Going digital: Luxury e-commerce growth outpaces non-luxury’s

Driven by pandemic disruptions and emerging technologies
Going digital: Luxury e-commerce growth outpaces non-luxury’s
More consumers are buying luxury goods online

The luxury market has been long synonymous with exclusivity and in-store experiences. With the pandemic changing how consumers shop, the global luxury industry has been experiencing a surge in e-commerce growth. According to an ECDB report, the rate even outpaces that of non-luxury sectors.

Stable growth

The recent report shows that the luxury sector’s online revenue has remained stable. In particular, online sales accounted for 18.8 percent of total global luxury sales in 2021. This marks a significant increase from 2020’s 17.3 percent. 

Even with the reopening of physical stores, the online segment generated impressive sales. Starting at $42 billion in 2020, the online market reached $58 billion the following year. In 2022, the online segment demonstrated stability, generating $57 billion in sales.

“The global luxury market has adapted, with many companies now viewing online channels as a valuable option alongside the prevalent offline model,” stated the report.

“Even as offline sales picked up pace, the absolute online sales did not decrease drastically, as our data shows. The indication is that online channels will remain relevant in the luxury market in the coming years,” it added.

At the onset of the COVID-19 pandemic, many physical stores were forced to close, prompting the rapid rise of digital shopping. Even the most prestigious bands heightened their efforts in exploring online avenues.

In the Middle East — where more than 90 percent of buyers opt to buy goods through online channels — the luxury market is also booming. In 2023, Boston Consulting Group estimated the market’s value at $16 billion. It could double by 2030, reaching $32 to $37 billion.

Read: 6 in 10 retailers to use AI for better shopping experience

Luxury vs. non-luxury e-commerce

The report also analyzed how the luxury goods market fared between 2020 to 2022 when compared to its non-luxury counterpart in the fashion and personal care segments.

The luxury market exhibited a compound annual growth rate (CAGR) of 17 percent during this period, surpassing the 8 percent CAGR observed in the non-luxury e-commerce market. While the non-luxury segment experienced a contraction in online sales from $958 billion in 2021 to $928 billion in 2022, luxury e-commerce continued to thrive. It surpassed $57 billion in 2022.

Giving an insight into what prompted the rise of luxury online shopping, the report noted, “The retail landscape has undergone a technology-driven evolution in recent years. Digital penetration, the ubiquity of mobile phones, and COVID-induced changes in consumer behavior have all boosted online shopping.”

The sector is expected to maintain this momentum as it embraces more emerging technologies.

Backed by substantial capital, luxury brands have been exploring artificial intelligence (AI)-driven personalization. Experiential and immersive luxury and virtual fashion events are also among the advancements taking over the scene.

Furthermore, brands are ramping up their omnichannel strategies, integrating online and offline experiences to cater to their customer base. 

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