How to Succeed in the Luxury Marketplace
Luxury brands face a unique challenge when it comes to building brand awareness and demand for their products online. Many are opting to rethink traditional luxury marketing tactics and embrace digital marketplaces. These e-commerce platforms have become an effective tool for connecting with new and existing consumers. Unlike traditional online retailers, which provide a single shopping experience, luxury marketplace allow for a variety of product categories and price ranges.
This flexibility allows luxury brands to target specific consumer groups. Moreover, it provides an opportunity to increase the number of sales channels and reach new audiences. Currently, the global online luxury market is worth around USD 109 billion. Various factors are contributing to the growth of this sector, such as increasing internet penetration and rising incomes in developing countries.
In a world where you can buy a $12 million Colorado ranch, a rare supercar or even a piece of artwork with the click of a button, it’s no wonder why more and more consumers are looking to purchase luxury goods online. According to Bain & Company’s 2021 Spring Update, “The luxury marketplace has seen robust growth this year as buyers discover new ways to buy luxury—from an entire home, a single piece of jewelry or a rare car to an expensive hotel stay.”
However, some marketplaces are more focused on luxury goods than others. In particular, luxury resale offerings have been enjoying considerable momentum, boosted by the pandemic and increasing consumer demand for pre-owned luxury items. In fact, by 2025, the resale market for watches and jewellery is expected to account for a third of all luxury retail revenue—with sales on specialised luxury platforms growing significantly faster than at traditional brick-and-mortar boutiques.
It’s no surprise, therefore, that some high-profile luxury brands are dipping their toes in the water of luxury resale. For example, Gucci has partnered with TheRealReal to recycle / upcycle garments, while Kering has acquired UK-based watch specialist Watchfinder and taken a stake in Vestiaire Collective. Such arrangements seem to make sense, given that millennials and Gen Z shoppers are becoming increasingly concerned with sustainability and favour a circular economy.
Still, it’s important to remember that resale platforms can only succeed if they provide a genuine, authentic experience. Moreover, these marketplaces need to be designed to cater to the aspirations and needs of luxury consumers. If they don’t, they may fall short of expectations and erode their reputations. To avoid such a fate, it’s important for luxury brands to understand the unique challenges and opportunities presented by the online luxury marketplace, including how to leverage the platform’s potential.