Marketing to Affluent Customers, for High Margins
Many online retailers compete on price. But selling luxury products to relatively affluent shoppers with annual incomes above $100,000 per year is an exercise in brand building and content marketing.
Shoppers buying luxury apparel and accessories spend $902 per purchase on average, according to a Google Think Insights report released this month, and $3,835 per purchase on jewelry and watches on average. Other luxury purchases may include electronics or household items, including furniture.
Products that Appeal to Affluent Shoppers
If you’re unfamiliar with luxury brands take a moment to visit a few websites representative of the market. For example, visit Ermenegildo Zegna’s site, where you can spend $2,495 for a leather jacket — albeit an admittedly handsome one. T-shirts on the Zegna site sell for between $88 and around $145.
Similarly, check out the Trinity De Cartier collection on the Cartier website and you will find that the large Trinity bracelet retails for $16,300.
Wealthy shoppers are willing to pay a lot of money for these sorts of products for three reasons, according to the Google Think Insights report.
First, about 62 percent of affluent shoppers simply want a better product that is superior to lower-priced alternatives. A Zegna jacket will, in fact, be made of better materials, manufactured to a high standard in a form that leads fashion trends rather than follows them.
About 39 percent of affluent shoppers are looking for a custom fit item. To continue the example, made-to-fit clothing is another service that Zegna or similar brands provide.
Lastly, about 33 percent of luxury shoppers, again according to Google, want to distinguish themselves in some way from others, and few things can set you apart in a crowd more quickly than Cartier jewelry or similar items of quality and worth.
It is important to remember that all luxury purchases are not only aimed at high fashion. In fact, even somewhat rugged items might be a luxury purchase of sorts. GORUCK, which makes very high-quality rucksacks, as an example, might be considered a luxury brand, given that its GR2 rucksack sells for $395, while similar sized rucks from lesser brands might be as lower as $25.
Luxury items are high quality, often custom fit or customized, and set owners apart.
How Wealthy Shoppers Make Luxury Buying Decisions
The Google Think Insight survey found that 78 percent of wealthy shoppers will research a luxury product online before buying and nearly every affluent shoppers (98 percent) will do research of some kind.
It is likely that those shoppers will look more than once, checking products and specifications from desktop or laptop computers (67 percent), from tablets (29 percent), and smartphones (29 percent). On average an affluent buyer will check 4.6 resources before making a luxury purchase.
The Problem of Where Affluent Shoppers Buy
Unfortunately, for pure-play ecommerce retailers, the majority of luxury purchases are made in physical stores, with some 69 percent of affluent shoppers saying that they wanted to touch and feel the luxury item before buying it.
Opportunities for Online Luxury Retailers
Although affluent shoppers may like to hold the luxury items they buy as they are making the purchase, there are still three good opportunities for Internet merchants: convenience, time, and value.
The Google Think Insights survey found that 69 percent of relatively wealthy shoppers made luxury purchases online because it was convenient and “no stress.”
Unlike what some might imagine, 81 percent of affluent shoppers — both male and female — work, and have the same time constraints (or even greater time constraints) than other shoppers. Thus, 60 percent of those surveyed bought luxury items online because they could shop anytime, anywhere.
Finally, affluent shoppers are not affluent by accident, and 44 percent of them liked shopping online because they could find “good deals” on the luxury items they wanted. Perhaps, put another way, these shoppers are willing to pay $2,495 for a leather jacket, but they are perfectly happy to pay less for it.
Convenience, availability, and value give online sellers an opportunity to address the luxury shopper.
Taken collectively, the Google Think Insights survey data may provide some excellent ideas for marketing to affluent shoppers.
First, given that shoppers want high-quality goods that help them to stand out, merchants might be able to succeed by focusing on building brand, that is convincing potential customers that the brand’s (store’s) products are, first, very well made and, second, exclusive in some way.
To revisit an example, think about how GORUCK has succeeded in building just this sort of brand. Whether or not you were familiar with the company, take a look at the its website. Notice how much space is devoted to describing quality. Also consider how the company markets its brand through events. These events feature military-like training while wearing GORUCK rucksacks loaded with weights. The workout is clearly not for everyone, but neither is the GORUCK brand, rather it is higher quality and exclusive.
Market with Content
The Google survey, which found that many wealthy shoppers research purchases, may also indicate an opportunity for content marketing. Consider the Mr. Porter website, as an example.
The high-end site has a editorial section called “The Journal” that provides great quality content. The September 17, 2013 issue included a profile of fashion model Kate Moss and a short article about “Eight Ways to Look Fresh for the Office.” Mr. Porter is using content to attract shoppers, who may also use the site to research products and, of course, buy something.
Remembering that convenience was the top reason that wealthy shoppers purchased luxury items online, an ecommerce retailer would be wise to limit barriers to the sale. This might be as simple as implementing a quick buy or even one-click purchase option or ensuring that many forms of payment are accepted.
Another aspect of convenience could be offering customer service or live chat after regular business hours.
Provide an Immersive Experience
With a majority of luxury shoppers saying that they liked to touch and feel expensive items before making a purchase, online sellers might consider providing a more immersive, if you will, online shopping experience.
This experience might include relatively more video, larger or even full screen graphics, and different shopping formats. Zegna’s site, as an example, encourages customers to shop by look.