Facebook May Help Online Luxury-Goods Sales Grow 20% Annually

 

Online sales of luxury goods may climb 20 percent a year by 2015 as producers build networks of potential customers on social media websites such as Facebook.com, according to a study published today. Revenue from fashion, jewelry and other luxury products is likely to reach 11 billion euros ($15 billion) in four years, the report from Italian luxury trade group Altagamma shows. “The explosion of social media and the increasing investments in the online channel by luxury companies has reinforced and enlarged the community of those who explore, comment upon and eventually purchase luxury goods,” Milan-based Altagamma said in a statement. Luxury companies are more than doubling their “friends” on Facebook annually in recognition of the link between online and offline purchases, according to the report. At least half of consumers in Europe, the U.S. and China form an opinion or seek information online before buying in a store, while most online luxury sales are preceded by a boutique visit, Altagamma said. Burberry Group Plc (BRBY), the U.K.’s largest luxury goods maker, gets “the most reach and most response” from digital initiatives compared with other media, Burberry Chief Financial Officer Stacey Cartwright told analysts on July 13. To promote the Burberry Body fragrance, which hit shelves this month, the London-based company offered exclusive samples to its nearly 7 million Facebook fans. It received more than 225,000 requests in little more than a week. The Internet plays a key role in increasing the hype around luxury brands and their products, Altagamma said. Fashion Blogs The web’s influence on perceptions of luxury goods is strongest in China, where fashion blogs are the source of opinion for 58 percent of consumers, compared with 27 percent of their counterparts in Europe and the U.S., the report said. The Asian country also has a higher penetration of online purchasing. Seventy-eight percent of Chinese buy luxury goods online, compared with 56 percent of Europeans and 46 percent of Americans, “mainly because they wish to avoid interactions with sales personnel or their insistence,” Altagamma said. The study included surveys of 187 companies with total revenue of 60 billion euros ($82.1 billion), interviews with 1,500 consumers and analysis of 450 websites in seven countries.