Category: digital

Klarna brings buy now, pay later to e-commerce

In a fresh bid to harness the impatience and impulsiveness of the modern consumer, a number of online retailers have signed up to an e-commerce payment service which allows users to buy now, pay later. Klarna, a Stockholm based e-commerce business, are the intermediary offering the service which gives shoppers the option to defer payment by up to 30 days, as well as giving them the ability to “slice” larger orders into more manageable instalments. So far a number of retailers (mostly high street giants including the Arcadia group, size? and JD) are offering the payment option, though some luxury brands are available through Lyst. E-commerce giant ASOS are also trialling the service.

What is Klarna?

Klarna started in Sweden in 2005 with a mission to ‘simplify buying’ and, after joining with SOFORT in 2014 to form the Klarna group, they’ve made significant strides in the payment services market. Though they only received their banking licence in June 2017, Klarna Group claim to be “one of Europe’s biggest banks”, with the company valued at $2.3bn in December 2015 after their latest round of investment (they’re backed by the likes of Sequoia Capital, Visa, Permira and Bestseller). That same year Klarna achieved $325 million in sales, and are now processing over 650,000 transactions per day (including over 40% of e-commerce transactions in Sweden) – numbers which suggest that they’ve struck a chord with modern consumers.

So how does Klarna’s payment system work?

The secret of Klarna’s success is it’s ease. Unlike traditional checkout processes, shoppers don’t need to create an account or fill out any long-winded forms; Klarna simply asks for an email and delivery address before using an algorithm to determine whether a customer is creditworthy or not. Klarna then pays the retailer (bearing the risk that the customer will default on their payment) before starting the 30 day timer for the customer.

Klarna offers three checkout options: Pay now, Pay later, or Slice it.

Co-founder and CEO Sebastian Siemiatkowski says that the idea comes from the traditional way of buying things in Sweden:

“‘In Sweden the way of paying was the bill. You’d order some things, get them to your house, look and feel and then if you want them you’d send a cheque to the mail order company. Of course with that comes a risk that the customer won’t pay, so when ecommerce came along, these companies found credit cards a much smoother way of operating. But the customer demand was still there. Not everyone feels comfortable with a credit card, or has a credit card. They worry am I going to get the goods I ordered?’”

Sebastian Siemiatkowski, Co-founder and CEO of Klarna

In the same interview with Management Today, Siemiatowski went on to discuss the three potential roadblocks that Klarna faced when promoting their service to merchants:

“We identified three things they were worried about: the risk of not being paid, having to do lots of admin and cash flow. When we ranked those, we realised the first two were much more important to them than the third. We said we’ll solve for the risk and admin, but when it comes to getting paid, you have to wait until we get paid. They were okay with that.”

So why is this taking off now?

Klarna addresses a very modern problem for online businesses, specifically the final hurdle in an e-commerce funnel; online checkout conversion rates. According to the Baymard Institute, cart abandonment currently stands at around 69%, which represents a lot of missed sales. How many times have you clicked all the way through to the final page of the shop checkout only to get cold feet? When a customer gets to that point, no amount of money spent on social media, affiliate marketing or paid advertising campaigns will address the apprehension a customer has before pressing the ‘Buy’ button – but Klarna’s novel approach manages to increase customers’ willingness to commit to an online purchase. Their results suggest that it’s a winning formula, with Finery reporting that basket sizes grew by 15% and the number items per basket increased by 20% after introducing Klarna’s buy now, pay later service.

What’s equally promising for the service is that over 60% of its business today involves mobile shopping, a figure which was under 10% two years ago. Some estimates put mobile cart abandonment rates as high as 85%, so there is significant room for improvement in the mobile field.

Klarna on the Topman website

High street giant The Arcadia Group offer Klarna payment options through a number of their brands, including Topman

So far, a number of brands have signed up – though most of these would be considered high street retailers. However, some luxury brands (such as Burberry) are available on Lyst, who are also a partner. It stands to reason that the concept could translate just as easily to other luxury brands’ e-commerce platforms, making impulse buys that little bit easier. The option of spreading payments for purchases over a number of months might be more popular with luxury customers (particularly aspiring millenial consumers), as a finance option for the latest Louis Vuitton wallet or Bottega bag will make luxury more accessible. It’ll be interesting to see how luxury brands react to the service, especially as some brands still have significant catching up to do. If a big player like Net A Porter decided to trial the service it could have a big impact on the balance between the booming e-commerce sector and the struggling retail sector. ASOS are marketing the service as “bringing the fitting room home with you”, which suggests that they anticipate an even greater number of returns as customers are encouraged to load up their online baskets. The knock on effect of this could mean that sales figures be stunted as the increased cost of returns eats into any gains. Whether this approach translates to luxury buyers who are spending hundreds or thousands of pounds on individual items remains to be seen. Nevertheless, we’ll be keeping an eye on the uptake of Klarna across online retailers over the next few months.

Balenciaga rebrands as it gears up for growth

Balenciaga's new logo

In the latest example of a creative director stamping their authority on an iconic fashion house, Balenciaga have debuted a new logo at their SS18 show in Paris. Created in-house, the luxury brand’s new typeface has been inspired by the not-so-luxury “clarity of public transportation signage”.

It isn’t a radical departure from their previous branding, with a new two-toned logotype replacing their previous elongated, thinner-texted design. The motivations behind the refresh are unclear, though it’s worth noting that as more people interact with luxury brands through mobile devices, replacing the older, delicate logo with a bolder, more recognisable logotype addresses a pragmatic issue of the mobile age. It’s an issue Apple recognised in 2015 – as screens and devices get smaller, traditional typography becomes harder to render and see – which led to the development of their now ubiquitous San Francisco typeface. For Balenciaga, the result is a shorter logo which appears more as a stamp, increasing the text’s surface area with a timeless typography – let’s face it, Kering are certainly winning the digital race when it comes to luxury fashion. Gucci alone posted online sales growth of over 60% in H1 2017. 

Interestingly, products with the old Balenciaga logo are still available on their website.

Balenciaga's old wallet appearing on current stock.

Creative direction and the obsession with rebranding

As custodians of an iconic brand, it seems that redesigning the logo has become the in vogue way for creative directors to ensure their tenure is as memorable as possible. While Hedi Slimane’s controversial redesign of Yves Sant Laurent’s branding wasn’t universally well received, Raf Simons and Jonathan Saunders have both had a go at updating the logos of Calvin Klein and Diane von Furstenberg respectively.

Mobile messaging opens a luxury gateway in Asia

Luxury marketing on WeChat

WeChat leads the way for mobile luxury in Asia

Earlier this year WeChat announced their performance figures for Q1 of 2017. The results were impressive, with the social network posting a whopping 889 million monthly active users. The social network has gone from strength to strength in recent years, continually innovating with new features to promote deeper engagement with their users. For the luxury sector, WeChat’s recent performance figures will have turned some heads in the digital departments (especially after a 2016 Bain & Company survey found that around 60% of users identify the platform as their online source for information on luxury goods). WeChat in 2017 looks ripe for luxury brands, both in terms of marketing and sales potential. There aren’t many Western social media platforms that provide both a marketing and sales channel in one – so how is WeChat different, and why is this year relevant to luxury brands?

 

Luxury fashion brands are already familiar with WeChat. Burberry has been using the platform to connect with Chinese consumers since 2014, broadcasting the AW14 Womenswear show to WeChat users who were able to unlock exclusive content and personalise pieces from the collection. At the time, Christopher Bailey commented that “WeChat opens up a huge new world of opportunity in the digital space”, allowing the brand to present their story in a “deeper and more meaningful way”.

 

Last year, over 10% of WeChat Pay users were spending over 5000RMB (£550) per month on the platform.

 

US luxury brand Coach are another brand to have run marketing campaigns on the platform, including their #MyFirstCoach campaign and a loyalty scheme for Chinese consumers. Chanel have an account too, using the platform mostly for content marketing, and Mulberry have also invested in the platform with the help of Hot Pot Digital, a digital agency which specialises in marketing to China.

 

 

So if brands are already familiar with the platform, why should they be even more interested in 2017? Well, deeper and more meaningful connections with consumers are great, but some of those campaigns are a few years old now. While the marketing potential on WeChat is great, it’s another part of WeChat that represents a big opportunity for brands: WeChat Pay.

Social + Commerce = £$¥

WeChat Pay is WeChat’s mobile payments service – a platform boasting over 600 million users – and one which has seen huge increases in per capita spending over the past 12 months. The ability (and willingness from consumers) to spend money through the app has created a perfect storm for luxury fashion.

Mobile payments in China are currently booming. Last year, digital payments through WeChat Pay hit $1.2 trillion (yes, trillion) – a huge increase from the relatively meagre $11.2 billion spent on the platform 5 years ago. The amounts being sent over WeChat Pay are increasing year on year, with around 10% of WeChat Pay users (around 50-60 million people) spending over 5000RMB (£550) on the platform per month. This represents a thriving ecosystem for luxury brands looking to enhance their digital presence; WeChat is a platform which is trusted as a source of luxury news, with an audience that are evermore willing to spend large amounts of money via their mobile phone. In fact, between WeChat Pay and Alibaba’s competitor AliPay, Chinese consumers sent over $3T through mobile payments in 2016. That’s nearly 50 times more than US consumers spent via mobile payments.   

 

Louis Vuitton have recently opened a Chinese e-commerce store. Credit: Getty Images

With the region bouncing back after the recent slowdown, both Gucci and Louis Vuitton have opened new digital channels in China. Gucci, who previously ran an online store on Alibaba’s Tmall, launched a brand new website for Chinese consumers this July, with Louis Vuitton following suit a few weeks later. The Louis Vuitton store (which accepts both AliPay and WeChat Pay) is available in 12 cities including Beijing and Shanghai, as well as more regional cities such as Dalian, Haerbin and Wuham. This focus on tier-2 and tier-3 cities indicates a long term investment from Louis Vuitton, as a recent report by Morgan Stanley identified these cities as the driving force behind a predicted Chinese consumption growth from its present levels of $4.4 trillion to $9.7 trillion in 2030.

 

It won’t just be brands keeping an eye on WeChat but retailers and developers too. With a big increase in digital from most brands – whether that’s in social or setting up e-commerce stores – the digital market place is hotting up. Any lessons that can be learnt from WeChat should prove valuable as brands continue to experiment with accessing new customers through digital.

 

Gucci accelerates their e-commerce offering with a Mr. Porter capsule collection

Gucci X Mr Porter Capsule Collection

 

With Gucci’s capsule collection for Mr. Porter landing this Thursday, we take a look at the stand-out pieces that have been designed exclusively for a digital release.

The collection itself is an extension of Alessandro Michele’s technicolor baroque vision, with a variety of outfits catering to Mr. Porter’s traditional tailoring roots as well as the ever-growing streetwear movement. The capsule consists of 43 pieces – identifiable by the yellow tags – with Gucci’s popular floral and animal motifs appearing throughout. There’s a range of accessories and shoes in the capsule – including variations on the signature horsebit loafers – alongside belts, ties and sunglasses.

The collaboration represents another milestone for Mr Porter, having successfully sold crossover collections from Lanvin and H&M subsidiary COS. It also showcases an evolution to Gucci’s digital strategy, utilising existing e-commerce solutions rather than trying to build their own à la LVMH.

 

Gucci’s digital strategy enters a new phase

The collection itself is part of Gucci’s wildly successful digital strategy and represents a new direction for the brand. While LVMH look to build their own e-commerce behemoth, Kering appears to be tapping into the already established online giants to further extend their digital dominance.

E-commerce has been a driving force behind this ascendancy, with the brand posting the best sales figures since the Tom Ford days in April. Gucci’s organic sales increased by a huge 48.3% this year compared to performance in Q1 2016, thanked largely due to a 60% increase in online sales.

Partnering with Mr. Porter is a smart decision as it allows Gucci to maintain their ubiquity, whilst offering supporting stories to the brands’ main collection. It’s clear that an e-commerce strategy is going to be a key driver moving forward for Kering, highlighted by comments made by CEO Francois-Henri Pinault to investors in April:

 

“Tomorrow’s luxury isn’t based on heritage and artisanal excellence; there must be creativity,” Kering CEO  announced in April. “But creativity is not good enough. The implementation must be huge. Each team has to deliver to our customers, and organic growth will be amplified by the growing role of e-commerce in a cross-channel approach.

 

This isn’t the only partnership planned, as the brand look to launch a 90 minute delivery exclusively through Farfetch. We’ve already looked at how far ahead Gucci’s digital performance is to Prada, so it’ll be interesting to see how other luxury brands attempt to make up the lost ground. For the time being, the Gucci revolution is showing no signs of slowing.

Prada joins the e-commerce party to stem global slowdown

Earlier this month, Prada announced it’s worst profits since its Hong Kong IPO in 2011. It didn’t take them long to announce how they were planning to stem the bleeding and – in a surprise to no one – an increased investment in e-commerce looks to be the answer.

In an online space which is moving at an increasingly fast pace, Prada’s take-it-slow attitude has come at a significant cost, as net revenues declined 9% over the same period last year.

“Omni-channel integration” key to Prada resurgence

In his notes, Prada CEO Patrizio Bertelli outlined Prada’s plans to reverse this trend. The assembly of a “new team” to bring “further expertise to [Prada’s] digital strategy” suggests that Bertelli recognises that they are behind the rest of the industry when it comes to their digital strategy.

 

Bertelli offered a brief insight into what Prada’s digital strategy will consist of, chiefly “the roll out of [a] new global digital platform, collaboration with e-tailers, and in-store integration” – a tactic which has proved fruitful for a number of Prada’s competitors. Bertelli added: “I am confident that our creative vision combined with investment in online and offline engagement with our customers put us firmly on the path to sustainable growth.”

 

Chiara Tosato, formerly a commercial director at Italy’s largest commercial broadcaster Mediaset, has been hired to lead this new team at Prada’s HQ. Tasked with the aim of bringing the brands’ full product offering online, there will be a complete redesign of Prada and MiuMiu’s websites, as well as an increased focus on localised e-commerce sites in China, Korea, Australia. New Zealand and Russia. This investment can’t come soon enough, with revenue drops across the globe ranging from -5% in Europe to -12% in Asia Pacific and the Americas and -13% in Japan.

Prada’s existing e-commerce shortfall

Prada, who currently only offer a small selection of bags, shoes and accessories through their online store, have provided further evidence that the offline-only approach to brand exclusivity is a fading concept. Gucci this week announced a 86% increase in online sales this quarter – thanks largely to the popularity of Alessandro Michelle’s designs, as well as a sustained investment in e-commerce and online marketing. It’s no surprise to see other brands following suit.

 

 

Prada’s current website only features a small selection of bags, shoes and accessories.

 

In Gucci’s case, their significant investment into social media and e-commerce has translated into a 48% increase in sales for Q1 – their strongest growth in 20 years. Partnerships with online retailers (such as exclusive capsule collections for Net-A-Porter, and a planned 90-minute-delivery service via Farfetch will only contribute further to their huge online sales. 

 

In recent weeks, LVMH have launched a new digital lifestyle and e-commerce platform, offering their exclusive range of wines, champagnes and liquors to a thirsty online audience. With brick-and-mortar retailers filing for bankruptcy at a record rate, e-commerce and digital looks to become one of the most lucrative and competitive spaces for the luxury industry. 

 

If all goes to plan, expect news next year that Prada are enjoying a record resurgence – perhaps it won’t be long before we see the likes of Chanel and Hermes expanding their e-commerce offerings.

Where to cop? We explore the underground online market of counterfeit fashion.

Vetements and Supreme replicas on sale on Taobao

Most streetwear fans have a few options when it comes to buying an in-demand item from a favoured brand. The first option involves queuing up around the block, often spending hours waiting patiently for the opportunity to shop. The second, more expensive option involves paying through the nose in an increasingly inflated secondary market, where £148 Supreme hoodies re-sell on Grailed or Depop for over double their retail value. Online bots represent a third option, but even these can greatly increase the cost of a purchase while not fully guaranteeing success.

supremecopy

With these difficult sales conditions, it’s no surprise that a huge market has opened for fakes. Replicas of products from streetwear brands such as Off-White, Supreme, Palace, and Anti-Social Social Club are freely available to buy online – typically from Chinese websites AliExpress and TaoBao (both of which are operated by the Alibaba group). If you haven’t heard of these sites before, /r/RepSneakers (a subreddit of over 33,000 users dedicated to fake trainers) offers this introduction:

Taobao is often referred to as “the Chinese eBay”. Basically, it’s a marketplace for sellers to post stuff for sale. But, because of more lax laws I don’t know anything about, they’re much more lenient on selling replica\counterfeit things, that would never fly on eBay.

Enter the name of any popular brand on one of these websites and you’re sure to find a huge array of counterfeit products, available at a fraction of the retail cost. Churned out of factories in China to global demand, these products move in vast volumes before being removed, presumably by moderators from the respective websites.

A typical post on /r/FashionReps

A typical post on /r/FashionReps

The gateway to western shoppers comes via web forums, the most popular of which are on Reddit. Subreddits, such as /r/FashionReps or /r/DesignerReps are incredibly popular, and for good reason; they make it incredibly easy to buy clothing that appear to be from brands that are notoriously difficult to purchase from. /r/FashionReps, a subreddit dedicated to finding and rating the best streetwear fakes available, is a community of over 30,000 users, many of whom post reviews of products or are requesting information on where to cop (or ‘W2C’) a certain item. The subreddit is so popular that it added over 5,000 subscribers in the weeks it took to research and publish this article.

Visiting these parts of Reddit require a crash course in jargon with users seeking the holy grail of a ‘1:1’ replica of much hyped pieces, frequently asking W2C in the hope that someone has started producing replicas or asking for a QC on a product they’ve found. There are often discussions as to which rep offers the best replica, with frequent debate as to whether ‘David’ or ‘Edith’ provide the most convincing Yeezy 350 copies. Users pour over details in the stitching, pattern and sole to see how the fakes hold up to the retail versions.

retaildavidedith

Ask most people on these subreddits why they purchase replicas and the majority will tell you that it’s not to do with the cost but with the convenience. Why disappoint yourself trying to buy a Supreme hoodie when there’s almost certainly going to be a rep selling them within a month?

Vetements and Supreme replicas on sale on Taobao

Vetements and Supreme hoodies on sale on TaoBao for $32.51 and $28.53 respectively

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Delve a little deeper and users will tell you that the best fakes are on TaoBao, but the difficulty with this is that purchases from TaoBao can only be made with a Chinese bank account. This has given rise to the use of ‘agents’ – people (presumably Chinese) who place the order on the users behalf and organise shipping, taking a small cut for themselves – and users frequently posturing over who is the best person to purchase from. From the /r/FashionReps subreddit:

What is an agent?

Plain and simple, an agent is someone who will act as a proxy for you. You pay them, they buy the item. When they get it, you pay them to ship it to you, and, as expected, they ship it to you. Agents charge a fee, which is how they make money. But even with the agent fee, the final total generally ends up being much less anyway.

These individuals are accessible through their own web stores which are hosted directly on Taobao, with most communication carried through the Chinese messaging app WeChat. It’s not uncommon for breakdowns in communication, or for a product to simply not turn up. Thankfully moderators of /r/FashionReps have a list of recommended agents, making it incredibly easy to access a huge market of knock-offs.

But it’s not just streetwear brands that are being counterfeited. Increasingly, luxury brands such as Gucci, Balmain and Louboutin are being copied and sold on these Chinese websites.

Fake Louboutin's for sale on TaoBao

Fake Louboutin’s for sale on TaoBao

 

 

Looking at the feedback sections on the product listings on AliExpress and TaoBao indicate that this trade isn’t limited to one region or country. Shoppers from Canada to Russia appear to be taking advantage of this unregulated market of knock-offs – activity which hasn’t gone unnoticed by the brands who are being counterfeited.

Kering, parent owner to Gucci, Yves Saint Laurent and others, have taken Alibaba to court in the past, with mixed results. In a statement last year, Alibaba commented that “[they] do not tolerate or condone those who steal other people’s intellectual property” whilst claiming to have taken down 380 million counterfeit product listings and closing over 180,000 stores on Taobao in the 12 months leading up to August 2016. Prior to this, one of China’s main commerce regulators released the results of a 2014 survey which found that nearly two-thirds of goods sole on Taobao were counterfeit. 

This doesn’t seem too much an issue for shoppers either, as Alibaba’s 2016 Singles’ Day sales passed $14bn in revenue – more than double the $5.8bn in sales of Black Friday and Cyber Monday in the US. One can only imagine what percentage of that was made up of counterfeit goods.

While a clamp down from Alibaba is unlikely, there have been recent efforts by media outlets (notably Complex and Highsnobiety) to educate their target demographic on the consequences of buying counterfeit fashion. Even without delving into the ethical issues, there appear to be links between the sale of counterfeit goods and the funding of terrorism and other illegal activities. However, until there are tougher sanctions on online reps, it doesn’t look like the trade is going anywhere soon.

 

Gucci’s e-commerce sales increase by over 50% to help push double digit growth

Gucci have announced a double digit boost in sales for Q3, with sales up 17% from 2015 – the first time they’ve posted double digit percentage sales increases since 2012 – helping the Kering group achieve a 10.5% organic growth for the quarter.

Tom Hiddleston models Gucci's new tailoring range.

Tom Hiddleston models Gucci’s new tailoring range.

While the Italian giants’ performance has been inconsistent in recent years, with disappointing sales figures under Frida Gianni and Patrizio Di Marco in 2013 and 2015, today’s figures were described by Kering CEO François-Henri Pinault as ‘[the] foundation for steady, sustainable growth’. Many will be hoping that this signifies a new chapter for the brand which has been experiencing a self-described ‘creative reinvention’ under Alessandro Michele.

Pinault attributed Gucci’s “sharp acceleration” to “the relevance of [their] strategy and the effectiveness of its execution”. It appears that investment into e-commerce played a large part in that, with Gucci’s ‘innovative digital strategy’ translating into bumper sales.

“Our excellent sales in the third quarter underscore the relevance of our strategy and the effectiveness of its execution. In a complex environment, we stepped up the pace of revenue growth and continued to gain market share”

François-Henri Pinault, Kering CEO 

Much of this can be attributed to Michele and the large focus he’s put on digital engagement, including an overhaul of their e-commerce sites and the addition of new content marketing hub ‘The Agenda’ which provides a behind-the-scenes look at their shows, collections and products. The introduction of exclusive online-only capsule collections, as well as ‘acclaimed partnerships’, helped sales from Gucci’s e-commerce site grow by ‘more than 50%’ during the quarter.

Gucci have a stable online presence in 2016, enjoying a 5.3% share of the online luxury market – the fifth highest share after Louis Vuitton, Coach, Michael Kors and Ralph Lauren. They gained nearly 5m followers to their Instagram account between 2015 and 2016, as well as adding over 1.5m Twitter followers and 700,000 likes on Facebook, putting their social media performance for 2016 ahead of the likes of Prada, Coach and Armani but behind Burberry, Louis Vuitton and Chanel.

This can be put down to innovative collaborations which have helped increase the brands’ visibility whilst promoting a dynamic and forward-thinking image.

GucciGhost's work on Gucci's store on Fifth Avenue

GucciGhost’s work on Gucci’s store on Fifth Avenue

Their collaboration with GucciGhost represents an innovative shift for notoriously overprotective luxury brands. While Louis Vuitton and Burberry fiercely protect their trademarks, Gucci have accepted and encouraged GucciGhost’s work to the point of plastering it on their stores. GucciGhosts’ graffiti inspired designs and his penchant for customisation has infused Gucci with a sense of streetwear credibility, making the brand more visible, and more relevant, to a younger demographic.

Kering’s announcement also included news of a 33.9% increase of sales at YSL and a drop at Bottega Veneta. Mentions of Stella McCartney, Alexander McQueen and Demna Gvasalia’s Balenciaga were fleeting, though Kering confirmed each posted growth of around 10% or more to contribute to a to a 2.5% comparable lift in the Groups’ ‘Other Luxury brands’ category.

Shoppable video offers a bridge between cash and clothing – but is it enough?

While the rise of digital marketing and e-commerce has provided luxury brands with new ways to reinvigorate their revenues, there’s an increasing gap between customers’ expectations of luxury and the level of service that digital platforms can offer.

Luxury businesses and fashion houses have shown that they are willing to embrace digital marketing – Snapchat, Instagram and Periscope have been mainstays at this years’ various fashion weeks – and consumers have shown that there is an insatiable appetite for content and clothing. The problem for brands is that there is a disconnection between their digital output and the demand for products – highlighted no less by the highly publicised changes to the fashion calendar by major brands – but also by the restrictive nature of social platforms when it comes to converting followers into customers.

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Periscope and Snapchat are the digital battlegrounds for brands and designers this year

The limits of social

As great as social media is for connecting brands to fans, it’s far less successful at converting fans into customers. For example, brands on Instagram are often reduced to directing would-be buyers to a link in their profile bio, whilst Twitter only offers a one-size-fits-all‘Buy’ button; a particularly crude call-to-action when shopping for luxury goods.

In many cases, the user journey from social media to an online store is clunky and complicated – certainly not on par with the luxury experience that brick-and-mortar shoppers receive – so it’s not surprising to see brands like Chanel with over 10 million followers on Instagram whilst offering no option to purchase through their website. While this gap is probably part of a wider strategy to retain an air of exclusivity, it will at some point become logical for businesses like Chanel to monetise their loyal online following. JJ Martin, editor of Wallpaper* has her own hypothesis to why brands aren’t making more effort:

The brands are petrified. They know they need to embrace digital and they don’t know how – JJ Martin, editor of Wallpaper*

The problem these brands face is that it’s currently very difficult to deliver a luxury, digital shopping experience – and no amount of HTML or CSS can change that.

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Chanel’s Instagram account boasts over 10m followers but no online store

One company hoping to bridge the gap between digital media and e-commerce is Cinematique, a video sharing platform which offers ‘shoppable videos’. The concept is simple: viewers tap or click on the products they like whilst watching a video which adds it to a sort of “video basket”. The user can then open their “basket” to see the information of the products they’ve selected and buy directly through the video.

cinematique

Cinematique videos allow users to shop while they consume content

Having raised over $5m in recent funding, Cinematique already boasts Net-a-Porter, Diane Von Furstenberg and  Harpers Bazaar among its users and it is one of the first of a new breed of platforms designed with e-commerce at its core. Websites such as Grailed maintain a thriving e-commerce space for second-hand luxury goods, whilst developments in AI and messaging applications have begun to push the boundaries of personalisation and truly opened up two-way digital communications with customers. However, until recently there has been a significant lack in the development of an online e-commerce system befitting of a luxury brand.

Technological developments represent a huge opportunity for luxury brands to get closer to their customers. Burberry and Coach have had success with their organic Snapchat campaigns, putting their brand in the palms of millenials worldwide, but there’s no doubt that at present these efforts are more of a branding exercise than a sales drive. Increasingly sophisticated CRM software, A/B testing and research can optimise the platforms available at the moment, but a gap remains between the tangible nature of luxury goods and the sterile digital world.

However, where there are gaps there are opportunities. With technology becoming more tactile and immersive than ever (VR fashion shows, anyone?) it’s inevitable that someone will crack the code. It’s just a question of who and when.

There’s never been a better time to be in fashion, there’s never been more of a need for storytelling in fashion. I call it the digital campfire, which is the ability to tell stories in a more successful and direct way. Who’s doing that? – Business of Fashion’s Tim Blanks

 

Burberry takes an organic approach to social media marketing on Snapchat

Snapchat users were offered a glimpse into the advertising potential of the ephemeral photo-sharing platform as Burberry launched their Spring/Summer 16 collection through their native Snapchat story – becoming the first brand to shoot and publish an advertising campaign live through the app.

BurberrySnapchatpreview-20151022095218364

Photographed by Mario Testino, the story started by introducing the ‘The British Cast’ before leading into a behind-the-scenes show which consisted of models clad in the SS16 collection. The main content of the Snaptchat story was made up of a blend of photographs and video content from the photoshoot, concluding with a picture of Testino and Burberry Chief Creative and CEO Christopher Bailey. While the models were dressed in Burberry’s SS16 offerings, the content itself was stylised through Snapchat’s native filters – maintaining a gritty authenticity to the platform whilst supporting the brand’s stylish ideals. Snapchat is unashamedly open about the fact that it isn’t designed to ‘capture the traditional Kodak moment’, something typically at odds with the sleek, ultra-preened brand image associated with Burberry. It was an interesting experiment for the brand – especially utilising a platform whose current fashion offering is limited to Refinery29 and Cosmopolitan magazine – whilst diversifying their social activity from other traditional fashion-heavy social platforms such as Instagram.

“We wanted to play with the traditional format of an advertising campaign to make more immediate and accessible.”

Bailey offered some insight into the decision: “We wanted to play with the traditional format of an advertising campaign to make it much more immediate and accessible just as we did with our runway show last month”.  Creatively this is incredibly exciting as we are totally focused on capturing the energy and the rawness of the shoot and sharing it the moment it happens.”

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Having advertised the campaign in the days running up to the launch (again, through their own Snapchat story), Burberry generated a real buzz for people to return to the app at a designated time and engage with the brand in real time. With 45% of Snapchat users aged between 18-24, it’s a smart (and cheap) way to attract a younger demographic to the brand, embracing the ‘rawness’ of Snapchat and intertwining it with Burberry’s luxury credentials.What is evident is that this is just the beginning of Burberry’s foray into new media channels, especially as the brand seeks to find new ways to continue it’s growth in the midst of China’s economic slowdown. The company recently announced a modest 3% increase in pre-tax profits to £152.9m, with annual sales hovering around the £1.1bn mark.