Home Business From east-commerce to ecommerce: how the pandemic has shifted luxury brand strategy

From east-commerce to ecommerce: how the pandemic has shifted luxury brand strategy

by wrich

By Francesco Maroldi, General Manager, JCB International (Italy) S.p.A.

There is a saying that any luxury that is easy to obtain, is probably not luxury at all. For luxury brands, this wisdom could be considered the cornerstone of retail strategy. 

Pre-pandemic stores were as exclusive as the stock – a select few elite outposts in prominent cities across the continent – encouraging wealthy consumers to make pilgrimages to obtain these high-end, high-status luxury goods. 

It is the age-old recipe of creating value from scarcity. But the effectiveness of these tactics has been dramatically altered in recent months. It has been a year (and some additional months) of global change in the way we live, the way we shop and what we value.

The luxury goods industry has been heavily impacted. With travel and tourism severely restricted, face-to-face retail sales have declined significantly. Research found that the luxury goods market shrunk for the first time since 2009, in the year to November 2020, falling by 23 %. 

For example, Burberry Group Plc pointed to the impact of this in its recent yearly results. The hiatus caused by the pandemic meant that luxury retailers’ sales in its home market of the UK were more than 50 % down on 2019 levels in the year to 27 March 2021. The luxury brand predicted it will take several years for long-haul travel to recover from the coronavirus pandemic but was optimistic as it moves into its “next chapter of growth and acceleration”.

The growth of ecommerce

In Italy, JCB’s partnership with Nexi enables brands to get ‘closer’ to their customers and reduce the stress of social distancing and travel restrictions through the secure facilitation of online payments. JCB’s online security protocol, J/Secure2.0™ is compliant with the EMV® 3-D Secure Protocol and Core Functions Specification and protects cardmembers from identity deception. It also acts as a major gateway into Asia for high-value Italian merchants wanting to expand their customer base across geographical borders and to ‘virtual’ tourists. 

Asian shoppers are a hugely important audience for luxury brands. These consumers are invested in the history and fame of these brands and would travel to Europe to secure their exclusive goods. 

Buying directly from a high-end luxury store is an experience in itself – and one which naturally communicates authenticity, legitimacy, and security. But with travel for these customers remaining challenging for the foreseeable future, luxury brands are turning to ecommerce to re-capture commerce from the east.  

China is set to become the first country in history to see most retail sales taking place online instead of in-store, according to eMarketer. And based on our own data at JCB, as a leading payment brand, we have seen a 300 % growth over the last four years in online transactions made by our Asian cardmembers in Europe. For our Taiwanese and South Korean cardmembers in particular, 98 % and 96 % of all transactions, respectively, were made online in 2020.

Our retail partners are also seeing strong demand for online purchases. For example, Luisa Via Roma, the luxury Italian retailer founded in the early 1930s, says 90 % of its total revenue comes from online sales.   

Experience is everything

Ecommerce has been supercharged by the digital habits developed by consumers lately. But luxury brands will need to supercharge their own retail experience to continue to capture Asian consumer spend. 

These consumers are willing to travel and spend to acquire luxury goods and immerse themselves in the authenticity and history of these brands. The entire path to purchase in a physical store is a unique experience. And the same must be true for a luxury brand’s ecommerce offer. 

According to Nielsen, Asia-Pacific consumers have the highest propensity to switch brands and try new products. Equally, this region is the only one globally in which “enhanced or superior quality” is a bigger driver of purchase behaviour rather than “value for money”. 

Replicating the premium luxury experience customers are used to in-store to an online proposition, requires brands to get closer than ever before to their customers – particularly those in Asia. 

This means ensuring that there are local language and currency capabilities for all site visitors. Forcing the customer to make their own calculations, translations and conversions drives significant cart abandonment.

This speaks for exceptional customer service too. In most Asian cultures, there is an expectation for high levels of service. This includes receiving timely replies to enquiries, reliable reviews, no hidden costs, and a clear and simple returns process. Use the right tools which allow these processes to be as automated and as personalised as possible. 

You will also need to know your audience’s calendar. We have seen great interest from our Asian cardmembers to spend in Europe during their holidays and key retail dates. 

With the rise of ecommerce, luxury goods are easier to obtain than ever before. Luxury brands can grow their relationships with these audiences, even when they are unable to travel. But it will require the ecommerce experience to deliver the premium feel and authenticity they crave. 

JCB has consistently prioritised security for payments and ecommerce on an international level. In the future, we will continue to mitigate risks for both our cardmembers and retail partners so that brands can continue to provide joy universally.


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