Do Luxury E-tailers Stand a Chance?

Of all the e-commerce pioneers that have tried to appeal to the public, perhaps none has had such an arduous climb as luxury e-tailers.

After all, how much do we expect a customer who has made shopping at Saks Fifth Avenue in New York City a part of his or her regular routine to transfer the experience online? Much of the joy of luxury shopping has to do with the in-store experience.

For those who have ever experienced the incomparable level of service offered at Tiffany’s, the thought of a solo online shopping experience at Tiffany.com seems watered down at best. The site is well-done, but it’s simply not the same.

Likewise for buying Ferragamo neckties at the incomparable Neiman Marcus department store in Dallas, Texas. The same ties at NeimanMarcus.com just don’t have the appeal without the elegant dark wood fixtures and the seasoned, professional salesmen.

So what lies ahead for luxury e-tailers? When the in-store experience is so crucial to the transaction, can luxury e-tailers really expect to survive? At a time when even mass appeal e-tail sites are hanging on by a thread, how does a business that focuses on only the top 0.5 percent of affluent Americans have a fighting chance?

Spending with Muscle

The truth is that the limited audience for luxury e-tail sites is not necessarily a roadblock.

According to Forrester Research, this exclusive consumer club is a highly active group of spenders. In fact, Forrester reported that consumers who have a net worth of US$1 million or more spend $100 per month on Internet purchases. That’s roughly twice the amount most online buyers spend.

In this case, time spent online correlates directly with expenditures, since wealthier shoppers tend to stay online an hour more per week than other shoppers. The combination of more time to shop and generous disposable incomesseems to result in strong spending.

Nonetheless, one has to wonder whether these spending efforts will be strong enough to sustain luxury sites that have often limited their inventory to watches, perfume, novelty electronics, diamonds and leather accessories. The market for Feng Shui aromatherapy candles is at best, finite.

Room for Improvement

Despite a constituency that is liberal with a buck, or maybe because of narrow product selections, luxury sites have not found a magic formula for survival or success. Since dot-coms rise and fall at record speed, even luxury sites do not have the luxury of time to figure this formula out.

Still, the key to their salvation could be as fundamental as good old common business sense. First, you know that if you are appealing only to 0.5 percent of the most affluent Americans, you need to broaden your audience. It is unlikely anyone in the emerging world of electronic commerce can count on longevity with a customer base this small, no matter how much money they have.

Second, did luxury sites simply overlook the critical importance of profit margin? Fine jewelry, upscale gifts and high-end writing instruments all generate strong profits, but luxury sites’ favorite son, wristwatches, do not. It seems obvious that attracting more customers and diversifying the offerings with an emphasis on big ticket and high profit items could give some of these sites a lift.

Most Undervalued Customer

Further, is it possible luxury sites are missing the most essential customer base — corporations? Yes, most luxury sites direct us to “click here for corporate gifts,” but graphically it’s often almost an afterthought.

Corporate gifts never go out of style. They rise and fall a bit based on the economy, but they are as much a part of corporate America as stocks.

Luxury sites should form alliances with high profile corporations. They would generate some consistent, dependable sales, and it wouldn’t hurt the credibility factor if users saw “Exclusive Corporate Gift Provider for AT&T” on the home page.

Harnessing the power and established image of corporate clients could go far in ensuring a healthier bottom line.

What Works

Not all is rough and tumble in the world of luxury e-tailing. Exhibit A for a potentially sustainable business model is Ashford.com. Why? In large part, because it already has a reputation as a tight ship that is run like a business rather than as an online experiment.

Ashford’s move up the luxury e-tail ladder also has to do with an emphasis on service. When holiday sales were anticipated to test the limits of the staff, Ashford added staff. With customers still smarting from last year’s delivery debacles, Ashford promised next-day delivery on most items.

Smart marketing and creative alliances haven’t hurt either. Last week, Ashford revived its marketing agreement with Amazon.com in a slick deal that required no up-front money from the luxury e-tailer. In fact, Ashford will pay as it goes for e-mail promotions and package inserts via Amazon.

Eye On the Prize

Finally, Ashford.com is the living, breathing example of the necessity for e-tailers to establish and adhere to measurable goals. The company has already declared its intention to realize a profit in this calendar year.

Take notes, luxury sites. If you want to attract and keep a decent size audience, one that will purchase items usually associated with a major brick-and-mortar shopping experience, you may have to dance a little faster and get creative.

Exclusivity is probably better left as an image, rather than a reality. After all, if middle America finds its way to upper echelon e-tailers, everybody wins.

What do you think? Let’s talk about it.

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Note: The opinions expressed by our columnists are their own and do not necessarily reflect the views of the E-Commerce Times or its management.


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OPINION

Cryptocurrency as a Hedge Against the Declining Dollar

Bitcoin and the U.S. Dollar

Whether you want to embrace it or not, the money evolution is well underway. It’s taking us from paper bills to all sorts of digital currencies and bitcoins.

We didn’t just get to cryptocurrency and digital wallets overnight.

The digital transformation in finance started back in the 50’s when credit cards first came on the scene, allowing money to be transacted with the simple swipe of a piece of plastic.

Next, before we knew it, e-commerce solutions entered the marketplace. This not only heightened the ability to facilitate millions of dollars across online channels, but it created a platform for borderless transactions that now impact enterprises around the world.

Although society has engaged in digital finance for years now, there are still people who fear crypto and can’t quite let go of the traditional American dollar. For them, it’s the only tangible way to show the value of their money. However, regrettably, trends show that the monetary value of the precious dollar has now been declining for years.

Who could fathom the decline of the dollar and the rise of new currencies? During the pandemic the U.S. dollar was down 10 to 12 percent relative to America’s major trading partners; its weakest levels since early 2018. In addition to the pandemic other events contributed to the decline, such as the financial crisis and inflation. While the dollar remains the most stable currency in the world, its position is being challenged.

Cryptocurrency Advantages

As the dollar weakens, the rise of digital currencies seems to be accelerating. Early adopters of bitcoin have been reaping some of the benefits, despite the turbulence that the currency has had to endure over the years. Its pushback doesn’t seem to outweigh the benefits.

For example, consumers can enjoy little to no transaction fees when using crypto. Also, 160 countries around the world accept bitcoin, making it easy to send money overseas. Not to mention, thousands of crypto ATMs are starting to saturate the marketplace, making bitcoin transactions more accessible than ever with daily limits as high at $21,000 per day.

Regardless of all the buzz and activity around crypto, some demographics are still just not ready to veer away from what’s familiar. Even though there is apprehension, many still understand that things are changing and that they must get on board or be left behind.

Furthermore, since the industry is on the brink of a financial revolution, it’s imperative that consumers are provided with knowledge and training from cryptocurrency providers. No one should be exempt from reaping the benefits that the world of digital monetization has to offer.

Once many see how accessible and user-friendly it is, they’ll be more excited to get on board. There are many innovative companies changing the way financial activity is conducted. It’s vitally important that consumers seek them out, as well as research the best digital currency providers and products that fit their risk level and financial needs.

For those who are not prepared for the paradigm money shift, it could result in a harsh wake up call. Especially if they believe that the dollar is the world’s only premier global currency. With the current yearly decrease in the value of the dollar, it’s only wise to be proactive in securing financial health.

With this in mind, here are some ways to move to digital money:

Start by Making a Small Investment

Bitcoin is taking a commanding presence. It’s a financial asset that is buzzing and for good reason. It has become the world’s most popular cryptocurrency, with currently over 81 million users and over 270,000 transactions per day. Out of those users, there’s a huge population enthusiastic as a result of unthinkable profits.

Investing small amounts is a nominal risk that could yield large gains in the future. The dollar passes from hand to hand never knowing who had it last. Every bitcoin, on the other hand, has its entire history visible on the blockchain. This means funds can be tracked. Additionally, strong cryptography makes it virtually impossible to manipulate this ledger.

In short, the Bitcoin blockchain is one of the most secure systems on the planet, if not the most secure.

Get Familiar With Crypto Platforms

Knowledge is power. When it comes to the digital space, it’s power to profit.

There are a variety of platforms which allow you to store and trade cryptocurrencies. Understanding each is critical to aid in discovering the best and most secure for you or your business.

When making the decision, there are key factors to consider. For example, how frequently you’ll be trading or how much money you want to secure. By answering these questions, you gain insight into what platform best suits your needs.

Talk to Others, Hire a Coach

Becoming educated about the fundamentals of digital currency will help to set your mind at ease. There’s a lot to learn, and crypto is continuously evolving.

Sitting down with someone who has purchased, used, and even traded cryptocurrency will help accelerate your progress. Those that have walked the road before you may have made mistakes they learned from. You won’t have to repeat the same mistakes, so you’ll be a step ahead.

Recently, many of us experienced a financial shakeup we didn’t see coming as a result of the pandemic. Proven to be resilient, the world is dusting off its shoulders from the fall. Moreover, we are slowly watching the redefinition of the dollar take place before our eyes.

This is the time for us all to prepare for the new financial movement that is about to transform the world. Thankfully, there are innovative companies positioned properly in the digital-currency space. They are here to help as we all transition into the future of money.

It’s important to relinquish fear of the unknown and become knowledgeable. There are numerous ways to do so. Whether that’s talking to a friend, doing your own research, or starting small with wise investments.

Everyone has the opportunity to ensure their financial stability in the future. Don’t wait for the fall. Make sure you have a variety of financial assets and capabilities in place in case the dollar does come crashing down.

The opinions expressed in this article are those of the author and do not necessarily reflect the views of ECT News Network. Investing involves risk. Please consult with your attorney, accountant, and/or tax advisor for advice concerning your particular circumstances.

Lee Hansen

Lee Hansen is CEO at Byte Federal, a fintech provider of crypto ATMs with a network of thousands of kiosks. As an entrepreneur he has launched companies, acquired millions in funding, developed software, authored patents, and innovated several business solutions.

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OPINION

4 Industries on the Brink of Technological Disruption

One of the stories told in management classes as an example of a recurring mistake companies make when their industry is transitioning focuses on buggy makers at the turn of the last century.

Those that figured out they were in the personal transportation business pivoted to cars. Most of the others that thought they were only in the buggy business became extinct because their market moved to cars, and they didn’t.

Seems obvious after the fact, but clearly at the time it didn’t seem obvious at all because most buggy makers and those that sold horses and did blacksmithing went out of business.

In the case of autonomous cars, we are looking at moving from car ownership to a service like Uber that will provide a car just when we need it.

But, going further, initially with services like Zoom and eventually with the metaverse extending the concept of holoportation — coupled with drone delivery and the pandemic — will we even need cars as much, or at all, in the future?

Holoportation, or the use of avatars to travel virtually, is not considered personal transportation today. But if it is successful, it could eliminate most personal transportation in the future, and in turn put existing car makers in the same category as those buggy makers were a century ago.

Should holoportation be considered part of the transportation industry, or should existing personal transportation be considered part of old school collaboration, social networking, and shopping?

Let’s talk about a some of these big coming technology disruptions. Then we’ll close with my product of the week, a head-mounted display from TCL called the Nxtwear Air that could become this year’s must-have gadget.

Personal Transportation

Before the pandemic, personal transportation was mostly focused on cars with air transport, human powered transport, and even motorcycles largely falling into different classes. But with the increased use of video conferencing and collaboration products like Zoom, Teams, and Webex, the need for business travel has taken a significant hit.

Among the cool stuff at CES this yearPortl and La Vitre demonstrated a way to visit family and friends virtually, while a solution from ARHT Media called Holopresence showed how you can speak at any remote event without ever leaving your home, yet appear to actually be there.

While we are currently still habit-bound to travel, the pandemic is forcing us to reconsider our safety and aggressively consider not traveling. We don’t really need to go to the store anymore as delivery options have expanded. Because of Covid, our doctors increasingly meet with us remotely, and we’ve been able to use services like Amazon and eBay to get around our need to go to malls and department stores.

When cars become truly autonomous, why will we need to own one for the few times we have to leave our homes? Just contact the car service and an automated vehicle will appear at your door and function pretty much like an elevator in a high rise. You don’t need to own an elevator, so why would you need to own a car?

At CES, a lot of the car designs looked more like rolling living rooms than cars, and several of them were rather ugly. But so are elevators, and we don’t seem to mind that much what they look like any more than we used to care about those old yellow cabs or buses.

Plus, we haven’t even begun to talk about flying cars and people-carrying drones, both of which are advancing very quickly. Once vehicles are autonomous, we won’t need professional drivers or driver’s licenses because humans won’t be driving.

Film and Television

In video games, we have a concept called NPC, which is a non-player character that follows a set script. But isn’t that what actors and extras do? Soon, it might be far easier to program an NPC to appear in a movie and convert a script to a realistic representation of the character far easier, and far less expensively than hiring a person.

Actors can get sick, they can have behavioral issues, they can get into trouble off screen resulting in their termination, and they get more expensive every subsequent time you use them. Movies today are largely filmed with computer graphics anyway and it is much easier for a rendered character to operate on a virtual stage than it is for a human.

Now, it isn’t just the acting. Script writing can now be done using AI. You don’t need catering or recruitment for virtual players, and with a digital movie-making engine, you can more easily rewrite the script and digitally reshoot the scene when fine tuning the result with digital characters than with humans.

Studios like Dust are already creating relatively high-quality content using far cheaper digital tools, and an increasing number of movies today use rendered people as extras for scenes that previously would have required humans in those roles.

So, do we replace directors, writers, actors, extras, camera people, and all the rest of the movie staff with a few programmers and advanced artificial intelligence? The result is still a movie — and services like Netflix and Amazon have a never-ending appetite for content today. It seems to me like video game studios might well displace movie studios before this trend is over.

Farming

Traditional farming methods are becoming largely obsolete due to climate change. We are moving to warehouse farms which produce more food in much less space and can exist a lot closer to customers located in cities.

Farms such as these are increasingly tended by robots and autonomous equipment to reduce cost and contamination and operate at a scale that traditional farms generally can’t match.

In addition, for ranchers, we are developing healthier, tasty alternatives to beef, chicken, and other animal protein sources.

These changes should be not only more reliable during times of rapid weather change, but also potentially more beneficial for the environment because you don’t need to clear rain forests and you no longer need to eat other animals. Some of the animals we eat are huge producers of methane gas which contribute significantly to climate change.

Does this mean farming will become like manufacturing, particularly when we start 3D printing food? The farm of the future could simply be another factory.

Manufacturing

Warehouses and factories are changing with the increased use of robots and reduced need for human workers. Factories effectively evolve into huge 3D printers that can produce both cookie cutter products at volume, and far less expensive custom offerings thanks to increased automation.

Are factories still factories once they are fully automated? Or are they just huge appliances that 3D print the products we want on-demand and ship them using the increasing variety of autonomous vehicles and package-carrying drones?

Fully automated 3D printing factories should have fewer shutdowns, be less impacted by inflation slowing their growth, and be more able to meet transitory demand using a just-in-time manufacturing model. Also, because these automated factories will use 3D printing as part of their process, they can be smaller, more localized, and probably more resistant to logistics disruption.

Wrapping Up: Tip of the Iceberg

I could go on for pages about the massive disruption of electrics replacing internal combustion engine (ICE) cars, personal robots, military drones (we may not need military pilots or drivers in a few years), fast food robots turning fast food restaurants into large food vending machines, and satellite-based data and voice services — and we already have advanced coffee vending machines that make a better cup of coffee than Starbucks.

Is personal transportation actually personal, or is it becoming part of the communications market? Are restaurants, factories and 3D printers merging to become part of the technology market? Are movies and video games going to merge and provide different experiences but use the same creation tools and back-end. If so, what do we call the result?

PCs and smartphones are merging at a rapid pace, but is the result an enhanced smartphone or a more portable PC? These are all things that will be addressed in the next decade and those companies that figure out what new segment they are in will likely survive. Those that don’t anticipate these changes and evolve with the times probably won’t.

But one thing is for sure, this decade is going to be known for both an unprecedented amount of change and a lot of companies and people suddenly discovering that the road they were on dead-ended. You’ve been warned.

Rob Enderle's Technology Product of the Week

TCL Nxtwear Air Wearable Display Glasses

One of the coming disruptions are head-mounted displays which are finally reaching a price and performance level that makes them viable. The TCL Nxtwear Air head mounted display is powered by the smartphone or PC it is connected to and it projects a HD image into the glasses that is like watching a 140-inch screen from four meters away.

TCL Nxtwear Air Wearable Display Glasses

While this is mostly for movie watching rather than a monitor for work or gaming, it is a significant step toward that latter category and, eventually, head-mounted displays will force a major shift between PCs and smartphones, particularly when coupled with cloud services like Windows 365.

Once they are in wide use, the need for monitors, laptops with screens, and even personal TVs may become a thing of the past. We may decide that even when we are sitting together, using our own screens which can be adjusted for our eyesight and unique problems (like colorblindness) will be a better solution than the large screen experiences we have today.

What makes these latest TCL glasses interesting is that they are 30 percent lighter than previous generations and they don’t look dorky. The glasses provide decent detail (though I expect the 4K glasses that will eventually follow will be better), deep colors and surprisingly deep blacks. They have built in speakers that sound pretty good and mean you can often leave the headphones at home (I’d still use headphones on planes or when near others, however).

Expected to cost just under $700, these glasses are competitively priced when you consider that 140-inch display likely costs more than any car you’ve ever purchased, making them potentially a true value — and my product of the week.

The opinions expressed in this article are those of the author and do not necessarily reflect the views of ECT News Network.
Rob Enderle

Rob Enderle has been an ECT News Network columnist since 2003. His areas of interest include AI, autonomous driving, drones, personal technology, emerging technology, regulation, litigation, M&E, and technology in politics. He has an MBA in human resources, marketing and computer science. He is also a certified management accountant. Enderle currently is president and principal analyst of the Enderle Group, a consultancy that serves the technology industry. He formerly served as a senior research fellow at Giga Information Group and Forrester. Email Rob.

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