Luxury Brands in Brazil Embrace E-commerce, But Face Challenges in Delivering Premium Customer Experience Online
Luxury brands such as Chanel, Hermès, Prada, Dior, Hugo Boss, and Estée Lauder have started to embrace e-commerce in Brazil in search of high-income clients. However, the main challenge for these large “luxury maisons” is to convey the premium experience available in physical stores, which even includes champagne, to the virtual world, without losing the exclusivity characteristic. The luxury goods market in Brazil is expected to earn US$2.85 billion (about R$14 billion) this year, a 4.2% increase from 2020, with online operations representing 4.8% of this amount.
The success of this business model will depend on how e-commerce sites can mimic the experiences offered in physical stores for these luxury brands to thrive in Brazil, according to the coordinator of ESPM’s fashion and luxury hub, Katherine Sresnewsky. Katherine states that “luxury e-commerce that understands the dynamics of physical retail and transports it into the virtual universe will succeed.” Physical stores have sales assistants explaining the products, showing combinations and reinforcing the quality of the items. E-commerce sites can do this through photos, videos, chatbots, and detailed descriptions of the items.
The decentralization of luxury goods in Brazil is also a factor that needs consideration. The country has a demand for luxury throughout, Katherine continues, as there are people in Amazonas and Bahia who want to consume luxury. Running their website for nine months, Carol Bassi is one of these examples of companies targeting high-income clients who have decided to invest in e-commerce. With three physical stores, around 20% of the income already comes from virtual sales. Flávio Spacca, the group’s e-commerce director, states that currently, around 60% of customers who buy on the site do not use the physical units, while 40% are from States where the brand does not have branches.
Challenges Faced by Luxury Brands in Brazil’s E-commerce
One key challenge is transporting the premium customer experience online without losing the exclusivity characteristic of luxury brands. The main focus of a luxury brand’s physical store is its meticulous customer service, complementary facilities (e.g., champagne bars, hotel rooms), and an aesthetically pleasing layout. These experiences have to be maintained in an online store despite being in a digital space where it is harder to replicate personalised experiences that customers receive in a physical store.
Another challenge is the localisation of the customer service in an online store. Brazil has vast cultural diversity that requires its digital presence to follow suit. Understanding the local Brazilian culture and tapping into relevant cultural events can help with localising customer service.
How to Overcome These Challenges and Thrive in Brazil’s E-commerce Market
To conquer the e-commerce market in Brazil, luxury brands need to;
1. Initiate a digital transformation, including integrating e-commerce, digital marketing, and social media as a strategic imperative.
2. Optimise digital pricing and develop effective promotions that will engage customers.
3. Improve e-commerce site user experience by considering and addressing the challenges of localisation, consumer experiences, local preferences, and payment and delivery preferences to cater to local Brazilian consumers.
4. Finally, luxury brands have to manage consumer data privacy to navigate uncertainties of local regulations and cultural-societal values.
Conclusion
Luxury brands in Brazil must implement a customer-centric strategy, maintain product and service quality, and create a unique personalisation experience that targets the local consumer to excel in the e-commerce market successfully. Businesses must acknowledge that Brazil is a vast country with significant cultural differences, and even within the same region, consumer preferences vary considerably. Therefore they must have an online presence that relates to each particular area in Brazil.
Summary:
Luxury brands such as Chanel, Hermès, Prada, Dior, Hugo Boss, and Estée Lauder are shifting to e-commerce in Brazil, targeting high-income clients while delivering a premium virtual customer experience. The physical store’s customer service, complementary facilities, and aesthetic layout are focused on earning a luxury brand’s customer loyalty. This exclusive experiential characteristic is a challenge for e-commerce to transmit virtually. Brazil has vast cultural diversity, making it a challenge to localise customer service. Overcoming these barriers requires digital transformation, pricing optimisation, customer experiences, local preferences, and payment and delivery preferences. The luxury brands must manage consumer data privacy to navigate uncertainties of local regulations and cultural societal values.
Additional Piece:
Why Luxury Brands Must Consider Localisation in E-commerce
E-commerce customers’ needs differ by country, and Brazil is no exception, as Brazilians have a particular preference for personalised service and attention. As luxury brands shift to e-commerce, localisation becomes crucial in catering to local customers. If luxury brands do not consider localisation, it is less likely that they will gain an international customer base in Brazil.
Luxury brands need to participate in cultural events to resonate with local customers by tapping into holidays and regional events that impact the respective cultural group. Brands should also adapt to consumer preferences, curate content based on regions, and be aware of each consumer’s unique purchase history. Localising services and offerings shows that the luxury brand is paying attention to the local population’s cultural significance.
Brazil has significant cultural differences, and consumer preferences vary per region. Brands need to implement a digital marketing strategy that reflects these differences. Brands need to remember that being digital does not eliminate the need for specific regional personalisation in the targeted audience.
In conclusion, Brazil is a vast country; therefore, customer cultural differences are to be expected. Luxury brands that aim to succeed in Brazil’s e-commerce market must show that they understand and cater to the customers’ needs by providing personalised customer service. Brands need to grasp regional preferences while valuing their customers’ sensibilities to ensure localisation and succeed in the Brazilian e-commerce market.
“Luxury e-commerce that understands the dynamics of physical retail and transports it into the virtual universe will succeed.” – Katherine Sresnewsky, the coordinator of ESPM’s fashion and luxury hub
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The brand director, Joana Laprovitera, started buying online as soon as the first websites selling fashion items appeared. Over time, she also began to acquire luxury items. “What drives me to buy online is the convenience and saving time,” she says, who also likes physical stores. “I like human contact.”
Joana’s case continues to be an exception in the luxury market, which concentrates most of the sales in the country’s physical stores. However, star brands such as Chanel, Hermès, Prada, Dior, Hugo Boss and Estée Lauder open their websites in search of high-income clients.
For the specialists heard by the report, the main challenge of the large “luxury maisons” is to transfer the premium experience available in physical operations, which even include champagne, to the virtual world, without losing the exclusivity characteristic.
The luxury goods market in Brazil is expected to earn US$2.85 billion (around R$14 billion) this year, 4.2% more than in 2022, according to consulting firm Statista. Online operations should represent 4.8% of this amount.
challenges
For the coordinator of ESPM’s fashion and luxury hub, Katherine Sresnewsky, the success of this business model will depend on how the sites manage to imitate the experiences offered in physical stores. “Luxury e-commerce that understands the dynamics of physical retail and transports it into the virtual universe will succeed.”
Katherine recalls that in physical stores it is up to sellers to explain the products, show combinations and reinforce the quality of the items, which on websites can be done through photos, videos, chatbots and detailed descriptions of the items.
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Running its own website for nine months, the Carol Bassi brand is one of the examples of companies targeting high-income clients who have decided to invest in e-commerce. With three physical stores, today, around 20% of the income already comes from virtual sales. The group’s e-commerce director, Flávio Spacca, says that currently around 60% of customers who buy on the site do not use the physical units, while 40% are from States where the brand does not have branches.
Decentralization is reinforced by Katherine, from ESPM: “Brazil has a demand for luxury throughout the country, because there are people in Amazonas and Bahia who want to consume luxury.
The information is from the newspaper. The State of S. Paulo.
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