Luxury E-Retailers Offer Coupons To Woo Shoppers as Economy Slows
June 23rd, 2009
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Author: Images of galloping polo ponies, chiseled yachtsmen and tousled children play across the screen. Sterling silver bar accessories, vintage watches and posh vacation retreats are just a mouse click away. Need a great evening look for a snowy weekend? In the "Ask Ralph" section, Ralph Lauren declares "nothing is better than a plaid velvet pant with a rollneck sweater." For the rest of the weekend, there's a "petunia" red leather women's jacket embossed to look like lizard for $1,250 or a Fair-Isle patterned cashmere turtleneck sweater for men for $725.
Polo.com (polo.com), which made its debut in November, is just one of the Web sites vying for status-conscious shoppers willing to spend,say, $700 on a handbag, sight unseen. Whether there are enough of those shoppers to keep the sites in business also remains to be seen. This year, Internet sales could hit $40 billion by some estimates, with about $18 billion spent during the holidays, nearly double last year's level. But only a small sliver of that is expected to go to luxury e-retailers.
A few luxury sites including Miadora.com and Folded Edge.com closed along with more pedestrian dot-coms in the Internet shakeout. But plenty of others have sprung up to take their place, including eLuxury.com (eluxury.com), Saksfifthavenue.com (saksfifthavenue.com) and LuxLook.com (luxlook.com), joining veterans such as LuxuryFinder.com (luxuryfinder.com), Best Selections.com (bestselections.com) and Ashford.com (ashford.com). Meantime, the roaring demand for upscale goods has cooled considerably since last year, and amid signs that the economy is cooling rapidly, many shoppers say they plan to spend less, or at least get more for their money this year.
To compete in what could be a make-or-break holiday season, some luxury e-tailers are resorting to frankly plebian sales gimmicks that belie their posh images, such as offering little freebies, coupons and frequent-shopper points. Luxuryfinder throws in a free gift, like a box of candles, with every purchase. Ashford.com, which provides free overnight delivery on all orders, guarantees that packages will arrive the next day or shoppers receive 25 roses from Martha Stewart.com. Ashford also gives $25 and $50 coupons on Amazon, which is an investor in the jewelry site. It also has a partnership arrangement with Webvan Group Inc., the online grocery-delivery outfit. Saks and Neiman Marcus allow their customers to accumulate "frequent-shopper" points on their sites, just as they would in their conventional stores.
Meanwhile, many luxury sites are promising overnight delivery up until a day or two before Christmas, even though that is what got many e-retailers into trouble last year with disappointed customers. And some are taking care not to be too exclusive. ELuxury, for one, has a prominent "Savvy Shoppers" section, where it offers gifts under $100. RedEnvelope Inc. has its own section of moderately priced stocking stuffers such as $22 chocolate-covered graham crackers.
To be sure, some luxury-seeking shoppers say they prefer browsing through a Web site than explaining to a snooty clerk that they would rather not spend quite that much on a bracelet. Others may live in areas of the country that just don't happen to have a Prada or Gucci boutique nearby. Michael Brown, who lives in Pittsburgh, began dabbling with low-end online purchases three years ago, but over the past year, he has bought watches by Baume & Mercier and Tag Heuer, as well as a Montblanc pen and a David Yurman bracelet for his wife on Ashford.com. "I'll probably do more of my Christmas shopping on the Web because I'm a late shopper," says 52-year-old Mr. Brown, an accounts manager for an Internet company.
Saks Inc. says it has been pleasantly surprised by how well its new Saksfifthavenue.com is doing. The average transaction on the site, which came online in August, has been above $300, which is higher than the $250 or so they expected, says Bill Haslam, president of Saks Direct, the catalog and e-commerce division of Saks Inc.
Still, the number of online luxury shoppers remains pretty few. Media Metrix Inc., the New York-based Internet-media measurement consulting firm, says of the major luxury Web sites measured in October, only Ashford.com had reportable traffic of more than 200,000 so-called unique visitors, the minimum a company needs for Media Metrix to measure it. (Ashford.com's total was actually 392,000.) By contrast, the top mass retailer on the net, Amazon.com Inc., had about 16.3 million unique visitors in October, the most recent month available.
And the more shoppers price-shop, the more luxury sites may find themselves in competition with outfits like Overstock.com (overstock.com), which swoops in on failed e-tailers, buying up their inventory for a song and selling it at steep discounts. Miadora's defunct Web address, for instance, directs would-be jewelry shoppers to Overstock, which gathered up its goods at fire-sale prices. Costco's Web site, likewise, carries many of the same high-end watch brands, such as Cartier, Baume & Mercier and Movado.
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