By  on October 14, 2009

The luxury world was once fiercely opposed to all things Internet, but a lot has changed and now, ironically, e-commerce is the only area of luxury that’s growing.

As the importance of online sales and marketing in the luxury category expands, online know-how “could be the key feature which determines success from failure over the next few years,” said New York University marketing professor and Red Envelope founder Scott Galloway.

Last month, he and other members of NYU think tank LuxuryLab released the first annual ranking of 109 luxury companies according to their online competence, called the Digital IQ Index.

Electronics and car companies topped the chart, but fashion, beauty and watch companies Louis Vuitton, Ralph Lauren, Tag Heuer and Clinique also made the top 10.

Others in those categories were described as “average” or “challenged.”

Brands were ranked in four broad areas: how well they translate their core values into the online space; traffic and online buzz; innovation and use of the online medium such as interactivity and video, and how well they use social media.

Vuitton was number one in the apparel category for its integration of offline and online, specifically for e-commerce, editorial and mobile.

Ralph Lauren was number two. “Arguably Ralph Lauren is one of the best e-commerce consumer companies in the world right now,” Galloway said. “They invested early and it paid off. It’s easy to find the products on the site, it has exceptionally robust search and doesn’t sacrifice imagery or brand values.”

If the Nineties were the decade of building out flagships, then this could be the decade of online branding, he said.

“Until 18 months ago, the luxury sector was arguably the most successful business in the world,” he said, citing double-digit growth in the top and bottom lines for the last decade or more. “Great product always works, but the model of taking a photo and putting it in an expensive book and selling from your Fifth Avenue flagship — that model worked marvelously well for a couple of decades, but now that model just seems to be broken.”

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