From a traditional paradigm, the term "luxury e-commerce" is an oxymoron. The high-volume,
hands-off approach of online sales is a direct contradiction to that of the high touch, human
relationship-based luxury retail industry. It is for this reason that, until recently, many luxury
brands have avoided e-retail - the belief is that it cheapens their image (Okonkwo, 2010). However, the successful experiences of certain companies in specific regions are gradually
giving many luxury retailers a reason to reconsider e-commerce. For example, the luxury
retailer Ralph Lauren has experienced huge success in e-commerce (see Figure 1), and is on a
mission to proliferate their multi-channel sales model across the globe. South Korea is one of
the most recent locations in which Ralph Lauren has chosen to roll out an e-retail initiative. Explosive economic growth across Asia has rapidly expanded the market for luxury goods and
services. In South Korea, this growth has been particularly strong and consistent, as has South
Korean consumers' appetite for luxury. This strong market growth, confluent with the reputation
as the world's most wired country, makes South Korea an attractive target for e-commerce
implementation. The Ralph Lauren team came to us with a rather broad request: to help them investigate the
potential challenges of their e-retail initiative in South Korea. Through our research, we found
several interesting and pertinent optimization models that could be modified to plan for Ralph
Lauren's e-retail operation in South Korea, but as we delved into these models we realized that
they didn't address Ralph Lauren's paramount mission in Korea, which is to "elevate the brand".For example, Collection customers who enter the Collection portion of
the website should also have easy access to most Blue Label merchandise, because they are
likely to "buy down" to Blue Label fairly often. However, the Blue Label segment of the site
should only strategically display certain Collection Label items (like accessories) - to elevate the
attractiveness and inspire demand for the Blue Label items, while not harming the Collection
image. Complete integration of the customer experience should be part of Ralph Lauren's everyday
operational practice. Store
associates should leverage the broad SKU assortment available at the central DC to enhance their
customer service capabilities. Behavioral drivers should be in place to reward store associates
for creating an online sale (similar to Store-Net in the U.S.). If the customer makes an online
purchase from a Ralph Lauren store, the mediation they experience can be mitigated by giving
the customer a tangible item to walk out with. These items might be small (so that several can be
stocked in a store) but they should not be worthless trinkets. Single batch, unique accessories
that customer find value in will elevate the brand image and eliminate mediation. Ralph Lauren should leverage IT enhancements and social networks to tap into the "viral effect"
of e-commerce, but be careful to avoid marketing hazards in the blogosphere.We found several mutually
reinforcing factors that seem to indicate Ralph Lauren is perfectly positioned to drive towards its
twin goals of elevating the brand and introducing e-retail.It will be interesting for supply chain
professionals to further analyze this initiative as it rolls out in South Korea and across Asia, and
we look forward to re-examining Ralph Lauren's position a decade from now to see how eluxury
has played out.There is a clear opportunity for the e-commerce platform to enhance store operations - providing
a virtual stock room for store associates to fulfill demand from.We took a step back and zeroed in on our focus question: how could Ralph Lauren elevate its
brand while simultaneously launching an e-commerce initiative in South Korea?We agree that Ralph
Lauren has synergies to be achieved by bringing e-retail to the traditionally brick-and-mortar
business, and the market is ripe for implementing such a strategy.iPad's @ or similar tablets can
be used to complement the limited assortment on-site.Overall, our analysis of the e-luxury opportunity in South Korea is positive.