The luxury market has seen a tectonic shift from offline to online mode, says Nakul Bajaj
The recent years have witnessed the evolution of the Digital Era in our country. Slowly and steadily, the market culture is shifting from offline to online in our country, which is quite evident from the fact that online shoppers have quadrupled in recent years. From everyday essentials to your favourite luxury brands, everything is available online these days.
This new age trend in the market is the result of various factors, the biggest one of them being the high penetration of smartphones, which has led to increased accessibility to the internet across the country. Around five years ago, the trend of online shopping was majorly popular and available in the metropolitan cities only, but in the last two years, we have witnessed a major shift in the shopping segment — from offline to online in tier two and three cities as well.
The demonetisation drive in November 2016 changed the dynamics of the luxury space in two major ways. When 86 per cent of the cash was removed from circulation, customers became more cautious about what they are paying for the items. Earlier the customers who were happily shopping luxury brands offline and paying full price for them made a considerable shift to try online players ranging from international websites like Net-a-porter, Neiman Marcus to domestic websites like Darveys.com, which offer more brands, newer styles and better prices, all on one platform. It also pushed the customers to try the online payment method and trust it like never before.
According to Darveys.com’s annual report 2017-18, 28 per cent of regular COD customers made a repeat purchase via online mode after demonitisation, and 67 per cent of new online transactors, who earlier preferred COD (cash on delivery) mode have continued to use the online mode after their shift to the online payment for the first time. At the entire industry level, in terms of luxury, there has been a jump of 22 per cent from cash on delivery to online transactions in the last two years across the industry.
Online websites have given an increased access to a wider variety of luxury brands and collections to the Indian consumers, which could never be available offline as the physical stores face the issue of extremely high rentals and space constraints in our country which leads to smaller stores. This is turn means that there are only limited collections at their stores.
The online shopping culture and in turn sector has been booming at an exponential rate in our country and is directly affecting the offline sector. Online portals have been studying this behavioural change of the Indian consumers. In order to be on the top of their game, they have been offering amazing services, simplified return/exchange policies and faster delivery timelines. They are constantly improving themselves to compete with the physical stores in order to increase their presence in the market and provide the best experience to the end consumer. The new age trend of online shopping has been able to break the psychological barrier of experiencing a product via touch and feel. Therefore, the luxury paymasters who are looking for discounts are now comfortable in splurging online. Even people who are not looking for discounts on luxury brands prefer shopping online because of the wider selection of products available.
The ease of shopping luxury brands in the comfort of their home gives the shoppers a better way to explore an extensive variety at better prices, as compared to the offline stores. The customers can easily access multiple brands all at one place with just a few clicks. People no longer have to travel abroad in order to get steal deals because the domestic portals give them the convenience to shop international luxury brands anywhere, anytime without any hassle. As we have seen in the past, the majority of luxury online shoppers in our country consisted of millennials in the age group of 21-30, who wanted luxury items on discounts. But the year 2018 saw the non online shoppers in the the age group of 30-50 coming on board and making a shift. These were the ones who earlier didn’t prefer to make big purchases online.
There has been a great realisation of the benefits of online shopping in this particular segment, which previously never came online to purchase anything. The hectic lifestyle, ever-growing dependence on smartphones, the impact of western culture and increased brand awareness through various mediums are few of the reasons why the older generation also caught onto the trend.
Looking forward to the year 2019, the online luxury segment is expected to provide greater accessibility to brands and collections in tier two and tier three markets of the country. Luxury fashion sector shall be one of the first sectors wherein online sales shall surpass offline sales in our country.
(The author is founder of a luxury, e-commerce portal)