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02 Jun 2019

Why Online Retailers Go Upmarket — And How to Join Them

Historically, upmarket luxury goods were reserved for face-to-face, brick-and-mortar retail locations. The reason, as noted by Forbes, was that cachet and availability were the two biggest stumbling blocks. If anyone can easily order high-end goods, do they lose the label of luxury?

Companies that embrace the trend to online upmarket sales are enjoying substantial growth. Research firm Bain and Company found that sales growth for online channels was up 24 percent in 2017 alone. The market is also largely untapped, with just nine percent of all personal luxury goods sold online.

But it’s one thing to recognize market opportunity and another to make effective inroads, especially given the high expectations of upmarket customers. How do companies operating (and breaking into) the Middle East make the jump from mid-market e-commerce retailers or high-end brick-and-mortar luxury sellers to conquer the online market?

Seeing Success

There’s a market for luxury across the Middle East. As noted by the Gulf Marketing Review, an emerging set of consumers across the region — including the UAE and Saudi Arabia — are driving a $10 billion e-commerce market forecast this year. As noted by Arabian Business, meanwhile, 56 percent of MENA respondents said they now use their smartphone “as their main tool for online purchasing.”

For online brands looking to go upmarket, existing e-commerce storefronts aren’t enough. New-generation luxury consumers don’t just want static product pages and generic descriptions. They want mobile technology to deliver seamless experiences and showcase luxury goods wherever they choose to focus on those brands. As noted by Forbes, for example, near-luxury men’s clothing retailer Bonobos doesn’t just show male models wearing their high-end clothing; their webstore shows men moving around in the garments, talking to each other and showcasing how the clothing pieces move and interact with each other.

Put simply, to succeed in an upmarket online world, seeing is believing. Immersive visuals trump hyperbolic descriptions and rival assurances of quality.

Finding Your Audience

As noted by the GMR piece, luxury brands have discovered that e-commerce localization of social and website pages is critical to attract buyers across the MENA region.

Social media drives sales, especially in luxury markets where word-of-mouth is more important than on-site promotions or promises. Luxury brands must also target their audience more narrowly than mid-market retailers, and this starts with effective localization. Pages that contain obvious localization areas that ignore cultural language constructions or are simply reskins of descriptions for other countries won’t attract the interest brands need to generate long-term loyalty.

Consider a recent Entrepreneur piece about the value of moving upmarket: In many cases, 80 percent of revenue comes from 20 percent of customers. This is true in luxury e-commerce as well — while many buyers will purchase a single item or two over the course of a year, high-volume, high-profit customers are critical to online success. The key to attracting and keeping their interest is creating customized, localized pages that reflect their experience rather than the generic experience of Middle East citizens.

The takeaway? Find your audience, and you’ll find your 20 percent.

Influencing the Outcome

Luxury brands are personal brands. While mid-market e-commerce goods are often used to meet a specific need or solve a specific problem, upmarket purchases are designed for personal interaction. Buyers show them to friends, rave about them to family and write about them online.

This is critical in the Middle East market, where women especially are now interacting with brands and Instagram influencers online. As noted by Digiday, MENA-based beauty experts are “particularly in demand of late, especially as the conversations around skin tone and shade range become more of the norm by cosmetics and skin care companies.”

By partnering with influencers to show Middle East consumers people who look like them purchasing and using luxury products, it’s possible to create a sense of personal connection and identity. With e-commerce upmarket sales quickly expanding, this is critical — companies able to secure consumer interest before online luxury goods go mainstream in the MENA market have the chance to capture the cachet favored by traditional luxury brands.

The New Luxury

Online is the way forward for luxury brands. As a result, companies are both scaling up their offerings and developing e-commerce platforms to leverage this growing market opportunity.

In the Middle East specifically, rising mobile device use coupled with regional identity and evolving social media use is changing the way users find, evaluate and purchase luxury goods. No longer are brick-and-mortar stores the only way to create social buzz and showcase high-end products. Now, the right e-commerce presence can drive word of mouth and create organic upmarket reputation.

The new luxury has arrived. Online MENA retailers are going upmarket — and there’s room to grow.