American Marketer


How next-generation commerce platforms can work for luxury retailers

January 24, 2012


By Naveen Gunti and Chirag Patel

Luxury consumers are among a new breed of online shoppers who feel empowered by the Internet and research online to check the latest trends, find good deals and evaluate product quality.

Since luxury shoppers often pay premium prices, they feel entitled to a superior online shopping experience consisting of exciting product selection, rich visual content and excellent customer service.

Retailers understand the needs of their customers and are determined to create an online experience to cater to these shoppers.

In a recent Luxury CRM Association survey, 90 percent of executives agreed that luxury culture and values are directly linked to positive financial results. However, luxury firms tend to have smaller budgets and enter the ecommerce channel in progressive phases.

Bring your store online
As early-stage firms gained greater online visibility and brand awareness, they opened up light ecommerce capabilities based on a simple personal shopper model.

The personal-shopper experience allowed customers to email call customer service agents for placing orders on products that they were interested in from browsing the catalogs on the Web site. The customer service representative would appropriately respond through a follow up to complete and fulfill the order.

The success of this model eventually led these companies to start exploring additional online experiences to increase the throughput of the orders and support for enhanced merchandizing options for the products they want to sell online.

Retailers wanted to better enable the merchandising of their products, setup promotions and make them easier to find for the customers by allowing them to navigate in a meaningful and intuitive way.

As the businesses further scaled up and wanted to expand their reach, they sought multiple payment methods, strong order management, faster fulfillment, quicker checkout flow and increased customer engagement including post acquisition and conversions.

This demand saw a number of retailers focusing on specific building blocks of the commerce supply chain and this phase saw a huge growth in large retailers starting to bring their stores online.

Learn about customers and adapt
When the firms noticed an increase in sales revenue as a result of their online presence, they started to learn more about customers and adapt to their needs by increasing their budgets to cater to these changes and enhance their ecommerce capabilities.

Retailers desired standard shopping cart and order entry features as well as better templates to communicate their brand effectively. These firms also invested more in online order processing and warehouse fulfillment operations during this phase.

Firms like these started to increase their presence in the market place and desired to more effectively compete with other firms in the same market space.

Also, firms choose partners that help further increase sales and drive down operational costs.

For example, a firm may choose to integrate its commerce platform with an order management vendor to help them achieve efficiencies in settling payments, providing customer service, and providing additional reporting for current and historical sales trends.

However, the issue with firms at this stage is that they have platforms that are costly to integrate. It will be large investment for such a custom integration, so a firm must plan ahead and allocate the proper budget.

Firms at this stage also wanted to expand into other international markets.

Commerce platforms at this juncture allowed for internationalization, but this was usually handled with a complex workaround such as creating a separate instance for each international market in which that firm desires to do business.

The disadvantage of this approach is additional operational overhead in managing merchandising and marketing of each international market through separate platform instances.

As the sales scaled up, they were forced to shift strategies in order to compete more effectively with others in the market place. These firms wanted to engage online customers in newer and different ways.

Driving commerce without constraints
With the customer reach expanding to various channels, luxury retailers started to explore different avenues in improving customer experience, retention, throughput and fulfillment.

With the increase in demand began additional sales revenue growth as well as greater budgets for their other online channels.

These successful firms desire to be industry leaders in adopting additional Web 2.0 capabilities such as user communities, blogs and social commerce.

These brands added in additional long-term strategies by opening up to international markets as well as additional cross channels such as mobile and Facebook commerce.

What is next?
Retailers are demanding more capabilities to manage their electronic commerce and related cross-channel business lines including mobile commerce and Facebook Commerce.

There are rare cases where your electronic business strategy is perfectly aligned with your technology capabilities. In these cases, your technology systems can quickly adapt to the needs of your growing electronic sales channels.

As retailers evolve and grow multichannel businesses, platforms must be able to adopt sophisticated technology to match the strategy. In other words, they need a commerce platform that is more flexible, agile and mature.

Firms that are rolling out multi-region/multi-language/multi-currency/multichannel commerce sales capabilities are opening up numerous revenue opportunities. However, this also increases the complexities of managing all of these various sales channels.

To remain profitable, you will want to make investments that keep the operating costs low for managing merchandising, brand content, orders throughput and fulfillment logistics.

AT THIS EXCITING time, clients are expanding into more channels and more markets internationally. They are localizing pricing and content by region so that it becomes easy for the retailers to create region specific sites for their international customers.

Luxury Institute research on the wealthy consumer use of mobile devices shows that 76 percent compare prices via mobile devices, while a rapidly growing 27 percent have bought via a mobile device.

In addition, 21 percent report that they use mobile devices to look up respective product information while shopping in stores.

Naveen Gunti is senior vice president for commerce solutions and implementations and Chirag Patel is senior business analyst at Createthe Group, New York. Reach them at and