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21 Dec 2000, Netherlands

Kindest Dr Ecommerce,

I am a student of economics in the Netherlands and I was wondering what (potential) impact you can identify for a global luxury brand such as Louis Vuitton or any other?

thanks in advance,

Pieter

Dear Pieter:

I expect you'd do best to ask Louis Vuitton. That said, I think the prospects are very good for a couple of reasons:

1. Luxury brands are expensive and, as such, customers will be higher income and probably better educated (you generally need to have a good education to earn a high income). Most Internet users are also from higher income, better educated socio-economic group. Hence there are more prospective customers on line than their would be for products targeting low income groups.

2. Wealthy East Asians, such as Japanese, Koreans, Thais, Chinese and others are especially image conscious and have long been major customers of luxury brands. At the same time, distribution systems in these countries tend to be inefficient, with too many intermediaries. In addition, import duties are very high. As a result, luxury brands can cost several times more in Bangkok than in Paris. Doubtless, if East Asians could purchase their luxury brands directly via the Internet and save substantially, they would (of course, they wouldn't save on import duties, as these would be payable when the goods enter the country).

That said, it is also clear that if a lot of sales start going via the Internet, sales from retail outlets will suffer. It is clearer still that retailers will not like this and the luxury brands will understandably be reluctant to upset their retailers - who will still be responsible for the bulk of their sales for a long time.

Finally, I suggest you join the eThesis discussion forum - it's especially for students researching e-commerce related issues.

Good luck,

Dr. Ecommerce