The Psychology Behind Luxury and eCommerce

Luxury and eCommerce, do they go hand in hand?

After all, luxury is about exclusivity, being part of a story, feeling special. eCommerce, like other internet-based trends, is often about democratisation.

Yet, eCommerce companies like Yoox Group, Net-a-Porter and Gilt have all shown that there are eCommerce models for luxury fashion. And as Federico Marchetti, the founder and CEO of Yoox Group, told John Seabrook of The New Yorker, there are those people that want to link the seemingly divergent planets of luxury and eCommerce:

I loved the fact that they were so different, and I could bring them together. Fashion was all about exclusivity, and Internet was all about democracy; fashion was for the élite, Internet for the masses—someone had to link the two planets.

But is luxury the exclusive purview of traditional luxury powerhouses—the kinds of brands Marchetti works with at Yoox—like Dolce & Gabbana, Armani and Diesel?

Or can small and medium sized eCommerce businesses, such as many of those using WooCommerce, get in on the act?

eCommerce and Luxury

While it still might seem like luxury and eCommerce make strange bed fellows, eCommerce has already disrupted the traditional luxury model in a powerful way. Luxury eCommerce models include:

• selling end-of-season items;
• selling full-priced in-season items;
• or running flash sales of small batches of deeply discounted luxury goods in limited-time offerings.

Amazon has recently entered the luxury fashion market to offer all three of these options, and sites like Net-a-Porter and Yoox.com have been disrupting the luxury fashion markets since the turn of the century.

Not all traditional luxury brands have embraced eCommerce, however. Chanel and Céline have so far resisted selling their fashion ranges online (Chanel does sell their cosmetics via the web), instead opting for greater retail store expansion in Asia.

Conversely, brands like Burberry have embraced their digital presence, to great success. As reported by Style.com:

Digital is a fundamental part of our brand from both a commercial and marketing perspective,” says a Burberry spokeswoman. “It allows us to have a closer relationship with our customers.”

So it seems that eCommerce and luxury increasingly go hand in hand, although what works for one brand doesn’t necessarily work for another. For small players wanting to get into the eCommerce luxury space, it is a matter of understanding your customers, your brand, and the psychology driving luxury purchases.

The Psychology of Luxury Products

Customers are often paying many, many multiples more for luxury products than they would for a standard version of the same good. They might tell themselves that the price reflects the high-quality of the item. But of course, those kinds of prices go way above and beyond the cost of producing the good. The quality of the luxury item is only part of a customer’s motivation.

A Story, A Lifestyle

When consumers buy luxury goods they are buying into a story. They want to be part of a particular lifestyle, aspiration, or mythology.

The mythology surrounding Coco Chanel is powerful, and used to full effect by the Chanel brand. When people buy Chanel they feel they are buying into a lifestyle of parisian elegance and sophistication, and the use of the Coco Chanel mythology helps this aspirational fantasy.

This same element of luxury psychology can be used by small and medium sized eCommerce sellers. For example, you can create mythology around the founder of your company by telling and showing your founder’s story prominently on your website. WooCommerce luxury watch company Berkbinder and Brown does this, with a whole web page dedicated to the story of the Maker, Ted Brown.

Other tactics you can use include using your content, marketing and social media channels to show the aspirational lifestyle your brand is selling to your customers. While aiming for the parisian chic of Chanel might not be a good idea, tapping into a more local, artisanal form of luxury might be.

A good example of this is the San Francisco/Napa Valley artist Ann Rae (who was interviewed as part of the Creative Live Power Your Podcast with Storytelling course with Alex Blumberg). She not only sells landscape art, but sells people a unique experience.

Customers of Ann Rae’s Experience Art offering get to visit a landscape that’s meaningful to them with the artist. Ann then creates sketches and oil studies, which she shares with the customer. They then choose their favourite study for a custom canvas, and Ann creates a storybook of the experience. This example shows the power of creating a story to go alongside your luxury product (in this case making the customer feel like a sophisticated art collector or patron), as well as the power of experience in luxury shopping.

Buying Into An Experience

Another element of luxury is that consumers are buying into an experience. In many cases, that luxury experience has involved going into a high-end brand’s store and being treated like you are special.

I remember when I was looking for my wedding dress, the very first shop I went into was (rather unwisely) a small but high-end couture wedding dress creator.

Everything about that experience was designed to make me—as a bride-to-be—feel special. Like this was my chance to experience what it is like to be, for example, a royal princess.

The fabrics and laces were apparently all hand-chosen by the designer in Europe each year (sophistication). I was given opportunities to try a variety of styles and fabrics, and told that pretty much everything could be customised to suit me perfectly (personalisation). At the at the end of the session, the designer handed me a beautiful sketch of my favourite, customised dress, with samples swatches of the beautiful fabrics attached (letting me flirt with the fantasy of being a fashion designer).

That first bridal dress store was probably the most powerful luxury shopping experience of my life. I didn’t end up buying the dress from there (it was out of my price range), but frankly, after that experience, no other wedding dress shop made me feel as special.

This second psychological pull—the luxury experience and the powerful emotions that it creates—may be harder to create online. But it’s definitely possible.

There are ways eCommerce sellers can give their customers a luxury experience. You might send personalised emails with curated suggestions based on browsing or personal data you’ve collected on them previously. Or you might offer VIP customers exclusive products, based on their own preferences and behaviours. You could ship items in luxurious packaging, and include handwritten notes. You can send customers invitations to exclusive events (both online and offline), like Everlane did with their recent Black Friday Fund events in New York and San Francisco.

Or you can create opportunities for customers to participate in online content in ways that make them feel unique and special (like Burberry’s The Art of the Trench). Digital platforms offer people a much wider platform for expressing themselves and showing off their newfound luxury, one area where eCommerce may have the upper hand over traditional retail. Sure, you can walk down the street showing off your Fendi bag, but being re-pinned thousands of times on Pinterest may be even better.

Create Your Own Little Slice of Luxury

Hopefully this post has demonstrated that luxury and eCommerce can indeed go hand-in-hand, and that harnessing the psychology of luxury shopping is within reach for small and medium-sized eCommerce sellers.

While you may never be able to replicate the mythology of Coco Chanel, or the experience of shopping in the Louis Vuitton store, you can create your own stories and experiences that tap into luxury psychology of stories and experiences.

And with some segments of the U.S. market shifting away from international luxury brands and towards artisanal creators, now might be the perfect time to create a slice of luxury on your own little corner of the internet.