At a recent roundtable on the trends for global travelers held by Marketing, several marketers from luxury brands such as Christian Dior, DeFred Jewellery, Clarins, Club 21, Valiram Group and more found themselves drifting to the topic of e-Commerce.
Here’s where the conversation got heated.
e-Commerce is stealing business from retail
While several marketers such as Club 21’s Linda Locke, Christian Dior’s Brenda Chow and Valiram Group’s Karen Leong clearly outlined how e-Commerce was rapidly forcing their businesses to change and at other times, posing strong competition to their retail businesses, not all of them felt their brands should be in e-Commerce yet.
Dior’s Chow outlined how e-Commerce businesses were posing a threat: “We have customers calling us and saying, hey we saw this bag on Reebonz, it’s 20% cheaper than what you’re selling in the store. I say, well you may go ahead and buy from Reebonz but I cannot guarantee that it is genuine.”
Locke, Chow and Leong all said how customers were increasingly only using retail stores to touch and see the product in person, but would make the actual purchases online anyways.
“We see customers do it all the time – they come in, they try the size, they go home and they buy it online,” said Locke.
While Club 21 has an e-Commerce offering, Christian Dior does not.
“We don’t have e-commerce for Dior,” said Chow, but added she did not rule out the brand going into this few years from now.
Brands stay offline: does it work?
However, marketers from Audemars Piguet and Richemont Luxury both felt e-Commerce was no threat to their brands.
Audemars Piguet’s marketing lead Stephanie Ng said she felt it is not a threat for the watch industry as “people need to touch, feel and know more about fine watches.”
“You need to find the right fit; that is why we have an edge with our customers – because of the relationship that all of us have built, including the retailers.”
Dior’s Chow talked about how traditional retail is still working for the brand.
She gave the brand’s boutique in Marina Bay Sands as an example. “In the daytime, it is a dead town but come maybe 8pm to about 12am, it’s boom time and transactions keep on coming because that’s when these people go to the casino to gamble and they have a win.”
Aside from these luxury brands, e-Commerce is in the plans for another brand: BreadTalk.
Group senior vice-president of brand development at BreadTalk Joyce Koh tells Marketing that this is the next step for the brand.
“Our objective has always been to convert an online impression to an in-store sale. With this in mind, we focus on engagement social media strategies by tapping on current online user behavior, i.e. where do Facebook users currently spend most of their time.”
She gives an example of an online game the brand ran on Facebook during Chinese New Year, which Facebook users being able to accumulate points and redeem e-vouchers to use in its stores.
Over 1,500 Facebook users played the game from 1 January to 6 February 2013, she added.
However she acknowledges that there have been several barriers to entry for this, perhaps revealing the challenges many other brands face in going online.
Firstly, finding an integrated and effective IT system is a challenge. This should maximise the efficiency of the existing operations and supply chain, including just-in-time purchasing from suppliers, said Koh.
Another is getting a strong loyal customer base – which is often underestimated for any e-commerce business. “Creating customer strength and loyalty requires a lot of hard work and customer loyalty is earned one customer transaction at a time – starting with the first transaction. And this goes beyond just giving discounts,” said Koh.
Finally, one big constraint for BreadTalk is its production facility – that is its central bakery from which it can deliver from – which has been the key reason the brand has held back from e-Commerce.
e-Commerce firm Asia Pacific Digital has said it does not see brands in Asia Pacific taking to e-Commerce as quickly as they should.
Sean Toohey, group head of eCommerce for e-Commerce firm Asia Pacific Digital, said that the company regularly sees retailers and brands taking 12 to 18 months to launch their online platforms.
“Many find that when they launch, all they have really done is build a shiny piece of technology with some nice creative, but without clear visibility on how they are going to make money online. So 18 months into the process, we find many brands are not successful online; some claim that eCommerce doesn’t work for them, but it is their approach towards eCommerce that is often wrong,” said Tooley.
A daunting challenge facing retailers and brands from operating in the Asia Pacific region is how to segment and enter the regional markets, said Asia Pacific Digital.
*A Reebonz spokesperson has sent a note of clarification to Marketing.
“All products on Reebonz are guaranteed authentic and we stand by this with our 100% Authenticity Guarantee policy quoting that if in any doubt, customers can send the purchased item to the respective brand’s boutique in their country to verify. We will do authenticity claims with no questions asked should an official letter from the brand be issued stating that any item purchased from Reebonz.com is not authentic. This letter has to be provided before we proceed with an exchange or refund,” said Reebonz.
Do brands still have the luxury of time to debate the effectiveness of e-Commerce, or are they running the risk of being left behind? Share your thoughts with us. Write to me at email@example.com