Alon’s Blog

This is my third blog posting on E.Factor about the subject luxury. In my previous blog posting on E.Factor I tried to start a discussion about the definition of ‘luxury’ and present my personal definition of this relative term.

In this blog posting I want to discuss eCommerce in relation to luxury, hence the title: “To eCommerce or not to eCommerce?”

It has been a decade since the Internet Bubble and still only a few luxury players fully operate eCommerce Sales Channels. This is beyond my grasp. Therefore I am one of the founders of ILEA - International Luxury Ecommerce Association (www.LuxuryEcommerce.org). I want to start with my own situation/case and explain what made me co-found this non-profit association.

I am active as an entrepreneur in the Luxury Industry since 1998 and since that year I have been trying to sell luxury goods via internet (who used the term eCommerce back then?). Without succes… Until last year. With our family company Ace Jewelers Group we had the honor to launch the first authorized luxury ecommerce website in the Netherlands that sells: watches, jewelry, diamonds, sunglasses and accessoires (www.AceJewelers.com). I hear you thinking: “Nothing special about that, even Amazon sells these items for year.” That is correct, but up until 2009 no luxury brand in our industry authorized online sales. All the items that seemed to be for sale online were either: fake, stolen, pre-owned, without warranty or from black markets. Most of the luxury brands (also fashion brands) were opposed eCommerce. Not many brands had a clear answer why, but Karl Lagerfeld – who is the artistic director of Chanel and also designs for Italian fashion house Fendi, a unit of LVMH – said that the Internet does not convey “the unique feel and sophistication of luxury materials, refined tailoring and extraordinary attention to detail found in luxury fashion.” He added that shopping for high fashion required a “multi-sensory environment”. For many luxury companies, the Internet is traditionally associated with cheap knock-offs sold on auction sites. The Internet can make it harder to know who the actual vendor of a product is. “This leads to fears of cheap copies and heavy discounting,” says Bernstein Research luxury goods analyst Luca Solca (Source: Wall Street Journal, 11-2-2009).

I understand where Lagerfeld is coming from, but if you look at the technological development in the last 10 years and how the society and consumer behaviour has changed, I do not agree. The consumer of today wants: convenience, quality, service and instant satisfaction (at a low price). This is definitely the case for luxury purchases. I agree with Lagerfeld that for high fashion and other physical products consumers will often (not always) will want to feel, touch, see, smell and/or try-on the product before purchasing it. Therefore I truly believe in multichannel retail/cross-channel strategies for luxury brands, the so-called Golden Triangle/combination of: Retail, Etail and Concierge Service (Back-Office/eFullfilment). For some industries I truly believe retail is over (think of travel agents, book stores, video rental stores, etc). But for Luxury Goods/Services (please read previous blog item what luxury is), I don’t believe stores will ever disappear. Never say never, but I do believe the role/task of a store will change. Stores will have to change their function of high speed sales outlet to brand experience centers. I find the Apple Stores one of the best examples.

Going back to our case, like Lagerfeld, most of the Swiss watch brands and international jewelry brands we represent in our stores, were and most of them are still opposed to eCommerce. Ace Jewelers have been online since 1998, but never received autorisation to sell the brands we officially represent online. In 2008 we decided to change our strategy of a pure retailer to a cross-channel (r)etailer. We founded Ace Online and we operated it as our fourth store within the Ace Jewelers Group. We have a dedicated Concierge Service that replies to all e-mails within 24 hours and they answer phone calls and incoming chats on the spot. We do not outsource any service and all staff members are trained within our industry and actually know what they are talking about. The Concierge Service is the bridge between our eBoutique and the physical stores. We truly moved to a cross-channel operation. Next month it is going to be a year that we operate full power… Maybe I will blog about the experiences in a future posting.

Today we can proudly say we are the first and only retailer in the world that can sell IWC watches and Baume & Mercier watches online. We are also the first company in the world to apply Augmented Reality in the jewelry industry (you can try on a diamond ring in front of your own computer). The luxury brands are slowly changing their strategies and experimenting with eCommerce. But, a lot of brands are still very much opposed. Breitling for example strictly forbids us to present even a picture of a watch on our website. This is one of the major reasons for us to participate in the foundation of a non-profit organisation like ILEA. The International Luxury Ecommerce Association was founded to create a Think Tank for everything that is linked to Luxury & Ecommerce. I always summurize it: “We want to turn all the non-believers of eCommerce into believers.” Hereby I want to invite all believer AND especially all non-believers to become a member and participate in this enduring discussion via: www.LuxuryEcommerce.org.

I want to conclude this blog posting by saying that I don’t believe we should even wonder IF we should progress with eCommerce… The question should be: “To eCommerce or to mCommerce”! Maybe a good title for a future blog posting

The E.Factor team has asked me to become a part of the E.Factor Blog Team and blog mainly about luxury goods. Apparently they believe I have interesting views about luxury since I ‘breath and live’ luxury. I literally grew up in my family’s jewelry business. Currently I have the honor to represent our family company, Ace Jewelers Group (www.AceJewelers.com), as the CEO of our retail organization with three physical stores and an international eBoutique.

It is up to you to decide if I have interesting views, in general and especially about luxury. In my previous and first blog posting on E.Factor I tried to give an introduction about myself by posting the Q&A I had with E.Factor. In this post, my second on E.Factor, I want to start a discussion about the definition of ‘luxury’…

… What is luxury? This is a question that I always keep on asking myself and my surroundings, ever since I am a child!

Nowadays we do not use a paper dictionary to find definitions, we search on Wikipedia… Here goes:

“Luxury can refer to several things:

* Luxury good, an economic good for which demand increases more than proportionally as income rises; contrast with inferior good and normal good.
* Luxury tax, a tax on products not considered essential, such as expensive cars
* Luxury tax (sports), a surcharge put on the aggregate payroll of a sports team to the extent to which it exceeds a predetermined guideline level set by the league
* Luxury vehicle, a relatively expensive automobile
* Luxury yacht, a very expensive privately owned yacht which is professionally crewed
* Luxury real estate, a niche real estate market dealing with the highest economic group of property buyers
* Luxury resorts, which are very exclusive vacation facilities
* Luxury box, a term for a special seating section in arenas, stadiums and other sports venues
* Luxury magazine, a magazine devoted to fine craft and luxury goods.”

Mmmm… I am not satisfied. I can distill some keywords from the previous sum-up: high income, non-essential, expensive, niche, exclusive and fine craft.

If we jump to Wiktionary, we find:

“Etymology: Latin luxus “abundant”

luxury (plural luxuries):

1. very wealthy and comfortable surroundings.
2. something desirable but expensive.
3. something very pleasant but not really needed in life.

Antonyms: (dispensable thing): necessity”

Second thing almost everyone does, is Google what we are looking for. If I type ‘luxury’ in Google (with a Dutch IP), the first result is the definition of Wikipedia! Interestingly enough, the second hit is the vague website eLuxury.com, that is owned by LVMH. I write vague, since it was launched as the hallmark of eCommerce of Luxury, but failed heavily. Now it is a vague promotional site for a Twitter page and Facebook page associated to this site. I will come back on eLuxury.ccom, social media and eCommerce in relation to luxury in a following blog post!

Since my childhood I was captured by the question what luxury actually is. As life evolves, ones views and opinions change too… So did my personal view and perception of luxury!

As a child I thought that the most expensive car, home, watch, diamond, etc was ultimate luxury. Of course if you look back on it, growing up in a wealthy western country in a warm and loving home is luxury. As a teenager gaining your own ‘freedom’ and making individual consumption choices of exclusive/non-essential products is often considered luxury. As soon as you start working and make your ‘own’ money, you are confronted how difficult it is to buy ‘luxury’… As Wikipedia states: “Luxury good is an economic good for which demand increases more than proportionally as income rises; contrast with inferior good and normal good.” and this true for a student that starts a company…But when one hits maturity you notice that luxury doesn’t necessarily needs to be linked to money… At a certain moment it can hit you that luxury can be: (free) time, friendships, health, peace, family, etc. Today my short definition of luxury is: “Something that makes one feel ‘rich’ although it does not have to do anything with money.” For example, having a great conversation with a dear friend can be a great sensation of luxury. But, I can not neglect the fact that luxury goods are often synonymous to expensive. Personally I prefer to link luxury goods to fine crafts, art and niche. These terms go hand in hand with scarcity and therefore exclusivity. And, on therefore these two terms are correlated to high prices. As a sales person I always avoid the term ‘expensive’… Everything in life is relative, everything! So, perception of monetary values are and always have been, subjective and relative. And, that is the core of the luxury… Luxury is relative! What can give someone a ‘rich feeling’ can make someone else feel depressed!

My last sentence can be considered bold and I want to give an example: I met enough people who feel richer wearing a Swatch watch compared to people who own more than one Rolex watch! Some goes for women with an engagement ring, the size of the ‘rock’ doesn’t say anything about how much a gentleman loves his wife-to-be! It is all about the story behind the products, events and services. It is all relative! I see it everyday in our stores, therefore we (Team Ace) never judge a guest (we never use the term customers). We facilitate ‘story telling’… Hence our slogan: Add Some ACE To Your Life!

Please share your vision/opinion/views of luxury here as a comment…

Last month I have been invited to come and blog on the entrepreneurs network E.Factor about luxury goods. Last year I already entered the team of E.Factor coaches and now I have been invited to blog on the subject I love.

Click here to read the article plus comments or read the first post here below:

“I’ve been a member of E.Factor since the beginning and I was very proud to become a coach on this excellent network website. Last week the E.Factor team asked me to start blogging about luxury… Apparently I have an (interesting) opinion about it
Well, that is up for you to decide…

I will try to blog here at least once a month, my aim is to blog weekly about luxury. I am very excited to get started and am curious what your feedback will be… For now I will start with a classic Q&A.

My Q&A with E.Factor:

Name: Alon Ben Joseph
Year: 1979
Country: The Netherlands
City: Amsterdam

Q: What is entrepreneurship for you?
A: Fun, adventure, top sport and way of living.

Q: What was your dream job when you were a kid?
A: To become a jeweler

Q: Why and how did you start your company?
A: I rolled into the family business. But during my college years, I also co-founded an internet company.

Q: Is this your first business?
A: No, one of several.

Q: If you were to start another business, what might it be?
A: Consultancy.

Q: What were some of the early companies you worked with?
A: Too many to mention.

Q: What is your definition of success and have you achieved it?
A: A quote by Michelangelo Buonarroti (1475-1564) comes to mind: “The greater danger of most of us lies not in setting our aim to high and falling short, but in setting too low and achieving our mark.” Success is relative…

Q: Who has influenced you the most and has been your greatest inspiration?
A: Very cliché: my parents.

Q: What advice would you give to people who are thinking of becoming an entrepreneur?
A: The grass is always greener on the other side. Yes, it gives you a lot of freedom, but also a total new set of ‘stress’. At the end the sum should be a plus for you! But, as Nike said it: “Just do it!”

Q: Describe/outline to us what your typical day looks like?
A: A lot of fun, A lot of phone calls, Really a lot of e-mails and creating added value every day!

Q: Do you achieve balance in your life?
A: Never, but it is oooh sooo much fun to find your own limits and push them further.

Q: Where you see yourself and your business in 3 years?
A: Number 1 eCommerce player in the jewelry & watch business.

Q: And as a final question: If we could introduce you to anyone, who would it be and why? (you never know who we know!)
A: Good one! This is a true entrepreneurs question (ask and share)! Love it! I would love to meet Lev Leviev. He is a self-made man that turned the complete diamond industry around. Living legend.

I really liked the last question, to get the discussion going, I want to ask you the same question

“If we could introduce you to anyone, who would it be and why?”