The Ralph Lauren homepage.


Forget about digital democracy. It’s the familiar names with the funds to wave their own flags that win in fashion online — a huge advantage as shoppers increasingly ramp up their online spending.

The big brands are getting bigger, and the smaller brands, well, are trying to stay afloat.

“You essentially have a winner-take-all economy where a smaller and smaller number of firms and people are garnering a larger share of the spoils,” said Scott Galloway, founder of L2 Inc. and a New York University marketing professor.

Of the “bunch of big brands and upstarts” doing well, he cited Burberry, Coach, Gucci, Ralph Lauren, Michael Kors, Kate Spade and Tory Burch — all brands that ranked in the top 10 of L2’s Inc.’s Digital IQ Index: Fashion. The study, which came out last week, measured 83 brands on metrics including Web site and e-commerce, digital marketing, social media, and mobile and tablet.

All told, 210 million site visits were logged for the 12 months ended Oct. 31.

“The top 10 sites of the fashion brands we track [in the research] account for two-thirds of all traffic [to single-brand Web sites],” Galloway said. “We don’t have conversion data, but would speculate they drive 70 to 80 percent of sales as the majority have better sites and operations, resulting in above-average conversion.”

According to L2’s research in offline luxury fashion, the top seven players — Ralph Lauren, Hugo Boss, Burberry, Calvin Klein, Gucci, Michael Kors and Giorgio Armani — command 25 percent of apparel and accessories sales.

But online, the top seven brands command 65 percent of clicks — a much larger chunk of consumer mindshare than the leaders enjoy in the physical world. That’s a digital boon for those at the front of the pack, which include Michael Kors, Ralph Lauren, Coach, Louis Vuitton, Gucci, Chanel and Burberry.

And the leaders appear to be determined to stay that way. Both Gucci and Chanel this fall unveiled major new initiatives in e-commerce. Gucci in October relaunched its Web site in North America to reflect its new direction under president and chief executive officer Marco Bizzarri and creative director Alessandro Michele. The site has richer imagery and more editorial content to increase consumer engagement with the label.

Chanel, meanwhile, early last month started selling eyewear online in the U.S., with eventual plans to layer on more accessories categories and expand online selling to more regions. The brand has sold its beauty products online in the past, but the move with eyewear marked a major push into fashion e-commerce by the French luxury brand.

“The algorithm for success is growth that results from hype, inflated stock price that results in cheaper capital — and then you can spend more than your peers on online efforts, which results in [more] growth. This is a virtuous circle,” Galloway said.

Clearly, spending big money clearly pays off for brands looking for online exposure. But smaller brands coming into the market are still giving it their best and in some cases growing sizable businesses.

In October, Chad Horstman, founder of lingerie and costume e-commerce site Yandy, argued that the Internet levels his online venture with Victoria’s Secret.

“Victoria’s Secret in the real world has hundreds of locations and Yandy has zero, but online we have one location and they have one location,” Horstman said of Yandy.com, which he projects will likely do more than $50 million in sales this year and hit $100 million in sales by 2017.

That is all well and good, but Yandy’s sales, even in 2017, will still be dwarfed by Victoria’s Secret, which had revenues last year of $7.2 billion. And nothing Yandy comes up with online will equate with the social media and traffic driving tsunami that Victoria’s Secret creates with its annual fashion extravaganza.

Al Sambar, managing partner of Kurt Salmon’s retail and consumer group, agreed that larger companies have the advantage in that they have the money to build out their digital presences.

Sambar said it’s not surprising that big companies have such success in gaining digital attention — even soon after launching e-commerce, such as the case with Michael Kors. The big names can spend big time on paid search and customer acquisition.

“Nobody ever promised that the Internet is a level-playing field,” Sambar said. “The people who invest and drive the traffic get to drive that traffic first. It’s a mad race to figure out every new tool.”

This is why there’s an influx of attention when Burberry partners with Snapchat surrounding its runway show. Sambar called access to this kind of direct commerce and new paths to commerce a “first mover advantage” that favors the big, portfolio companies.

It’s a landscape that is every bit as dog-eat-dog as brick-and-mortar retailing.

“You’re competing to make an emotional connection to customers,” Sambar said. “You’re competing for each individual customer. Knowing who each customer is individually is much different from posting your catalogue up online. That’s why you’re seeing this race to invest in all of these digital commerce tools.”

Sam Cinquegrani, founder and ceo of Objectwave, a digital marketing and technology services company, agreed. And he said certain luxury brands are “missing the point.”

He cited one French fashion house’s Web site as looking like a “product catalogue,” where consumers have to go into their shop if they want to purchase a luxe handbag, many of which cost more than $2,000.

“A product catalogue is great but not appropriate for a luxury brand,” Cinquegrani said. “If I want to buy something, I have to go into their shop. Nothing like that replicates the experience online — yet. Customers like to buy in a certain way. If you don’t replicate that experience online, of course it makes sense that you’re going to lose.”

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