Luxury E-Commerce: Advantages and Disadvantages - Essay Example

? Luxury E-commerce (advantages and disadvantages) Luxury E-commerce (Advantages and Disadvantages) Introduction With the shifts in the modern world and its changing trends, there has been an influence in the human society and living. People living in highly modernized system has adopted many quick influences like e-commerce or luxury business (Okonkwo, 2007). This influence is from globalization which has brought changes in the lifestyle and in people’s buying and selling modes. Luxury is what stands out firm in this modern system; it is something which has centered people in between desires and modernism (Okonkwo, 2007). Though advancements like e-commerce or e-business has favored to an extent, but there are some drawbacks too, which often gets sidelined by the human setting of the present world. This study will give a critical view of how luxury e-commerce is important and what are the gaps that need to be covered in the modern business system (Okonkwo, 2007). Background As trends changed it brought changes in the human setting, like people got more to the use of e-commerce and e-business. On a similar node, luxury is part of the glimpse where e-commerce brought luxury brands on high human accessibility. There came up luxury e-portals like Net-a-Porter which facilitated buyers on luxury boutique and designer clothing. Net-a-Porter being UK’s top selling online forum stocked 3000 brands at one time of selling, which was all to favor the luxury patrons on the internet (Roberts, 2010). On the earliest luxury facilitated people where it became more than a necessity and something associated with the desires. Luxury was first sought as an idea of a peculiar, but later as fashion industry revolved and brands came up luxury became part of peoples’ lives (Danziger, 2005). The same perception revived on e-commerce where an estimated 95% buyers’ populace was only on the luxury. They bought luxury mobiles, branded watches, designer wear shoes, and fascinating designer clothes (Roberts, 2010). This was all because the opportunity was there on the e-commerce and more savvy brands utilized such opportunity to facilitate luxury consumers (Roberts, 2010). With the popularity of luxury in the modern business system, the methods of trade also adopted the change. Today consumers not only trace luxury in goods or service, but they also expect luxury in the method of deliverance and service (electronic trade and provision). It was the year 1990 when Amazon gave origin to the concept electronic trade and distribution. Ebay was the second major contributor to e-commerce, a competitor of Amazon which evolved in the same year of e-business (Schneider, 2011). It was the start of electronic based distribution (1995) when AltaVista, Lycos and Yahoo! came more with the luxury brands on their distribution and selling (Schneider, 2011). Later on MSN and Hermes also promoted luxury on the online buying and selling, as they were on a great response from luxury excavators (Okonkwo, 2010). Apart from all the persistence of luxury on e-commerce and trade has also aware the modern business specialists (Schneider, 2011). They have understood that luxury is a core preference of the buyers, where e-commerce is the right forum to distribute it. This is how luxury is widespread to all parts of the business system, from buyers to sellers and from marketers to branders respectively (Danziger, 2005). Definition to E-Commerce and E-Business With the plethora of globalization and internationalization, small and large business firms have identified e-commerce as a forum to exchange (Saunter, 2012). The core activities of a business like supply, distribution, promotion and marketing of goods have become achievable on the e-commerce and e-business. E-commerce is a term that indicates electronic business commerce, where businesses are sold, expanded and developed on the basis of large consumer presence on the internet (Dave, 2008). E-commerce is a combination of two things, electronics/internet (mode of business exchange) and commerce/trade (buying and selling of goods and services). E-commerce is significantly related to buying and selling where e-business is more than just e-commerce, including the activities of communication, recordation, and performance management operation. Taking origin from the World Wide Web, e-commerce has displayed a significant role for the modern business owners, where there is effective exchange of businesses with substantial methods to balance supply and demand (Meier & Stormer, 2009). E-commerce with respect to luxury business stands out for various advantages and disadvantages. There are different factors that associate to success and failure of luxury e-business in an e-commerce environment (Meier & Stormer, 2009). Factors like globalization, variance in consumer trends, changing attributes of consumers, distorting nature of the luxury etc are few of the factors that affect the nature of e-business (Okonkwo, 2010). Here are the following advantages and disadvantages of luxury e-commerce with an understanding of how an e-business can be effective or down turning: Advantages Effective Online Presence Understanding the modern business need luxury brands have identified e-commerce as a forum to excel. The brands have identified the strength on electronics where there is an open opportunity to deploy transactional websites (Roberts, 2010). The brands holding loyalty of customers like Jimmy Choo, Dior, Boucheron, Gucci, Louis Vuitton and Georgio Armani know the importance of such official websites (Roberts, 2010). They know that websites are precise mode to channelize their brand value. It is one mode that increases the presence of the brand with respect to online business promotion (marketing) and with respect to online buying and selling (trade and distribution) (Danziger, 2005). By persistent online presence, the brands get a room to establish themselves on different markets. Like Givenchy a popular brand of Europe exceeded its worth market in Australia in the year 2010. It was only because of 24/7 online presence Givenchy was able to understand the behaviors of Australian market, improvising its market holding strategy in the newer region (Roberts, 2010). Virtual Benefits Another major advantage of luxury e-commerce is the virtual benefit. On the basis of technology online business stores like Ebay, Yahoo! or Amazon works on the highest intangible level (Schneider, 2011). There is no requirement of the physical staff, physical resources like computer, machinery or office building, but only a website and a business logo are essential to bring the products on customer demand. This is how virtual online presence (e-business) sets a ground of virtual supply and distribution (Pena, 2008). Brands avail the best from virtual e-commerce. Adidas on the upper hand time lined two weeks virtual campaign. It was a cross-channeling campaign that increased 91% of client trade retailing than the previous brand campaigns. The campaign stabilized the online position of Adizero Rose2 (the shoe on effective response), and also the Derrick Rose brand (a shoe on the hype of NBA sizzlers), it was all via virtual effectuality (iProspect, 2012). Similarly Fendi (an Italian fashion house brand) embarks its virtual e-commerce with pop up shop baguette handbags. With such virtual presence, consumers shop exclusively from the online pop-up shop forum. It is worth benefit of Fendi’s pop-up shop that has raised the demand on the vintage handbags’ section (Carr, 2012). Gucci on the other hand has amazed its sensational buyers on brand vitality. Gucci websites are one of the main reasons of brand’s exclusive online retailing. Buyers find virtual shelves on Gucci’s pages giving a sensation of touch and physical experience. The shelves are embarked with special Gucci watches and hand bags which are part of luxury buyers’ fascination (Roberts, 2010). International Recognition Another major advantage of luxury e-commerce is that it gives international recognition to the luxury brands. Once the brand is on the charts of search engines like Google, Askjeaves or Bing, there is no stopping that it breaches its international globalized market (Meier & Stormer, 2009). The market is automatically captured once the brand is stretched to the e-market business. This is how the brand is travelled to all parts of the world, giving reception to brand’s peculiar products and services among a billion population customers (Okonkwo, 2010). In the modern studies it has been indicated that luxury brands mostly apply social media as a source to connect the online buyers, as it is one source to attain brands international recognition. Brands like Bulgari, Tory Burch or Burberry attained international recognition via facebook and twitter. Similarly there are brands that breach Tumblr and Google+ to increase brand availability and appearance, giving a doorway to exceed brand recognition on the international domain (Roberts, 2010). According to Junipers study 2011, the most vibrant mode of luxury brands marketing is social media. The mobile brands are on the height of such applications like they include social media apps and features to attract the young, affluent and professional demographics (Scott, 2012). Meanwhile there are luxury retailers who market smart phones like Apple and Android phones to attain the international recognition on their respective products and services (Webb, 2011). Increase of Revenues The most precise outcome of e-commerce is the increment of revenues. Brands which are on e-commerce are engaged with a large scale populace, generating high profits and revenues at the same time of their business (Dave, 2008). On e-biz websites there are definitely billion users at one time, which means that the target audience for e-businesses is massive and revenues are immense. Once the businesses expand on e-commerce, there is no stopping that they receive a big number on profits and revenues (Dave, 2008). The upcoming Chinese luxury provider Shouke.com is on the experience of e-commerce competition, especially from the European luxury e-tail like Net-A-Porter, which is excelling its revenues in the European market index (Ignaczak, 2012). Meanwhile, shouke.com as a Chinese luxury seller has also raised its revenues in the Chinese market where it has projected sales surpassed of 10B yuan (about $1.6B) in the year 2010. In the same respect, a growth of 30% is expected each year from the Chinese luxury seller “shouke.com” (Ignaczak, 2012). In the French index, Vente-Privee.com increased its turnover in the year 2010. It was all because of luxury e-commerce that vente-privee.com generated 968 million euros in the prospect 2010. It was a 15% increase than the previous fiscal year of the e-commerce (Zegna, 2011). Benefits for Customers There are several benefits for e-commerce customers like 24/7 opening, flexibility to explore and shop, easy online payments/credit billing, door to door product service, variety of products and services etc (Meier & Stormer, 2009). Apart from all there is no barrier in which customers can shop like on holidays or on special occasions. This is how a luxury e-business is on full benefit for luxury e-customers (Pena, 2008). Benefit of Ecommerce Retailing Model There have been emerging markets like Japan, Russia and China, where the brands are adapting the models of ecommerce retailing. The model is consequential in the apparel industry as it gives a door way to textile brands for high value branding, global marketing, and low cost product publicity. Ecommerce retailing is present with a diversified and dynamical environment (Euromonitor, 2012). For future global expansion, there are brands like Zara, H & M, C& A, American apparel, and Uniqlo who are adapting the internet retail branding. It is one method that has provided brands an opportunity to internationalize in a deliberate manner. Additionally ecommerce retailing has given a great sense to brands to bring control in their business environment (Euromonitor, 2012). The opportunities for channelizing, capitalizing and market segmentation are all there on the e-commerce retailing method. According to trend analyzers and with respect to the augmenting global competition, only those brands will be able to survive in the future who know how to add value on the internet like through internet shopping or add value to the brand like through parallel customer viewership (Euromonitor, 2012). According to luxury customers, internet retailing has many favors to offer like it includes low cost experience of products, free demand and testing, and exploring of diversified range of products and services (Euromonitor, 2012). Disadvantages Damage to the Offline Market There are many instances when customers find difference in brand prices and quality (Rajaraman, 2010, pp.9-12). This is because the price is found scattered, as the originally brand set price is changed on the online stores and outlets. When customers see the difference in both price and quality, they keep a bad impression on brands, damaging the original image and status of the offline present brands (Rajaraman, 2010, pp.9-12). Security Lag One of the most damaging facts of e-commerce is its security lack. There are no specified rules or apprehensions on internet, which protect rights of people, brands and customers. Man with an anonymous image can start off a business on e-commerce (Rajaraman, 2010). This is how the system gets dissolving, where people are found with online theft cases and money fraud cases quite frequently (Rajaraman, 2010). According to BBC (2009) report, online purchasing has grown to quite an immense level in the recent aspect of time. This has invited a huge population of scammers to cheat the online buyers which is present in a huge population. The cheats are on the basis of credit cards, visa debit cards and accounts raiding which are conventional payment methods on the internet and e-commerce. A fraud of ?440 million has been recorded in the year 2009, which is frequently based on online credit cards and visa debit cards. This is how the deceivers are damaging for true online sellers, which has become one major flaw of online buying and selling (Fildes, 2009). Dissatisfaction of the Customers In most of the time customers are not fully contented from online products and services. This is because of intangible service, the lack of sensation and touching they have on the online store market (Rajaraman, 2010). Though variety of product is there but there is no assistance of testing or evaluating the product. This sets a level of discontentment, which is unfavorable for both brands and customers at the same time (Rajaraman, 2010, pp.9-12). Abundance of E-commerce and Absurdity With the abundance of products, services and online shopping facilities, there is an extending rate of absurdity which is found in the recent aspect of time (Rajaraman, 2010). People often misuse or overuse the purpose of e-commerce. With varieties in the online products and selling, the logic gets somewhere disappeared, and people stick with their excessive spending and outlaying. This is one social disadvantage of e-commerce which cannot be ignored or dejected in the modern world (Rajaraman, 2010). Conclusion In the modern world when there is globalization at one side and e-commerce on the other, luxury is conceived as one form of necessity (Okonkwo, 2010). E-commerce is the most advanced and technological method of buying and selling. It is one mode of electronics that has fascinated modern civilization in a fast and uninterrupted manner. For new coming businesses like luxury brands, e-commerce has facilitated in the most effective manner (Okonkwo, 2007). The effectiveness is brand promotion, recognition and distribution of the products, which leads the brand to international recognition (Danziger, 2005). In the business point of view, luxury e-commerce has also supported online buyers and distributors. It has linked one business to another (B2B), to come to right level of customer needs and wants (Pena, 2008). There is an ease of service and placement of orders, which customers find on the online luxury stores. Despite of the favors which e-commerce has brought, there are certain drawbacks like safety lag, misuse, no exchange or return policies, and online theft, which have discouraged e-commerce customer to quite a major extent (Rajaraman, 2010). Reference List Carr, T., 2012. Fendi drives ecommerce through virtual Baguette pop-up shop. [Online] Viewed at: [Accessed 2 December 2012]. Danziger, P., 2005. 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