Internet a threat to luxury brands?

Some luxury brands are worried about the effect of the consumer's ability to acquire 'vintage' finds on internet with the click of a button. With internet purchases often limited to affordable or discount finds, the idea that people can buy luxury items online without fear of being duped threatens luxury companies that have always differentiated themselves by offering guaranteed quality for more.

"They seem to have the idea that a luxury brand shouldn't be doing this," Michael Sheldon, chairman of Potero, told the Financial Times. Portero is known as the "Ebay for the affluent", which trades luxury brands through Ebay. The company was founded in 2004, "on the belief that buying luxury online should be effortless and without risk". Consumers can purchase a Hermés Birkin bag or a Chanel purse online, with the guarantee that they are buying the authentic product. Some companies have expressed their disapproval of online trading of luxury brands. "We prefer our products to be sold in image-enhancing environments only," Lew Frankfort, president of Coach, told the FT. "We don't consider these sites appropriate for the brand."

However, the internet allows consumers to dispose of their purchases once they tire of them, which is happening increasingly frequently in the ever changing world of fashion. Affluent consumers are always looking for the newest and the best. The internet allows them to trade belongings on a secondary market and continually change their assets. According to Milton Pedraza, head of the Luxury Institute, wealthy baby boomers "want to forgo the burden of ownership". "They would rather leave their heirs a portfolio of investments than a lot of possessions," he told the FT.

Greg Furman of the Luxury Marketing Council does warn that trading on the secondary market needs to be "meticulously controlled", because of the danger of counterfeits. There are, however, companies that applaud the existence of a secondary market. Last year, Potero signed a deal with watch retailer Tourneau to authenticate watches. "We believe (Potero) is legitimising the secondary market of online auctions for luxury goods," Howard Levitt, president of Tourneau told the FT. "We recognize this is the future for buying and selling pre-owned luxury goods online and a way for us to extend our brand to the secondary marketplace."

Luxury goods group PPR's chief executive Francois-Henri Pinault shares this opinion, believing that a secondary market can educate the consumer about the product, provided it is authentic. "It would be better to have used products at a good price than fakes," he said. However, shops are not in danger of losing clientele as many consumers want what's new, and a secondary market usually offers predominantly old lines.