ellipticalpointofview

Going back to the Financial Times summary of the Altagamma and McKinsey & Co report which highlighted that the social media channels of luxury brands don’t have direct influence on sales it’s time to consider the more “abstract” queries from my first response to the  Altagamma and McKinsey & Co study.

Today I am looking at No.5 of my list: Where is the consideration of the purchase eco-system that  evolved around luxury goods?

Just to refresh: although the Facebook Likebase and Twitter Followerbase of these brands may be sizeable, according to the  Altagamma and McKinsey & Co study this does not directly influence or translate into sales for the luxury brands.

Can we really assume the connections users make with luxury brands are going to be specifically future-purchase focused?

It seems value ascribed to the social connections consumers form with brands on social channels is based on the assumption that those connections on the brand’s social media channels are:

1. specifically future-purchase focused, and
2. involve purchase interactions than can be seen in revenue for the luxury brand, either directly or through licensed sellers

Luxury has a past and a present focus, as well as a future focus

While I accept the social connections of ASOS, Topshop and other high street retailers are more likely to be more geared towards to continual, ongoing purchases for a variety of drivers:

• low(er) cost investment
• constantly changing / re-presenting items in curated, sale or seasonal themes
• always new items in
• constant sale area
• usable and accessible online commerce funcions

And these may be reasons why European fashion retailers see so much value in social influencing sales (see my previous post Fashion: Online Is The New Black for more).

Leaving aside the impediments to the social sales funnel inherent to the social presence of most luxury brands, I am not sure you can assume the same direct, purchase-focused intent is behind social connections made luxury brands.

We are talking about the classics here, are we not?

We are talking about purchases of items that are perceived to be the archetypes of fashion.

Consider Hermes’ Birkin Bag, unless you are Victoria Beckham (who back in 2009 had a collection of Hermes Birkin bags worth in excess of $2 million), you only need one.

One.

Why only one?

• They are a classic. They are an epitome of bag-ness that has existed since 1984 and is one which transcends the recent fashion for conspicuously owning multitudes of them.
• Because Jane Birkin said so herself

“What’s the use of having a second one?” she laughs. “You only need one and that busts your arm; they’re bloody heavy. I’m going to have to have an operation for tendonitis in the shoulder.”

Source: http://www.stylite.com Jane Birkin Speaks About Birkin Bags

Does the fact that I purchased an Hermes Birkin bag 10 years ago and may never need to purchase another bag ever again, mean I can never like the Hermes page on Facebook?

In the Luxury Society ‘s summary of the 2012 BrandZ™ Top 100 Most Valuable Brands rankings, one point made was about the connection consumers form with brands:

This year, we saw the growing importance of meaning,” continued Eileen Campbell. “For years we’ve known that consumers seek more from brands than just functional benefits. They’ve long formed emotional bonds with the brands they choose. But increasingly, we’re seeing those connections reserved for brands that consumers can be proud to call their friends.

Source: What the 2012 BrandZ™ Top 100 Means for Luxury

What about the longer re-purchase timelines inherent in the first purchase having a longer expiry date?

Does the fact that I bought a Chanel perfume once make me a less valid member of Chanel’s Facebook Likebase than someone who buys a pair Chanel shoes; and are they a less valid member of Chanel’s Facebook Likebase than someone who buys items from Chanel’s resort range each season; and so on…?

Is my connection with the brand any less relevant or any less important, even if it may not translate into a purchase next week, next month or next year? I still have half a bottle of Chance Eau Fraiche left, after all.

Some of the items luxury brands make have longer repurchase timelines and/or they represent a significant investment either in terms of:

• cost
• intended use
• necessity of replacement

How many how many pairs of Prada prescription glasses do I need to buy each year? I still only have one face and one pair of eyes after all and my eyes are not due for another eye-test just yet…you will wear out your favourite pair of Chanel flats long before you will wear out a pair of glasses.

Plus commiting to one pair of glasses for a pre-determined time is a serious and considered decision:

• They have to go with everything I wear
• They can’t be limited use
• They have to suit me, even if my whims and taste for other items of clothing change on a constant basis

Is the fact that I like the Prada brand page on Facebook any less valid? Even if I may not buy another pair of glasses for 2 years?

And what  about the different ways I can purchase luxury items?

While I can see the brands themselves will only be interested in purchases that directly affect their revenue, can we really assume the effectiveness of social media to drive purchases can only be measured in direct purchases when we are considering brands producing goods that are the epitomy of classic quality?

Goods which also hold value in terms of:

• pre-loved, second hand and vintage sales
• counterfeit sales, given it is often easier to buy a guaranteed fake online than it is an authentic item, knowingly or unknowingly

While the commercial imperative behind the report is to limit considerations to revenue directly generated by the brand from purchases, placing consumer purchase patterns as part of an overall consumption eco-system and life-cycle would be more relevant given the industry under discussion.

The Daily Mail recently reported that of the growing market for pre-loved Birkins sold buy luxury flash sales sites like Gilt Groupe

But while a brand-new Birkin is priced by the French fashion house at around $8,000, second-hand bags are selling for up to $56,000 online. To further mystify, the websites selling the pre-owned products, which include Ruelala.com and Gilt.com, are classed as sale sites.

Source: The Daily Mail: Why second-hand Hermes Birkin bags fetch up to $56,000 online (by buyers who claim it’s a reasonable price)

The article goes on to discuss the fact that the waiting list for new Birkins is driving consumers to purchase from sales sites. Last week, I received an email from n Australian flash sales site offering a sale on pre-loved luxury bags, it’s obviously not the first:

Screen shot of ozsale.com.au with flash sale for pre-loved bags highlighted (Accessed 31 August 2012)

Plus there are sites like vintagedesignerhandbagsonline.com, Rewind Vintage Affairs (specialise in Chanel bags) and Swank Vintage who specialise in vintage luxury fashion.

There are 6 pages of results for Hermes Birkin on 1stdibs.com which is a marketplace for reputed antique/vintage/luxury sellers:

Screen shot of search results for Hermes Birkin in 1stdibs (Accessed 5 September 2012)

There are 9 Birkins for sale in Australia at today’s date, 127 if I look at items listed on eBay AU:

Screen shot of eBay Search for Hermes Birkin (Accessed 5 September 2012)

If I purchase a vintage, pre-loved or second hand Birkin, mean I can never like the Hermes page on Facebook? Does it make me any less of a valid member of their social following than someone who purchased a Birkin new from an authorised seller?

And then…then there are sites which state they sell Birkins, but at extremely affordable prices:

Screen shot of search results for “buy cheap hermes birkin bags” (Accessed 5 September 2012)

Prices so affordable it makes me question the authenticity of the items, but to someone who does not understand the expected pricing for a Birkin and/or who is more trusting of content they find on the internet, they are sites which may represent the real deal.

Conclusions?

While I do still think:

• that the social channels of luxury brands are under-resourced and under capitalised on, and
• that there are technical impediments preventing them from being capitalised on as a sales channel for most luxury brands

I also think that the likebase connecting with luxury brands on channels like Facebook are doing so for a wider range of reasons than perhaps connections made by fans in the social following of high street retailers.

I think that some of the connections arise from the purchase ecosystem that surrounds premium items like Fendi baguettes, Chanel 2.55’s and Birkins etc.

Perhaps the value of the social channels in driving purchases needs to be seen across the whole purchase ecosystem and with a longer scope than other retailers?

Perhaps the activity of luxury brands on social channels should be seen in terms of ensuring the health of the whole ecosystem and grooming their social following to ensure that the next time one of us needs to purchase another bottle of perfume or another pair of prescription glasses or another expensive handbag…there is only one brand at the forefront of our minds.