Global online luxury market set to double
The global online luxury market will more than double in the next five years, research shows, as brands reluctant to make websites transactional, such as Tom Ford, succumb.
According to Verdict's global luxury report, despite the luxury market being forecast to rise 113.7% between 2015 and 2020 to just shy of EUR50bn (US$62.3m), online's share of the total market will remain below 11%.
Growth, the report reveals, will be driven by online pureplays such as MyTheresa, Yoox and FarFetch, who will grow their branded offers, differentiate via selling unique brands, and launch country-specific transactional websites.
The figures show the pureplay market will outpace total online by 65 percentage points between 2015 and 2020, as etailers invest in customer engagement and in differentiating their offer.
The study forecasts the online luxury pureplay market will grow 178% between 2015 and 2020, reaching almost EUR15bn and a 30% share of total online spend.
According to Verdict retail analyst Jessica Fioriti: "More consumers will be tempted to purchase high value items from online pureplays due to the variety of brands and convenience of shopping across different labels and markets."
However, it isn't all about choice: in order to compete with luxury brands and chip away at Net-a-Porter's 13.6% share of the pureplay market, the likes of Yoox and Avenue 32 must continue to invest in service, the shopping experience and customer engagement, Verdict says.
"Investment in enhancing loyalty among shoppers is particularly important now, as luxury brands are starting to invest significantly in the channel themselves, having recognised the sales growth potential provided, and have the benefit of integrating online and offline platforms," adds Honor Westnedge, analyst at Verdict.
Luxury pureplays FarFetch, Shopbop and MyWardrobe - the latter of which has struggled to drive up the scale required to succeed and, as a result, has cancelled its SS15 orders from designer labels - will come up against increased competition from luxury brands in the next five years, Verdict believes.
"However, they have a winning proposition and will drive online luxury spend if they focus on convenience - which luxury brands will continue to fall behind on - and broaden the variety of international brands and products they offer," the researchers conclude.
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