How popular is luxury e-commerce?
Editor’s note: This article is from the WeChat public account “Zinc Scale” (ID: znkedu), author: Mike McCurry, editor: Chen Deng new, Release with authorization.
Recently, LV announced that it has signed a new global brand spokesperson-Fan Bingbing. It is still the iconic red lipstick, but the lipstick has been replaced by a limited edition of Guerlain Tanabata. Some people say that this is Fan Ye’s two-year dormant comeback, which reflects the hard work of his sister to ride the wind and waves.
Coincidentally, on her 39th birthday, Amazon launched “Luxury Stores” (Luxury Stores), and Bezos finally attracted the big names.
Amazon displays high-end brand products to users through APP. With the digital version of the fancy window, businesses can also choose a 360-degree interactive perspective to display their clothing and products.
Amazon said: “This interactive feature will be launched with selected clothing when the product is released. It allows customers to explore the details of the style in 360 degrees so that they can better visually feel whether they fit and make purchases. Luxury goods have become easier and more attractive.”
The “luxury store” is known as Amazon’s “shop-in-shop” experience project, which only provides services for selected US Prime members. Currently, the number of Amazon’s advanced users is 150 million.
This time, behind the e-commerce giant and luxury goods hit it off, there is an unbearable past, but it also released more profound signals.
Carefully selected sellers and buyers
Leading the “luxury store” is the brand new product launch of designer Oscar de la Renta. Anyone who is invited to the store can buy Oscar de la Renta’s 2020 autumn/winter and early autumn series in advance.
Alex Bolen, CEO of Oscar de la Renta, believes that it makes sense to reach customers where they are. “For me, in addition to gaining new customers, I also need to gain more awareness among existing customers-this is the most important thing. We hope to talk to her in shopping places where she feels comfortable.” /p>
Designer Oscar de la Renta
Obviously, Amazon provides this venue, and its reach is large enough.
Previously, Oscar de la Renta products could only be purchased at their own stores and official websites. This time Amazon is equivalent to making a good publicity for Oscar de la Renta, and it also opened a green channel for its own high-end members.
However, Amazon’s green channel also has thresholds.
In order to cater to the characteristics of luxury goods, Amazon has introduced some artificial scarcity. Only selected US Amazon Prime members will be invited to browse the digital shelves. Of course, users can also apply for an invitation to Amazon themselves, and then have to accept a long queue for staff to review. Only by successful invitation can you shop in the “luxury store”.
In addition to clothing, cosmetics are also large luxury goods.
This time, Amazon has selected “up-and-coming luxury fashion and beauty” brands, allowing major brands to create Amazon’s “store in store” experience. The latter can use Amazon’s huge influence to find customers, use Amazon’s fast delivery network, while maintaining more control over inventory, selection, pricing, discounts, and events.
It is reported that 12 luxury brands will be launched on the platform in September, and major brands will join in the next few months.
The self-help of big names and the confidence of e-commerce giants
However, Amazon chose to launch a luxury store at this point in time, which is a bit contrarian.
After all, because the global market’s demand for high-end fashion has been declining, and the epidemic continues to change our lifestyles, consumption habits, etc., in fact, the sales of luxury goods are declining, which should not be Amazon’s main attack place.
However, taking into account the impact received offline does not completely curb demand. As Amazon Fashion President Christine Beauchamp said in a statement, the concept of this luxury e-commerce is “inspired by the feedback of Prime members, who hope to buy their favorite luxury brands in the Amazon app”. Amazon is doing its best, and the logic of serving the wealthy is correct.
But for physical stores, the addition of e-commerce giants is undoubtedly a grave digging. Since the beginning of May this year, many well-known retail companies in the United States have filed for bankruptcy protection, includingNieman Marcus, J.Crew Garment Group, Jesse Penny Company, Booker Brothers, etc.
The previous self-help behavior of luxury goods was through their official website or through cooperation with e-commerce. Now that Amazon personally ends up, there is no doubt that many luxury goods merchants are facing threats. You know, in 2019 alone, Amazon’s mobile fashion sales exceeded $1 billion.
Farfetch, a global luxury fashion platform, also faces threats. Obviously, Amazon will compete directly with it after launching its luxury store. This may be regarded as Amazon’s latest attempt to shake off the fast fashion hat and enter the high-end fashion field.
Amazon also hopes to attract or retain designers and luxury brands, improve the shopping experience of the website and increase brand influence.
In 2019, Nike stopped direct sales on Amazon. It believed that the services provided by Amazon were not satisfactory and hoped to establish a more direct and private relationship with customers. These complaints may have spurred Amazon and accelerated its luxury projects. In other words, it has made a lot of effort in the classification of consumer groups.
In terms of distribution, although the aviation industry has been affected by the epidemic, Amazon’s air cargo business has grown rapidly in recent months. For this reason, between May and July this year, Amazon added 9 new aircraft to the Amazon Air fleet. “This is the season that Amazon has purchased the most large aircraft since its establishment.”
At present, Amazon Airlines now has about 70 aircraft, and it is expected to increase to more than 80 by 2021. This is a substantial increase from the 50 aircraft reported in February 2019.
Amazon Airlines is growing rapidly
Starting from its opening in 2016, Amazon’s fleet is mainly a key component of providing same-day and next-day delivery services. Compared with outsourcing transportation, Amazon hopes to firmly grasp more logistics business in its own hands, so as to better control costs and transportation speed.
During the epidemic, it has become normal for people to place orders for daily necessities, office supplies, and electronic products on their home phones. However, with increasing market demand and service pressure, many e-commerce companies are facing pain points in logistics and distribution.
However, Amazon, which also holds air and freight, can ensure fast delivery. For those high-end users who want to buy luxury goods, if Amazon can solve the key efficiency of same-day delivery, then buy, buy and buy.The move may add weight to Amazon’s performance growth.
Foreign media said that Amazon’s new $1.5 billion aviation hub in northern Kentucky may help them gain a regional advantage. The center is scheduled to open in 2021 and is designed to accommodate 100 Amazon-branded airplanes and handle approximately 200 flights per day. “This aviation logistics center seems to be a turning point for Amazon to develop a series of comprehensive domestic delivery services across the United States.”
In terms of warehousing, it is said that Amazon is a luxury store. It has built a dedicated warehouse for the luxury e-commerce platform in Arizona and will invest $100 million in marketing.
In Amazon’s new “luxury store”, you can’t buy anything without a member. Although Amazon is only 20 years old, it has reached the peak of consumption.
Of course, luxury stores are only allocated to Amazon’s premium members for shopping, and other ordinary members who are not Prime can only be greedy. At least luxury goods provide opportunities for members to recruit new members.
Speaking of luxury goods, Amazon has always wanted to “encroach”. Bezos, the former richest man in the world, is certainly rich in the enemy’s country and regards luxury goods as the price of cabbage. However, before he wanted to “hook up” with LV or a cup, he took a sigh of relief.
Secretly, Amazon has picked up a bunch of luxury brands and promised to give it the greatest degree of freedom, including full control of online stores, adjusting the number of products on its own, and freely choosing whether to participate in discount activities, etc. In addition, they will also enjoy Amazon’s logistics and customer service.
This style is particularly “scumbag”, but it also shows his real and longing desire.
How popular is luxury e-commerce?
But is it possible that Amazon’s move is merely Play tickets< /span>?
Let’s take a look at Amazon’s data on the Black Friday shopping carnival (Prime Day) similar to Double Eleven and 618. You may understand why Bezos is playing luxury goods.
It is understood that Amazon seller ordersThe decline is very serious. From July to September, orders fell by hundreds of thousands, and the most serious decline has been at least 70% since September. Even more exaggerated is that some sellers even dropped to zero orders in a single day.
Amazon America is facing a development bottleneck. Before the epidemic did not take effect, the average daily visits to Amazon’s US site reached 87 million, but the decline in seller data will also make Amazon eager to open up new profit growth points.
Rather than forcing the poor to sell blood, it is better to cut meat for the rich. Therefore, it is not difficult to understand why luxury stores can only shop for premium members of Amazon.
Another noteworthy is that almost at the same time Amazon’s music service entered the podcasting field, becoming the latest entrant to the rapidly expanding media.
In this regard, Steve Boom, vice president of Amazon Music, explained. “Our joining will expand the market for everyone and introduce new audience groups, just like we did on music streaming. The timing is perfect.”
However, considering the popularity of live streaming in China, it is not ruled out that Amazon will introduce big-name live streaming plans in related categories. After all, luxury endorsers and celebrity traffic may save its precarious US station. This may also meet the needs of big luxury brands.
Bain Consulting predicts that the scale of global luxury goods in 2020 may fall by 15%-35% year-on-year, and sales will decrease by approximately 70 billion euros. Anyway, the recent financial reports of LV, GUCCI, and Hermes are very ugly. The epidemic has a great impact on consumption trends, tourism flow, and economic growth. The global regional markets have shrunk significantly. Therefore, in addition to raising the price of core products, the urgency of luxury goods to reach the Internet coincides with Amazon’s new e-commerce.
The Chinese market is particularly cooperative in this regard. Tmall’s luxury platform Luxury Pavilion has already occupied more than 150 luxury brands, of which a total of 22 brands under LV have entered. At the beginning of 2019, Farfetch won the first-level entrance of JD APP. A year later, Farfetch announced that it received US$125 million in capital injections from Tencent and US investment company Dragoneer.
Obviously, the luxury goods industry is embracing changes and accepting digital transformation, but on the other hand, the newness and richness of luxury goods on e-commerce platforms is not as good as brand official websites and physical stores; compared with other fast-moving products, it is not There will be price advantages.
Therefore, the online sales of domestic luxury goods are not good-looking. Secoo is still holding a group to keep warm. Even so, this year’s first Digital Paris Fashion Week was held, Micro The simultaneous live broadcast promotion of Bo, Tencent, and B station also emphasized the potential of e-commerce platforms.
McKinsey China Luxury Report: Information Sources Affecting Luxury Purchases
As far as China is concerned, according to a report released by McKinsey, there is a lot of room for development in online channels for luxury goods. Nearly half of consumers in lower-tier cities said they are willing to try online luxury shopping in the next year. Product. The report also pointed out that by 2025, online sales of luxury goods will increase by 2 to 3 times, equivalent to one-eighth of China’s 1.2 trillion luxury goods market.
This means that e-commerce has huge potential in the luxury consumer market, which is a market that must not be missed for luxury brands and e-commerce platforms.
The global benchmarking is also the general trend of the future development of luxury goods. Therefore, Amazon will naturally not miss it, so it needs to consider a differentiated approach.
After all, it still needs to learn from the previous cooperation with Nike, strengthen the establishment of a more stable relationship with emerging high-consumption groups, especially to find the right balance between brand empowerment and platform services, and pay attention to the social passion of young people. The demand for media platforms provides more possibilities for brand online promotion.
Amazon needs to go beyond the previous ideas of channel traffic retention and conversion, and improve users’ consumer experience after digital upgrades, so as to gain the upper hand in the battle with competing products such as Farfetch.