More on forward integration into online retailing

Yesterday’s post about Billabong’s forward integration into online retailing ended with a query about whether other such firms have pursued this strategy (and whether it has been a success).

Coincidently I have since stumbled upon this story reporting recent moves by various Italian fashion houses such as Armani, Roberto Cavelli, Valentino and Ferragamo, to build their presence online (link c/o State of Lux). This quote sounds pretty familiar:

“The cost of making a Web Site is not that big. That’s encouraging fashion houses,” said Stefano Sassi, chief executive officer of Milan-based Valentino, which opened its Web shop six months ago. “There’s a very interesting margin on e-commerce.”

It would seem these firms would face a similar issue with channel conflict (with potentially even more conflicts with respect to price parity maintenance).

Armani has also taken on the m-commerce challenge with an i-Phone application. Is this sort of customer engagement better suited to luxury goods?


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One Response to “More on forward integration into online retailing”

  1. Tom Osegowitsch Says:

    Clearly, margins are juicy enough to push a number of companies into online retailing. THere may also be other secondary reasons (learning benefits?) but the coincidence with the economic downturn would suggest this is primarily about securing revenues/profits in the current difficult climate. Obviously these companies are confident (or at least hoping and pryaing) that they can contain channel conflicts.
    What was interesting to see was that Billabong opted for a non-exclusive online platform. (I am presuming that the luxury companies featured in this blogspot are opting for their own, exclusive online sales site). Unless Billabong are planning to exclude other brands after the acquisition (unlikely), why would they opt for such an arrangement? THere is the distinct possibility of other brands balking at appearing on the same site as a competitor who controls the site. What is the big upside for Billabong? Aggregation — as in the case of an brick and mortar surfshop that aggregates many labels — would seem a weak argument. I can , after all, fairly instantly jump from one website to the next to compare offerings, prices etc.

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