09 March 2008

What should Web 2.0 mean for Luxury Brands ecommerce strategies?

[NOTE: I had written this article back in 2006 but could not publish it then. I can now do so and it is still very much relevant 16 months later!]

It is bizarre how an acronym so widely used as “Web 2.0” can lack an unanimous definition. What most experts tend to agree on however is that Web 2.0 is made up of at least two key concepts (as noted by the journalist Phil Muncaster in ITWeek 02/Oct/06 issue- ):

“Improved user experience and collaboration.
The democratisation of information.”

The latter concept refers to the fact that information becomes ubiquitous and relatively easily and cheaply accessible by potentially anyone. Democratisation also implies virtually no control over this “open” information. Companies cannot control what is said about them and about their products. They cannot even hope to read all this information relevant to them due to the shear amount involved.

The former concept is I believe even more specific to the Web 2.0. It relates to the fact that the web users are increasingly expecting a positive and memorable experience while visiting a site. By “experience” is meant: as user-friendly as possible, as interactive as possible and as unique as possible. In the case of ecommerce sites, this will be on top of the Web 1.0 criteria such as reliability, overall performance, competitive product prices and efficient and effective integration with back-end delivery and CRM systems.

As Phil Muncaster concludes in his article: “So whether you believe all the hype or not, Web 2.0 is changing the way users behave, retailers react and enterprises interact with their staff and business partners. Those who fail to embrace it will probably be left out”.

So then what does this new environment entails for the luxury products companies launching ecommerce initiatives? As for all other companies, it means both an opportunity and a challenge. An opportunity since the Web 2.0 should enable companies to better satisfy their customers by being more in tune with what they expect and desire. A challenge because of the relative difficulty to get it right first time using emerging Web 2.0 technologies (such as Ajax, Mashup) and because of the growing concerns for the Web security and privacy issues.

I would however infer that the luxury market companies are particularly well positioned to seize the opportunity and take on the challenge. The reason is that these companies are already by nature in the business of providing customer-centred, differentiating, memorable, even unique experiences to their customers. I believe you can make a parallel between:

· The individualized experience expected when we enter a Cartier, Louis Vuitton or Gucci boutique compared with the standardized experience expected in a Tesco or Wal-Mart superstore; and

· our expected experience on the Web 2.0 compared with the original Web 1.0.

Ecommerce customers of luxury companies will expect and value a Web experience as differentiating as purchasing in their high street shops. Therefore, these companies’ ecommerce websites must be highly innovative and take full advantage of the Web 2.0 context. This is totally in line with the following statement I made in my earlier post “Customers increasingly demand more personalized products and services” in Dec/05 :

“This new competitive environment indicates that luxury Brands should focus on bridging the gap between them and their customers through co-creation of value with the customers”.

The basic principle is to build this personalized experience through collaboration with the customers, which happens to be the other Web 2.0 key characteristic!

What could this mean in practice on a website? Let’s imagine:


Is this scenario really far-fetched? Not really. All the technologies required are already available. In fact, the concept of chatting online with an advisor has been around for years, typically for technical support services. Of course, the Web 2.0 can mean much more than this scenario. It is only an appetizer to what luxury companies’ websites could be designed to do. These companies need to first realize that they must and can be as exclusive on the Web as on the high street. They then need to engage in a sincere and continuous collaborative process with their customers to not only deliver what they seek, but to surpass their expectation.


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