The Sky Is Rising For Luxury Goods Online

from the opportunities-abound dept

Earlier today, we at Floor64 released the latest “Sky is Rising” study that we’ve done, in association with CCIA, this time about the nature of the luxury goods market online: The Sky is Rising: Luxury Goods Edition. This is a bit of a departure from the three previous editions of the “Sky is Rising” reports — which all focused on entertainment content. However, as we’ve been seeing over the last few years, while the effect has not been as dramatic, some traditional luxury brands have been attacking the internet, or suggesting that the internet is somehow damaging for their business. Usually, this is because they feel that they have lost some level of control over the channel — and many traditional legacy goods companies have used stringent controls over the channel as part of their business model. Our research, however, demonstrates that their fear of the internet is misplaced. Companies embracing the internet have found that it’s a better way to connect with consumers. Offering them new ways to research and buy such goods is one obvious aspect, but it has also created new communities that have enabled people to become more connected and supportive of certain brands. It’s also helped to open up new geographical markets and opportunities, allowing smaller brands to go global where historically that would have been too expensive or difficult.

Overall, we see that the internet has been a major driving force in growing the market for these goods, and we’ve seen that, contrary to the fears of some companies, things like secondary markets (for used goods) enabled by the internet have really only served to help. It has expanded brands name recognition and desire much further, and created plenty of new opportunities for brands. And, of course, it’s not just the “legacy” big brands that we’re talking about. The rise of the internet has enabled new luxury brands to take the world by storm, using new tools like crowdfunding and flash sales to build up a supportive customer base.

In short, as we’ve seen with our studies on the internet as it relates to entertainment content, while the internet has created certain new challenges for traditional players, those who have embraced the internet, rather than fought it, have found tremendous benefits in doing so. Please check out the report below, or see CCIA’s announcement as well.

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Comments on “The Sky Is Rising For Luxury Goods Online”

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14 Comments
Anonymous Coward says:

What exactly defines a “luxury good” anyway?

If you are one of the few people with the money to buy a country mansion, yacht or personal jet aircraft, you can usually expect to get your money’s worth, more or less, no matter what the price.

But many other kinds of expensive status symbols seem to be little more than overpriced fluff that only succeed in the marketplace due to the company’s heavy investment in clever advertising and strategic branding. In essence, these products are worth more only because a segment of consumers have been indoctrinated to believe that they are worth more. Never mind that for many years Rolls Royce cars used the exact same transmissions that went into Chevrolet vehicles costing a tiny fraction of the price, or that “luxury” Jaguar put out the most unreliable cars on the market, at any price. And never mind that the retail markup alone on perfume and jewelry is typically a few hundred percent, with the cost to produce it being pennies on the dollar. (De Beers could get away with it by running a worldwide diamond monopoly)

But back to the definition of luxury … You can buy a set of no-name speaker cables at the dollar store, or pay twenty dollars for Monster brand cables, or pay twenty thousand dollars for these:

http://www.noiseaddicts.com/2008/11/most-expensive-speaker-cable-world-audioquest-audiophile/

But can anyone say, at which point of the scale, from one dollar to twenty thousand dollars, does a set of speaker cables become “luxury”? (and/or at what point it becomes insanity)

That One Guy (profile) says:

Re: Re:

Possible definition of ‘luxury’: Something that costs significantly more, compared to another, similar alternative, without a matching increase in quality or life-span.

So a $100 pair of speakers wouldn’t be ‘luxury’ compared to a $10 pair of speakers, if they lasted 10x longer, but a $200 pair of speakers that only lasted 10x more than the $10 would be.

Anonymous Coward says:

what i find really bad about these luxury goods companies is that they have to bully sites that sell knockoffs. anyone who could afford to buy a ‘genuine’ item wouldn’t be looking on a knock off site, just as those who couldn’t afford the genuine articles wouldn’t be ordering off of the luxury site! all this bullying does is make the ‘genuine’ companies seem like just that and extremely scared that all the money people will be the cheapies. if the cheapies were so good, it must mean the genuine ones are crap quality, wouldn’t it??

Whatever (profile) says:

I rarely comment here anymore (freedom of speech, just watch what you say). But this one is classic Techdirt bullshit that is hard to avoid.

You show increases in online sales. Yet, you don’t show really what the effects are on the overall business. You point at vague “brand value”, which is hard to measure at the best of times.

You point at online research. Well, news for you, I research plenty of high end cars, but generally don’t buy them. Sometimes I am just looking at what my neighbor drivers, or perhaps the specs on that McLaren I saw the other day.

It’s voodoo numbers, like the idiots who pointed at the high right of abandoned online shopping carts as if there was some magic reason people didn’t buy – rather than it just being people looking for information and not to make a purchase. Pointing at vague brand values and searches made doesn’t mean much.

Tiffany and co? their net sales grew 7% in the latest report… http://investor.tiffany.com/releasedetail.cfm?ReleaseID=867889 Not 28%, not 1025%… sales shifted a bit, but they didn’t increase all that much.

So if this is the sky rising, well… nothing to pop champagne about, is it?

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