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Social Commerce: A Luxury that Luxury Brands Can’t Afford?

Posted by Jennifer Vano on November 12, 2010 02:05 PM

Once the candy of young adults, social media is now becoming the meat and potatoes of valuable brands and value-oriented consumers.  But it’s no longer enough to stick a logo, some boilerplate marketing copy and a handful of ads on your Twitter, Fourquare or Facebook page and call it a campaign.  As social media becomes analogous with social reality, users want to – you know – socialize with their favorite brands the way they do with their friends: through open dialogue and unique, fun and mutually beneficial exchanges. 
Welcome to the age of social commerce. Social media—specifically, a strategic social media presence—not only supports but also shapes consumer and brand behavior and increases brand and personal value.  Why?  Let’s break this down. You allow an entire network to review your Tweets about recent purchases, Tumblr posts about cool finds, or Facebook likes and dislikes.  That network cares about what you have to say, which validates your opinions and amplifies your confidence, your I-have-something -to-add chops.  It’s social currency and makes you a more desirable friend online and offline. Brands are starting to get it, and are giving consumers a reason to feel special and wanted via social media outlets. 
Visitors to Gap receive a 25% discount just for checking in on Foursquare. And Urban Outfitters will “like you back” if you like their page on Facebook by offering you exclusive promotions and discounts.  If the brand and you like each other, then the brand and you know each other, enough perhaps for you to offer your opinion about the brand and for the brand to listen. You become an influencer both amongst your friends and within the commercial landscape. Cool.  
All of this egalitarian socializing poses a unique quandary, though, for luxury brands. After all, Hermes and Gucci weren’t designed to deign to “chat” with the likes of most of us, let alone act on our plebeian feedback.  When a brand like Coach tries to get down to the level of the regular consumer, and engage with that consumer, isn’t some of the exclusivity that defined the brand lost? 

Do some brands risk losing their essence, their identities, by playing nice with all the other brands in the social media sandbox? Or will social commerce start to change the DNA of luxury brands and erode their elitism? We’d love to hear from you in the comments.


Milady Rosemeire Merlo Brazil says:

I'd appreciate souch to read nice cooments about the users of different Brands. However it should be their comments as users or whether they like or not. What I don't expect to see is a foward of a marketing campaign. For instance, I published in my Fscebook a dress from a stylist that, personally, I loved. In summary, it os a great tool, for both sides, if seriosly used. With best regards. Milady Rose

November 13, 2010 08:14 AM #

Joseph D United States says:

This is something we face quite often in our business..   I think there is a key difference in being 'responsive' as a major brand versus 'interactive'.  I do think that large luxury brands are becoming more responsive and approachable by the average person, but they lack the candor that smaller brands are able to have.  The conversations are thin at best.

I think the larger brands are making up for that with better-funded campaigns that dazzle more than interact. Stunts, livestreaming, super high res video, foursquare sponsorships, etc, but at a level so many smaller brands are unable to obtain just yet. (Whether that be for cost purposes, or simply reach/critical mass)

That's definitely going to shift as newer technologies are developed, and it's most certainly going to take away from the exclusive mystique the larger brands are able to uphold.  One way brands can regain that is by making them more of a 'cult' status, keeping tight membership only aspects to their business... creating almost a faux-circle.  Velvet ropes on the web seem to have the same effect they do in brick and mortar, just with larger groups of 'unqualified' prospects. Using the technology that exists to segment those prospect pools seems like one of the first steps, in my opinion.

(On a side note.. I miss Interbrand.. I used to read regularly, then life got in the way... it's back on the daily-radar now no doubt!)

November 13, 2010 07:22 PM #

Joseph D United States says:

PS.. Why on earth is brandchannel not using a more social-commenting system like disqus?  ;)

November 13, 2010 07:23 PM #

MArk Australia says:

good article.
I think it's the case of the medium (social networking sites like facebook, twitter, etc) being the message (and building the brand).
Do agree Luxury brands have a dilemma in that social networking is an opportunity because as you say "social media is becoming analogous with social reality", yet at the same time social networking sites are hardly exclusive and don't really add any brand-building value to luxury brands.
To what extent a luxury brand's exclusivity will be diminished by a presence on social networking sites, and how much control the brand managers have over this effect might be the critical questions to be answered. I think for strong luxury brands this diminishing effect might be negligible. Will luxury brands that immediately come to mind like Gucci, Versaci, etc ever be not viewed as luxurious?
Perhaps luxury brands can approach it in a different way. For instance, instead focus on product placement in social networking sites on the back of celebrities who have a presence on social networking sites for example (sure this is already being done).
Perhaps the weighting of social network presence with respect to other integrated marketing tools such as events, product placement in movies and on celebrities, sponsorship of events, etc may also be a factor.
I'm sure the very creative Ad people out there can make it work.

November 13, 2010 08:05 PM #

Richard United States says:

More affluent consumers are using the Internet today to help them make their purchasing and travel decisions and that amount is going to continue to grow rapidly. Luxury brands that use social media will be taking the first step in new technologies for brand growth in the market today and reach the new breed of affluent consumers on a more personal level.

November 15, 2010 10:13 AM #

mobi.luxe United States says:

As brands begin investigating how best to capture consumer sentiment in a manner that remains true to the essence of the Luxury brand experience, it is important to distinguish between two very different forms of consumer generated content: product level content and brand level content. The examples cited in the WSJ article "Luxe Lowdown: Tony Sites Begin to Invite Buyer Reviews" (October 16th) focus entirely on product level content, primarily in the form of customer reviews. It is precisely this content, spoken directly from the mouths of consumers, that has always been the barrier to entry for consumer generated content on Luxury brand sites. The statement from a Chanel representative reached for comment by the reporter speaks volumes – “We will not comment on this topic.”

Scott Galloway, founder of L2, a think tank that specializes in prestige brands, accurately surmises, “The notion of having a user saying that Chanel No. 5 smells like Brooklyn is so scary that [luxury brands] were literally paralyzed.” Note Galloway’s choice of words – literally paralyzed. Luxury brands have always existed as arbiters of fashion, defining stylistic trends for a global audience based on the brand’s view of the fashion universe. This paradigm, however, is steadily shifting as the C2B (r)evolution continues to gain momentum. Shoppers are armed with previously inconceivable access to information, opinions, and accessibility to brands than ever before. At some point in the not-too-distant future there will be a forced assimilation to engage consumers in open dialogue and those brands which ardently refuse to engage risk relevancy extinction. The question remains, how to best engage in open dialogue with customers and offer freedom of speech while maintaining the veil of mystery that Luxury brands inherently possess.

good blog post on this topic here - http://tinyurl.com/2at3trh

November 15, 2010 02:11 PM #

Daniel Kong Canada says:

This article really does pinpoint a greater dilemma within the fashion industry that has existed for quite some time. What happens so often with luxury brands is that once they reach a certain level of recognition (based on product quality, outstanding service etc), the masses start pouring into the stores and start buying those products. A good example would be both the Gucci and LV monogram print products you see in places like Hong Kong where it is now so ubiquitous that it may seem common-place and mainstream.

Just as this scenario describes finding that balance between exclusivity and mass appeal, it is important that companies find that balance between being too "social" and being too uptight (eg the Chanel example that mobi.luxe has outlined above.) Certainly, an interesting case to study would be Tom Ford when he denied any form of electronic media during his long-awaited comeback, creating a hysteria amongst those vying to see his show. Perhaps this is why marketing agencies constantly emphasize the need for objectives to be carefully defined before companies start jumping on the social-media bandwagon. A Facebook fan page may be typically measured by the number of "fans" it has. But to be sure, popularity and mass appeal doesn't count for everything.  


November 15, 2010 11:26 PM #

Cheray Unman United States says:

Luxury Brands have to develop their own personal and sincere relationship with the social media community. The best ways have been having their own brand groups on Facebook that shares the  intimate world of their glamorous product launch events and community postings of their favorite products. I created a group for the couture house Brunello Cucinelli on Facebook which has grown over the past few years ;The group members have posted pictures and news stories of brand from all over the world . Having a  verified Youtube channel for their runway shows, commercials and  events can also be a successful way for being social without losing control of the brand. The Gilt site is a beautiful aggregated online luxury store that allows smaller brand to access the online and social community. One can share an item on Gilt with their social media choices.
Luxury commerce is here and all brands need to participate but it is an amazing venue and very exciting for all ! Cheray Unman

November 16, 2010 01:31 PM #

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