In the first of a three-part series on online fashion, we explore the new age of luxury e-commerce, 10 years after the dot-com bubble burst.
In the laptop of luxury
What a difference a decade makes. The high-end fashion e-commerce space could hardly see the light at the end of a dark tunnel in 2000, but today it's sizzling with exciting activities. The dot-com bubble burst in March of 2000, taking down innumerable overvalued companies, including www.boo.com, one of the first online retailers, which sold fashion and sportswear online and dramatically went under in May after swiftly spending $135 million (Dh496m) of funding in just 18 months. Later that summer, Natalie Massenet, an intrepid fashion journalist, started Net-a-Porter, a luxury e-tailer merging editorial content with commerce, much like a fashion glossy.
Apart from the severe market conditions, another huge hurdle for Massenet was to convince the rest of the luxury industry to sell online. "The big issue was that luxury brands were afraid of diluting their goods," says Jason Campbell, who co-founded www.netsetgoods.com in 1998, a fashion e-commerce site that also fell victim to the crash. "They were afraid that the goods won't be represented well and they felt that the luxury consumer wasn't on the web. They wanted to control consumers' buying habits and brands felt they were in a position to dictate," continues Campbell, who is the founder of JC Report and now a stylist in New York and Los Angeles. "They didn't see the technology was bigger than they were then and they certainly didn't see it as game-changing."
Massenet, however, knew better: fast-forward to 2010 and her high-stakes bet has paid off. She's not only managed to convince hundreds of high-end brands to sell on the Net-a-Porter portal, but in March the company was sold to the Swiss luxury conglomerate Richemont for a whopping $533 million. Some of the London-based company's contemporaries are now also hitting their strides. For example, www.yoox.com, an Italian company that sells discount luxury products, now delivers to 67 countries worldwide, while London's Asos - an acronym for As Seen on Screen - is now attracting 7.5 million unique visitors monthly to its affordable trendy fashion.
What's been established 10 years later is that customers are willing to buy fashion products on the web, and the graveyard-like environment Massenet launched in is once more an electrifying space with massive potential. "The idea that a consumer must only go to a store to try on clothes has been disproven with the success of Net-a-Porter and all luxury marketers have to realise that their consumer has become so smart and savvy about fashion that she or he is willing to buy virtually, when presented with the right product, in the right environment, with the right point of view," explains Quynh Mai, the founder of Moving Image and Content, a New York-based digital creative agency catering to fashion brands.
To entice women, many sites are offering an irresistible product mix that's more diverse than bricks-and-mortar shops - and much more conveniently at your fingertips. Net-a-Porter has visually arresting editorials that act as a shopping guide with products from an eclectic mix of designers such as Peter Pilotto, Rick Owens and Giambattista Valli. Boutique1.com also has diverse offerings and takes a similar approach by curating trends, while the Florence-based Luisa Via Roma stocks the hard-to-find designers such as Borsalino, AIAIAI and Max Kibardin, alongside show-stopping pieces from Lanvin, Yves Saint Laurent and Marc Jacobs.
But no matter how diverse or luxurious the products are, fit is a paramount concern for many women. Online, this is harder to achieve, but there are extensive sizing guides and clothes are shown on mannequins to help women find the perfect garment. While these tools are helpful, there's really nothing like actually trying on clothes. To make up for this online shopping caveat, e-tailers have relaxed shipping and return policies, and are using customer service to wow their clientele. Boutique1.com ships free of charge in the UAE, its main market, and Luisa Via Roma offers free shipping on orders of more than $500 (Dh1,836); both sites have free collections for returns. Depending on where one lives, Net-a-Porter has the same-day delivery in London and New York, and Boutique1.com has a four-hour express delivery service for the Emirates, as well as enticing gift-like packaging and free returns for the same item in a different size. Fabergé, the just-revived high-end jewellery brand, easily trumps these customer service initiatives. It employs a person to come to a client's door to make sure that they can see and choose the right jewellery.
The famously e-commerce-resistant luxury companies are also building out their presence online. "The acquisition of Net-a-Porter by Richemont shows that the gatekeepers of the luxury industry believe that their consumer will continue to consume luxury goods online more and more and that it is possible to build a brand and a loyal customer base without necessarily having the shopping experience in-store," says Mai.
Many luxury brands such as Prada, Armani and Balenciaga have launched e-commerce sites in recent years, and Chanel, a staunch luxury traditionalist, is launching its e-tail site later this year. Fabergé is using its website as the main source of distribution for its expensive jewellery. While it's unclear whether luxury companies will reduce the number of physical stores over the years, one thing is for sure: the internet, which counts almost two billion users worldwide (and is rapidly growing), will probably draw more traffic than any brand's bricks-and-mortar locations.
This staggering statistic is now viewed as more of an opportunity rather than a threat and the competition is hotting up in e-tailing. If you build a website, customers may not necessarily come if it doesn't hatch a plan to keep shoppers clicking and buying. "Online retailers and brands are quickly realising that they need to have engaging content to entice the consumer once they enter their virtual flagship store. Posting their print advertising campaign on their homepage in a Flash-designed slide show doesn't cut it any more," says Mai. Net-a-Porter has had this idea down pat since its early days, and Luisa Via Roma is using a series of flash images to create a dynamic presentation of clothes showing garments worn from different angles. For the French emporium of cool, Colette, it's not entirely about eye-popping visuals, but more about replicating the orientation of a blog, allowing easy navigation for consumers to browse its exclusive limited edition collaborations with unbendingly cool brands.
While Prada currently has a static image of its ad campaign on its homepage, many brands such as Marc Jacobs and Armani are using videos of their fashion shows as a backdrop. Louis Vuitton's is engaging its consumers to customise their own monograms and stripes on their bags and Burberry, a very digitally minded company, is taking an interactive approach, allowing consumers to click on a slick image on its homepage and rotate it at will.
While these dynamic presentations entice the consumer to stay on their site, initiatives to attract new customers beyond traditional online marketing, such as banner or search ads, are lagging. "They are spending their digital marketing dollars solely on their website and forgetting that they need to allocate budgets to drive the consumer to their virtual flagship store," adds Mai. This may apply to many other sites, but certainly not the digitally savvy Burberry. Last year, the brand used social media to its advantage by asking people to take pictures of themselves in its classic trench coat and upload them on its Art of The Trench site. In February, it livestreamed its London Fashion Week show in five cities in 3-D and all over the web via blogs, and the handsome shearling jackets in the show were available for 72 hours for consumers to buy.
Soon fashion videos may not only be effective promotional vehicles. The emergence of hotspotting technology such as Pokeware and Overlay enables consumers to watch videos and shop at the same time, whether "on Facebook, a blog, an online publication or on iPad", says Mai. Mobile devices, too, hold an enormous amount of commercial potential. Ever the innovator, Net-a-Porter, which already has applications for Apple's iPhone and iTouch, has just launched a version for the iPad. It's a dynamic application that shows images akin to a well-shot fashion magazine, but also allows users to purchase its products on the go. "Net-a-Porter takes the same care in presenting the garments as the designers do in creating them," says Rana June Sobhany, a mobile expert and the author of the book Mobilize (Perseus Book Group, out in October). "The iPad extends that concept to the viewing experience. Apple's design and display are ideal for highly graphic elements and it will be very interesting to watch brands embrace the iPad.
"Mobile is where this is all going," predicts Sobhany. Considering that there are three times more mobile phones than computers in the world and it's still a largely unexplored platform, Sobhany has a convincing point. It's also poised to become a $119 billion (Dh437bn) industry by 2015. But this new, albeit more optimistic, phase of e-commerce has parallels to the environment of the internet bubble. According to Campbell, all the business models, technologies and "stickiness" - a term that describes how to get people to stay on and return to your site - were being discussed then as now. "The difference is that everyone was trying to do everything at once, but there wasn't time to realise these functions because of the crash," observes Campbell.
"Many are coming into fruition now." This is the new age of e-commerce. Next Sunday, we explore the power of e-commerce to bring you vintage, niche and unique pieces wherever you are in the world, and in the third part of the series, we shall put the UAE's online fashion stores to the test.