Designing a Digital Marketing Strategy for Start-Up Luxury Brands: The Case of Vidda Royalle

Introduction

Luxury is a large and relentlessly proliferating industry (Baker et al., 2018), even during times of crises (Barbosa et al., 2018). Incessant demand is driven by the six core characteristics of luxury brands, namely that they, (a) offer emotional, hedonic experiences, (b) at a premium price exceeding their functional value, (c) tied to heritage and culture, (d) in limited editions, (e) accompanied by auxiliary services, and (f) affording a sense of symbolic privilege through conspicuous consumption (Kapferer & Bastien, 2012).

However, while an estimated 70% of new value created over the next decade will come from digitally enabled platform business models (World Economic Forum, 2021), the above-mentioned characteristics of luxury products do not necessarily lend themselves to e-commerce strategies. First, while luxury products exude connotations of exclusivity and high social status (Vigneron and Johnson, 2004), the internet provides ubiquitous accessibility where clients are indistinguishable from the masses (Barbosa et al., 2018). Second, online platforms represent the future for tech-savvy consumers, while luxury is associated with heritage, history, storytelling, and a rich past (Corbellini & Saviolo, 2009). Third, the internet is associated with low prices, whereas the opposite applies to luxury (Okonkwo, 2010). Fourth, luxury products are experience goods – clients paying large sums for emotional and hedonistic experiences may be reluctant to order without being able to assess quality prior to purchase (Hagtvedt & Patrick, 2009). Fifth, luxury brands pride themselves on strong customer relationships, where discriminating clients enjoy being pampered and seek personalized, tactile retail experiences usually provided by mono-brand bricks-and-mortar stores, whereas online platforms by their very (non-human) nature, de-personalize this interaction.

Accordingly, many scholars have questioned the compatibility of luxury and online sales, the so-called “internet dilemma” (Baker et al., 2018). E-commerce is still only expected to account for 18% of luxury goods sales by 2025 (Quach & Thaichon, 2017). Compared to other sectors, luxury brands have shown low commitment to digital platforms (Okonkwo, 2009), with 40-50% of luxury firms electing not to sell on e-commerce sites (Baker et al., 2018), and those luxury brands which have adopted digital technologies are considerably more hesitant to engage in digital marketing such as tweets and posts (Ilyashov, 2015).

However, luxury brands are increasingly realizing that many of their customers are millennials for whom e-commerce is indispensable (Quach & Thaichon, 2017). This has given rise to the term “masstige” (mass and prestige) brands (Chandon et al., 2016), requiring luxury brands to navigate in the world of digital marketing. Furthermore, traditional luxury brand incumbents are being increasingly challenged by the entry of new start-ups, emergent brands heavily financed by venture capital and private equity firms. As such, there has been a burgeoning number of new start-ups in the luxury fashion industry in recent years (Ehrensperger et al., 2020; Ramadan & Nsouli, 2021). To compete in an industry where brand names, heritage (time compression diseconomies), and traditions are important prerequisites, luxury start-ups can successfully overcome the liabilities of smallness and newness by implementing digital strategies which allow for rapid and extensive exposure whilst obviating the need for costly intermediaries or expensive mono-brand stores (Gimenez-Fernandez et al., 2020). Interestingly, the very resistance of the incumbents in the world of luxury brands to establish online presence until relatively recently (Okonkwo, 2009) is actually an advantage to a digitally oriented new start-up, which can catch-up relatively quickly to their competitors´ online platforms without heavy resource expenditure (Gimenez-Fernandez et a., 2020).