Analysis of the U.S. E-commerce Market for Luxury Big-Ticket Goods

A comprehensive analysis of the e-commerce market for luxury big-ticket goods is provided below.

• US market size (in dollars), growth, and leading players in the big-ticket luxury goods market are examined in the first part of the report.
• The customer journey, and a compiled list of car dealerships that allow customers to purchase vehicles online are outlined in the second part of the report.
• The third section of the report examines the purchase habits of luxury buyers, the pain points of purchasers, and a list of customers that make up the market.

MARKET SIZE

• The 2020 US e-commerce market size for luxury goods, including big-ticket items, is approximately $26.6 billion. The United States market dominates the worldwide e-commerce luxury goods market.
• Looking ahead, the global luxury goods market is expected to grow at a CAGR of an estimated 7% within the next 5 years.
• Globally, online sales made up approximately $58 billion of luxury goods in 2020, up from $39 billion in 2019.
• Online channels influenced 85% of luxury transactions compared with 75% in 2019, and 40%-50% of purchases were digitally enabled compared to 20%-25% in 2019.

GROWTH

• In 2018, the US e-commerce market size for luxury goods, including big-ticket items, was $14 billion. In 2019, this number increased to approximately $16.8 billion marking a 20% increase from the year before.
• Last year, the market size significantly increased to an estimated $26.6 billion, marking a 58.3% increase in total e-commerce sales from the year before. The move to internet shopping during the COVID-19 epidemic accounted for the majority of this rise.
• By 2025, online is anticipated to overtake brick-and-mortar as the primary channel for luxury goods.

US BIG-TICKET E-COMMERCE LEADING PLAYERS

1. Amazon

•  Amazon is the leading player in the e-commerce segment for big-ticket luxury goods. In 2020, Amazon’s revenue was $386 billion.
• The company sells multiple luxury goods, including jewelry, furniture, clothes, and cars.
• While the company has sold luxury goods for quite some time, last year Amazon launched Luxury Stores, a new luxury shopping experience partnering with brands such Oscar de la Renta.

2. eBay

•  eBay is the second leading player in the e-commerce segment for big-ticket luxury goods. In 2020, eBay’s revenue was 10.27 billion.
• Luxury goods on eBay include jewelry, furniture, clothes, and cars.

3. Overstock.com

•  Overstock is the third leading player behind Amazon and eBay. In 2020, Overstock’s revenue was 2.5 billion.
• The company offers multiple luxury goods including jewelry, clothes, furniture, and at one point back in 2017 used to sell cars on their online platform.

Globally, JD.com and Alibaba are leading the big-ticket luxury e-commerce market.

CONSUMER JOURNEY

Decision

• Buyers of luxury goods encounter various sources that make them aware of products they may want to purchase. When it comes to the single most important influence on purchase decisions for millennial luxury buyers, 38.5% state they are influenced by a friend they admire, 37.7% are influenced by the brand and 23.8% are influenced by their favorite celebrity influencer.

Research

• Shoppers considering buying big-ticket luxury goods engage with various sources of information that provide data on big-ticket items. A market study from Deloitte states that millennial luxury buyers make buying decisions based on information from multiple sources such as traditional magazines, videos, social media, websites, and blogs.

Purchase

• According to McKinsey, of the three brands examined by luxury buyers prior to making a purchase, two are often regarded top-of-mind and account for 93 percent of consumer purchases.
• Purchase triggers for luxury shoppers include receiving extra income (such as a bonus), shopping for an occasion, for a treat, buying an item after seeing friends with it, or for replacement of an older luxury possession status as a globally well-known brand is considered the top buying factor across all luxury categories, while timeless styles and innovative designs have become secondary key drivers of luxury purchase decisions.

Post-Purchase

• During this stage, customers expect premium post-purchase experiences across all phases of tracking, delivery, packaging & out-of-box experience, and returns and refunds.
• In fact, a study by GWI found that 34% of luxury customers expect access to content/services post-purchase.

ONLINE CAR DEALERSHIPS

Tesla

•  Tesla was one of the first car companies to lay the groundwork for big-ticket e-commerce.
• The automaker has 35 locations in the US as of 2021.
• Tesla vehicles are built in both the United States and China. In the US the company has a factory in San Francisco and two giga factories in Nevada and New York.
• Consumers can buy a Tesla directly through the company’s website where they are prompted to select the car model, options, and price, and are offered financing options.

CarSaver

•  CarSaver is an e-commerce platform operated by Walmart that sells used and new cars.
• The company sells multiple popular car models including Acura, Audi, BMW, Cadillac, Jeep, Maserati, etc.
• Consumers can buy new or used cars or even build one directly through the CarSaver e-commerce platform by themselves or with the help of a personal shopper.

CarGurus

•  CarGurus is an e-commerce site for the sale of pre-owned and new automobiles.
• The company sells multiple popular car models including Jeep, Chevrolet, Acura, Subaru, BMW, Ford, etc.
• Consumers can buy new or used cars, lease or even sell their cars directly through the website. A review and a question forum are also available on CarGurus website that provides customers with useful information.

TrueCar

•  TrueCar is an e-commerce platform that sells new and used cars.
• The company sells multiple popular car models including Jeep, Ford, Kia, BMW, Buick, etc.
• Consumers can buy new and used cars, lease and sell/trade in their old cars directly through the website. Similar to CarGurus, customers have a wealth of information that includes, reviews and car rankings to help them during the buying process.

PURCHASE HABITS

• According to Walker Sands research, 46% of customers are more receptive to making a large-ticket purchase online than they were a year ago. The percentages are greater for individuals aged 18-25 (51%) and 26-35 (51%) respectively (56% ). Many of these customers have browsed for and bought big-ticket items such as home appliances, furniture, cars, and luxury clothing online.
• Of the majority of customers shopping for big-ticket items online, cars are the third most frequently bought items by high net-worth individuals.
• These individuals value convenience and premium experiences. For many of them, acquiring a car online eliminates a number of the pain points (long waits, anxiety over financing, dealing with large crowds, and paperwork) associated with traditional in-person automobile purchases at dealerships.

CUSTOMER PAIN POINTS

Lack of human experience when purchasing items online

• Affluent customers expect high-quality experiences when shopping for luxury goods online. They are purchasing the experiences and emotions the brand can offer them.
• Unfortunately, the rise of technology has led to “tech angst” where customers are increasingly concerned about technology’s influence in their lives.
• While luxury buyers love the convenience e-commerce brings, they expect a balance of digital with human-first messaging, experience, and activities.
• Providing them with avenues for real person-to-person interaction where they can get information about a product, ask questions, and get the full emotional experience when purchasing products online as they do in-store is key to keep them coming back.

Inconsistency between channels

• Inconsistency between channels is another major pain point for luxury goods buyers because brands have been slow to create consistency across devices and physical touch-points.
• Millennials expect an omnichannel experience during their shopping experiences. They anticipate regular communication via online channels such as social media, as well as companies gaining an understanding of their specific preferences and distinct demands inherent in the purchasing experience.
• To create this consistency many luxury brands are deepening the connection between the in-store and offline experience by offering options such as buy online pick up in-store, optimizing their mobile websites, and harnessing social media in their marketing strategies.

Different values between brands and consumers

• A difference in values between brands and consumers has quickly become a major pain point for big-ticket luxury buyers.
• Luxury customers are concerned with issues like sustainability, purpose, and effect. They seek out brands that prioritize sustainability with many having already shown commitment to doing good through philanthropy.
• When it comes to sustainability, 42% of millennials prioritize the environment, 26% prioritize animal welfare, and 32% of Baby Boomers choose ethical production.
• Sustainability is a big driver in positive conversations around luxury brands and for younger luxury consumers this is important because “doing good”, and “being the best self” is the essence of luxury.

CUSTOMER TYPES

Regular Treaters

• Regular treaters are defined as customers who enjoy treating themselves to luxury goods purchases regularly.
• They represent the biggest demographic in the luxury market and are more likely to purchase cars, household/furniture, and travel items and have done so at least once over the past year.
• They include affluent/elite customers who have traditionally driven the luxury market and HENRYs (high-earners-not-yet-rich) who have quickly become the target customers for luxury brands.
• HENRYs, mostly millennials earn between 100,000 and 250,000 a year. They are regarded as having a taste for a luxurious lifestyle, but when student loan debt and living expenses are factored in, there is little money left over for wealth accumulation. They are also more likely to have one/two homes, enjoy luxury travel, and have a ‘pleasure fund’ for fun activities.
• The majority of regular treaters are between ages 25-44 years old with males making up 62% of this group.
• When it comes to expectations of luxury brands, 21% of regular treaters expect immersive advertising from brands, 29% expect a story or narrative behind the brand and 28% expect a strong online presence.

Gifters

• Gifters are defined as customers who purchase gifts or luxury products for special occasions. Of this group, Generation Z and millennials emerge as the primary demographic.
• They are more likely to purchase luxury experiences such as glamping, special events, travel, and household items/furniture. Considering they only purchase luxury items less frequently, they are more selective with purchases.
• 34% of gifters expect access to services after the initial purchase, 34% expect clear values from the brand, and 60% expect exceptional customer service.

Occasional Treaters

• Occasional treaters include customers who purchase luxury goods once in a while. Of this group, older age groups and females represent most customers.
• For these customers “branded” translates to luxury and they are more likely to purchase luxury food ingredients (caviar, truffles), electronics, and bags.
• In terms of expectations, 78% of occasional treaters expect high quality materials/production, 48% expect a sense of authenticity from the brand, and 60% expect great customer service.