How Luxury and Beauty Brands are Bringing Specialized Experiences to eCommerce
Luxury brands are known for prestige, not for promotions, yet they too can benefit from flash sale sites. Here are three ways luxury brands can harness the power of specialty sale sites to achieve revenue goals, maintain brand continuity, and protect against eCommerce fraud.
Gated flash sale sites
Staying agile and relevant is more important than ever as the coronavirus pandemic brought an end to several high-end brick-and-mortar stores. “Neiman Marcus emerged from bankruptcy in September with 3,000 fewer employees and seven fewer stores, and Lord & Taylor is in the process of liquidating all its stores and will become an online-only business under new management,” Glossy’s Danny Parisi shared. Many high-end brands are not turning to digital solutions in an effort to better reach their customers.
For a majority of consumers, the first time they hear about a retailer they’ve never purchased from is through friends and family, according to a new study by Yes Marketing.
“The Retail Shopper’s Journey to Loyalty” surveyed over 1,000 consumers and found that “word-of-mouth recommendations significantly outweighed other sources, including product review sites (8%), influencer recommendations (4%), and news sites (2%) when it comes to driving brand awareness.”
Online gated flash sales—like annual friends and family events—are a quick, efficient, and trusted way to sell through product and bring in incremental sales while offering a perk to employees, partners, and stakeholders. An eCommerce platform makes it far easier for luxury brands to offer promotions with exclusivity. It also allows employees to evangelize for the brand by digitally sharing promo information with a broader pool of potential customers who are no longer inhibited by physical distance.
Example: L’Oréal Australia Friends and Family Sale
L’Oréal Australia launched its first-ever Friends and Family sale in November 2020, to reach a wide array of customers while following social distancing requirements. Scalefast designed and developed a specialty store with password-protected timed entry, a simplified cart checkout, and a high-powered search and product filtering function. The sales event was a stunning success thanks to the considerable discounts on luxury beauty, fragrance, and cosmetics, with orders 85% above target and total revenue 23% above target.
Siloed sample sales
Sample sales have long been a tenet of the luxury industry, but luxury retail has come a long way from the Sex and the City era. Sales and shopping have moved to social, mobile, and digital platforms. The sample sale should move from IRL to URL too. Here’s why.
Reach beyond local customers and capture revenue from a wider swath of customers, including those who live overseas
With 850 million digital consumers, the Economist estimates that China’s e-tailing market is worth $2 trillion. That’s more than America’s and Europe’s markets combined. Many luxury brands have explicitly focused on China’s demand for luxury products, including Louis Vuitton, LVMH, and Dolce & Gabbana. As Danny Parisi explains, “Brands have realized they can’t just focus their commercial efforts in the U.S. and Europe and expect the Chinese audience to keep buying. Now brands are shifting their cultural focus — meaning marketing efforts, shows and other areas beyond just commerce — to China as well.”
Liquidate products sustainably and bring in incremental revenue
When products from previous collections do not sell through, retailers are left with excess inventory, creating an ethical, financial, and logistical quagmire. 2020 hit luxury retailers especially hard. McKinsey & Company reports the worldwide expected value of excess inventory from spring 2020 collections is between $160 to $185 billion. With the value of luxury products based on the idea of prestige and exclusivity, a flood of outdated merchandise into the resale market poses a challenge. In the past, luxury retailers have resorted to extreme measures to dispose of inventory, but with consumer trends and values shifting toward greater sustainability and transparency, innovative ways for ethical product liquidation in the luxury market must be explored.
Get in front of trends in the emerging luxury resale and consignment marketplace, which is set to take off in the coming years
The image of luxury resale, rental and consignment channels has shifted, and consumer interest in certified pre-owned luxury goods has been piqued. Sites like Rent the Runway, the Real Real, and Depop have normalized authenticated resale and designer consignment phenomena and have generated new demand.
In fact, consumers are now viewing luxury resale as investments, tracking an item’s pricing history to determine the best time to purchase or sell high-end accessories. According to Lisa Lockwood for WWD, “Hermès bags, for example, maintain, on average, 80 percent of their value. Louis Vuitton and Chanel handbags have strong resale demand with 63 percent average value retention.” Rebag, a luxury resale retailer, released the Comprehensive Luxury Appraisal Index for Resale, or Clair, considered the “Kelley Blue Book” for fashion. Clair allows consumers to determine the resale value of any handbag or accessory.
Example: Salvatore Ferragamo Holiday 2020 Gated Sales Event
Italian fashion dynasty Salvatore Ferragamo is known for designer goods, not discounts. But in 2020, the brand needed a specialty flash sale site for a holiday sale campaign that could bring in incremental revenue, offer visibility into inventory management, and keep the discounted merchandise siloed in a separate site well away from their full-price goods. Launched in under three weeks, the Scalefast team developed a flash sale site tailored to the brand’s exacting standards. Site capabilities included gated site entry, a €3,500 purchase ceiling per account, inventory visibility, and advanced reporting capabilities.
Luxury retailers and beauty brands must make the most out of every product drop, collection launch, or new release. To increase site performance and protect against fraud and bots, a campaign or launch-specific site powered by enterprise-level eCommerce platforms is key. These sites offer real-time anti-fraud systems and load-balanced infrastructure to ensure business continuity and mitigate fraudulent purchasing.
Speed and performance
An eCommerce site must be able to handle hundred of thousands of concurrent site visits, purchase attempts, and form-fills. A load-balanced pool of physical and virtual servers, zero points of failure, and 24/7 hardware and application monitoring are all things to look for in an eCommerce platform provider.
Fraud protection: stop the bots
Forget people jumping the queue or stampeding at launch time. Modern luxury consumers now worry about bots that butt into the virtual checkout line. An eCommerce platform that offers bot protection ensures that your loyal customers are rewarded for their business—not fraudulent resellers.
Offer a premium experience and a preorder sales pipeline
By giving the product or collection a defined site or digital experience of its own, brands can shine a spotlight on their offerings with tailored UX and CX for earned media. A dedicated launch or campaign-specific sale site offers an exceptional opportunity to develop and deploy a preorder sales pipeline that rewards dedicated fans and improves sales performance.
Example: Telfar Global takes on digital fraud
Brooklyn-based luxury brand Telfar Global was forced to reckon with digital fraud, robo resellers, and total fashion frenzy over its popular leather shopping bags during the summer of 2020. As journalist Joshua Espinoza says, “Telfar announced it had temporarily shut down its online store after bots overran its much-anticipated ‘Shopping Bag’ restock. Though some customers were able to make a purchase, many failed to secure a piece because resellers had reportedly used checkout bots to swipe all the inventory.” Unwilling to repeat that experience, the brand debuted “The Telfar Bag Security Program”, a one-day, 24-hour online shopping event. The security program allowed anyone who wanted a Telfar bag to preorder their preferred color, size, and quantity, effectively defeating resellers and bots. Investing in an eCommerce business infrastructure that maintains business continuity and protects against fraud—even during the most explosive sales events—is a smart, strategic and worthwhile investment for luxury DTC brands.
Protect the brand experience
Whether it’s friends and family sales, sample sales or new product launches, luxury brands can benefit from the right eCommerce platform. Specialty sales sites are built to manage high-frequency purchases and address issues on a global scale. The ability to prevent product from flooding the market, protect inventory from resellers and bots and present consumers with stylish and seamless web experiences keeps a luxury brand’s reputation intact.