engine-sexy means he can fish in a bigger pond with a larger rod. The message for brands - brand/luxury is about content and that's the differentiator (so syndicate it across the web). Folks' internet time is a clear indicator: 5% is spent in search, 50% in content.
The best thing about online is the immediate metrics.
Bec Astley Clarke founded Astleyclarke.com, an online jewellery boutique "pureplay" (which means online only) which is 2 years old. She's is backed by Index Ventures, a serious VC outfit (so sadly she coudn't disclose numbers, except her goal to do "several £ms this year" and a planned average order value of £150, which she's exceeding. She wants her website to be a
luxury end-to-end experience - exclusively next day delivery, expensive gift wrap and the works. For Bec, the whole business is a steady marketing and technology evolution, driven by careful attention to the metrics: traffic sources, conversions, drop-offs et al on a daily business. She tries everything - but measures. Astley Clarke gets best results from PR, SEO, and
email as well as partnering with other brands on joint promotions. Her killer stat: she spends 5 times more on natural search than paid search for the same number of sales - just shows how much work getting those top search results are.
The panel agreed that the No. 1 driver of profitability is repeat business, as its so expensive acquiring new customers: lifetime value is critical.
Part Two was all about "social media"
That'll be blogs and Facebook, then, and as Mr. Salter said: "we just can't avoid it". We all loved Forrester's Christine Spivey Overby with her shiny black hair, a perfect white smile and wearing a nice, big shiny black belt over her black woollen dress. She spoke in American and we enjoyed her US pronunciation of our cherished olde worlde European brand names as she discussed "social strategies that work". (I was hoping this would improve my cocktail party patter).
Well, it transpires the audience was heavily signed up already: 50% use it/them for personal stuff, 20% use it/them to enhance their brands and 5% do it succcessfully. Ultimately, she said, social media is about people getting things from each other, not institutions (or advertising they no longer trust). More dialogues are now happening online between customers
about the brand, rather than between the brand and the customer.
She had some great content - such as the dog that rolls in nothing but Gucci on Flickr. Forrester's reasearch shows that luxury brands are participating and about one fifth pursue most of the obvious social media channels. Christine's message was
basically to be clear on one's marketing objectives. Breaking down usage into spectators, creators, critics, collectors and the rest, here are the stand out stats:
- 47% in the mass affluent class spectate (read, listen, watch social media), versus 40% in all other classes;
- 11% in the mass affluent are creators (create blogs, upload content etc) vs. elsewhere
- In fashion its a lot higher: 58%+ spectate and 20% create.
You can download her slides at http://www.forrester.com/walpoleluxury
The panel that followed presented various social media platforms - which we shall skip for the time being - but concluded that whatever you say or might think, there are growing numbers of people doing it and people are coming together in these new ways - but what's the tipping point? Ultimately, brands should treat it all as they treated brand communications all along: it's about driving messages to targetted influencers. Sounds just like PR, I guess.
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