Projecting Luxury Over The Internet
January 30, 12
An event of major significance for the global gem and jewelry industry took place at the end of September 2011 when a Blue Nile customer bought a diamond engagement ring that cost more than $300,000 through the company’s iPhone app. Luxury was successfully sold over a mobile phone.
Most Indian retailers think that an event such as this is an impossibility in the country’s domestic gem and jewelry market. Indians are wary of buying anything over the Internet, let alone jewelry. While the likes of eBay India and several other Internet retail systems have regular sales – with eBay reporting that jewelry constitutes one of its fastest-growing categories – these are normally for items with relatively low sticker prices. Indians will not buy high-value jewelry on the internet, say most domestic market observers. For most Indian jewelry retailers, particularly the high-value ones, the Internet is – at least for now – not a great medium for doing business.
Internet marketing strategists, however, beg to differ. One pointed out that while high-value jewelry purchases are not likely to take place over the Internet, Indians are increasingly using the Internet to source and select high-value items they intend to buy. They might not want to pay for these items online, but they are happy to avail themselves of the convenience of selecting them and ordering online.
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Also, while they might not actually even order high-value online, Indians are now being exposed more than ever to the projection of luxury online by the big global jewelry brands including Cartier, Tiffany and Van Cleef & Arpels. While these firms initially resisted the Internet (some still do), thinking that luxury is a “touch and feel” product, many have developed successful online retail operations.
Others do not go all the way to online retail, but use the Internet to project their brand attributes to consumers around the world. Cartier’s online presence, which displays some its most iconic jewelry, such as the famous Cartier Panther, also includes an “India boutique” that shows online consumers where its outlets are located in India. Luxury, it appears, can be transmitted over the Internet very successfully indeed.
In the west, the Internet has also become a very successful sales medium for upscale products, especially jewelry. Western consumers have a higher degree of trust in the security of internet sites, which has resulted in a major shift in consumer behavior, with high-ticket items now being regularly sold online. This behavior has moved even further on the electronic pathway with an increasing number of high-value transactions taking place via ‘smart’ mobile phones.
“Large jewelry purchases, running from a few thousand to tens of thousands of dollars, via smartphones happen quite frequently,” John Baird, director of brand and corporate communications at Blue Nile, told Internet Retailer. “When it comes to diamonds and fine jewelry, Blue Nile’s mobile shopping site and iPhone app are extremely powerful tools.”
According to Internet Retailer, many people are doing more web browsing on their smartphones than on their computers. “People are shifting their web behaviors from the desktop to the smartphone, and that includes shopping,” Bill Siwicki, Internet Retailer’s managing editor of mobile commerce writes.
Neel Grover, president and CEO of Buy.com Inc., says he sees customers purchasing products every day through their mobile phones. “These products will range from a book to a bottle of wine to a several thousand dollar television.” Said Siwicki, “It doesn’t matter who you are or what you sell, smartphone shoppers are visiting your site and many more of them are on the way.”
Indian consumers, even if they don’t buy high-value goods online themselves, now acknowledge that the online projection of the attributes of these big brands is every bit as effective and compelling if different from the rich ambience and “touch and feel” provisions of a brick-and-mortar store. This is why marketing gurus urge the Indian domestic retail jewelry industry to move firmly into cyberspace.
“The Indian jewelry retailer has traditionally enjoyed a close and long relationship with his customers. Jewelry buying in India – high-value purchases in particular – is definitely relationship-based for the vast majority of consumers,” said one, “but what jewelry retailers need to understand is that these old relationships are no longer guaranteed to generate sales for them. There are a whole range of new luxury items vying for the consumer’s wallet along with another range of investment options. Given gold’s volatility, it isn’t the sure-fire investment vehicle that it used to be. So those old relationships are not as bullet-proof as they used to be. So never mind looking for and targeting new customers, jewelry retailers need to actively reach out to their existing consumers just to retain them.”
The expert went on to say that Indians, especially those who are in the high-value-purchase economic bracket, spend a significant amount of time on the Internet. “Even if they don’t buy much on the Internet, they certainly get a lot of information and comparative data off it. Luxury homes, vacations, boats and cars are all either available for sale on the internet or the consumer’s nearest brick and mortar store easily located online. Jewelry needs to be online as well if it wants to maintain market share.”
Most luxury jewelry retailers feel – as do retailers of other luxury products – that the Internet degrades the concept of luxury and that all it does is give the consumer the best options in terms of price. Many point out that Blue Nile’s success has come from the fact that it offers a staggering range of diamond qualities along with an equal number of price options. It is a formula that no brick and mortar retailer could ever compete with. But, they argue, the Internet cannot give the experience of luxury that a brick and mortar store can. It cannot recreate the ambience, the human contact and the focus on the product alone that the traditional luxury retailer offers. The Internet highlights price and promotes the “value for money” feeling over the appreciation of the product itself.
To understand how best to project luxury online, it is necessary to clearly define the concept of luxury itself. Authors Jean-Noel Kapferer and Vincent Bastien, in their book The Luxury Strategy: Break The Rules Of Marketing To Build Luxury Brands, define the concept in terms of humans being aware of our own mortality. They make the point that keeping our memories alive even after we have died is the ultimate luxury. By collecting items of luxury, they argue, we create a legacy that helps project our memory beyond our own deaths. The woman who wears her grandmother’s jewelry keeps her memory alive as well.
So what do we perceive as constituting luxury? Much of it is based on a combination of the perception of quality as well as tradition and history. Most of the world’s top luxury brands have a reputation for quality along with traditions that go back a long way – more than a century or two in many cases.
These core attributes, say marketers, can be very effectively transmitted over the Internet. And along with the convenience that online shopping offers, it makes the Internet a great medium through which to market luxury.
In western markets, the numbers speak for themselves. A 2008 survey by Google and Unity Marketing revealed that high net worth individuals (HNIs) who shopped online were actually much wealthier than those who only patronized brick and mortar stores. The online HNIs averaged a net worth of $21.7 million compared to an average of $3.4 million for the brick and mortar shoppers. At $114,632, the online HNIs also spent more per year on luxury goods than the brick and mortar shoppers, who spent $23,000. In today’s world, the Internet offers the consumer something that commands a premium – convenience.
That the Internet works well in India is attested to by the success of market leader Tanishq. Its online presence offers the consumer a step-by-step guide to Internet buying, a great range of products with a 15-day delivery and best of all, a downloadable wedding planner that gives the prospective guide a clear, time-lined plan all the way up to the actual wedding day. In a country where some 80 percent of jewelry purchases by value are driven by the bridal market, Tanishq has successfully established an online presence that not only offers a range of bridal jewelry, but help in planning the big event itself.
Speaking recently at the annual general meeting of the All India Gems & Jewellery Trade Federation (GJF), Sandeep Kulhalli, vice president - retail and marketing for Titan Industries, Tanishq’s parent group, stated emphatically that the brand’s core attributes included complete transparency and ethical conduct. Tanishq strictly adhered to the rule of insisting on customers furnishing details of their income tax permanent account numbers (PAN) for all purchases above Rs.500,000 ($9,950). Contrary to what traditional jewelry retailers might believe, consumers appreciated this complete transparency and ethical conduct and the brand’s high-value product range was doing extremely well. This meant that the kind of customer who bought Tanishq jewelry would not have any hesitation about making a purchase online.
With some 125 stores across India, Tanishq already has a wide geographic spread. The Internet greatly multiplies this reach, and the brand is able to reach prospective bridal market customers in smaller metro areas where hitherto, the local jewelry retailer had almost exclusive access.
It must be understood, however, that online luxury retail is not simple. Uché Okonkwo, the author of Luxury Online notes, “The challenge of selling luxury goods online is enormous. The luxury shopping experience is different from the conventional shopping experience. Luxury goods are sensory in nature and their purchase requires a high aesthetical appreciation and the utilization of the human senses of vision, aural, smell and touch. This often requires human and physical store presence, which is absent in the online virtual environment. The Internet also lacks the exclusive and prestigious locations where the luxury stores are situated. Therefore the question of creating a prestigious online atmosphere, replacing the human senses in the virtual environment and matching ‘high class’ with the ‘mass class’ of the Internet world is justified.
“Online luxury consumers have high expectations and this includes their belief that although the luxury e-boutique is available to the masses, it should be designed to feel right to only a select few. Fortunately, with feasible strategies, this could be possible.”
She goes on to list how Internet luxury retailers can now use new technology that not only conveys the sights and sounds of luxury, but also, through the use of a speaker-like computer attachment, also conveys smells. But the new technologies aside, she points out that the successful online retailers – including the mass-market variety like Amazon – have mastered the art of customizing the consumer’s online experience. At the end of the day, making the customer feel special is a major part of selling luxury.
Just as malls suddenly became the new brick and mortar medium for most upscale retailers in India a few years ago, the Internet is a medium where many of them have found success. The Indian jewelry retail industry ignores the Internet at its own peril.