International Journal of Retail & Distribution Management

Selling luxury goods online: effects of online accessibility and price display
Philipp Nikolaus Kluge Martin Fassnacht
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To cite this document:
Philipp Nikolaus Kluge Martin Fassnacht , (2015),"Selling luxury goods online: effects of online accessibility and price
display", International Journal of Retail & Distribution Management, Vol. 43 Iss 10/11 pp. -
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 1. Introduction
Luxury goods manufacturers have long been hesitant to adopt the Internet as a channel of
distribution (Chevalier and Gutsatz, 2012). To date 40 to 50 per cent of luxury goods
manufacturers do not sell online (Bain & Company, 2013; Roland Berger, 2013). Most
specialist watchmakers like A. Lange & Söhne, Patek Philippe, or Vacheron Constantin do
not operate monobrand online stores. Other luxury brands like Chanel or Chopard limit their
online offering to US customers only. While online sales have shown strong growth of
annually 29 per cent for the past five years, stationary retail still accounts for more than 95 per
cent of the worldwide personal luxury goods market (Bain & Company, 2013). Today, the
possibility to shop online is the second most important feature of a luxury brand website
(Roland Berger, 2013) whereas it was considered least important ten years ago (Riley and
Lacroix, 2003).
Whether or not to sell online represents a multi-faceted business question. From a
marketing perspective, most arguments both in favour and against online distribution (e.g.
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additional sales and convenience versus lack of touch and channel conflicts) equally apply to
both luxury and non-luxury goods manufacturers. In luxury, however, an additional concern
specifically applies: selling luxury goods online may erode the fragile perception of scarcity
and thus brand desirability (Kapferer and Bastien, 2012; Seringhaus, 2005). The apparent
mismatch between a luxury brand's concept of exclusiveness and the mass medium Internet is
often referred to as "Internet dilemma" (Kapferer & Bastien, 2012, p. 247) or "love/hate
relationship" (Chevalier & Gutsatz, 2012, p. 63). In contrast to mass manufacturers, luxury
goods manufacturers limit the accessibility of their goods in terms of a selective distribution,
high-end prices, and limited production in order to preserve brand desirability (Dubois and
Paternault, 1995; Fassnacht et al., 2013). At the same time, in order to sustain the firm’s long-
term growth in sales and profit luxury goods manufacturers are tempted to sell more to either
new or existing customers through either new or existing distribution channels (Keller, 2009).
In essence, luxury goods manufacturers face the dilemma of making additional sales at the
expense of perceived exclusiveness. It is this dilemma of making the inaccessible accessible
which makes the online-distribution-challenge a luxury-specific one.
While prior research empirically examines consumers’ motivations for shopping luxury
goods online (Liu et al., 2013; Riley and Lacroix, 2003; Wiedmann et al., 2011) and the
design of luxury brand websites (Kluge et al., 2013; Riley and Lacroix, 2003; Seringhaus,
2005) both marketing scholars and executives lack empirical evidence on how the online
accessibility and price display of luxury goods affect consumer perceptions of scarcity and
brand desirability.
We empirically addresses this research question from both a managerial and a consumer
perspective. First, we discuss benefits and concerns regarding the direct online distribution of
luxury goods. Second, a qualitative pre-study with luxury industry experts reveals a
considerable controversy on the suitability of the Internet as a channel of distribution. Next,
we present two experiments on consumer responses to the online accessibility and price
display of luxury goods. Results indicate that making luxury goods accessible online does not
affect consumer perceptions of scarcity and, thus, does not dilute brand desirability. This “no-
dilution” finding applies to both high- and low-involvement goods and persists independently
of whether or not retail prices are displayed. We conclude with a discussion, managerial
implications, limitations and directions for future research.

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 2. Conceptual background
Distribution is about making goods available to relevant customers. Mass manufacturers
typically aim for a high distribution intensity to serve more consumers more frequently. In
contrast, luxury goods manufacturers intend to limit the accessibility of their goods as over-
diffusion diminishes the desirability of a luxury brand (Dubois and Paternault, 1995). In
luxury, distribution is about controlling and communicating scarcity (Kapferer and Bastien,
2012). Maintaining scarcity represents a critical success factor to luxury brands (Brun and
Castelli, 2013). Among other antecedents of perceived scarcity (e.g. rarity of material and
human resources, limited production, high-end prices) luxury distribution strategy is about
constraining the accessibility of products, i.e. the extent to which consumers may easily
obtain a luxury item. Following this logic, marketing scholars and executives alike question
the suitability of the Internet as a channel of distribution as it implies extending the
accessibility of luxury goods to virtually anyone (Gastaldi, 2012; Hennigs et al., 2012;
Kapferer and Bastien, 2012). Existing literature cites multiple arguments both in favor and
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against direct online distribution for luxury goods as summarized in Table 1.

– Table 1 here –

2.1 Direct online distribution: benefits and concerns

From a managerial perspective, using the Internet as an additional channel of distribution
enables the manufacturer to increase sales and profits by reaching new customers at lower
cost and a higher share of margin (Chevalier and Gutsatz, 2012). In addition to financial
objectives, a monobrand online store allows luxury marketers to fully control brand
communication, assortment, and prices and directly interact with online shoppers (Chevalier
and Gutsatz, 2012; Quintavalle, 2012). In contrast, establishing a direct online distribution
requires capital for setting up the technological and logistic infrastructure, may cause channel
conflicts, and increases the risk of price competition and counterfeits as a result of the
increasing transparency of price and product information (Gastaldi, 2012; Hennigs et al.,
2012; Kapferer and Bastien, 2012).
From a consumer perspective, the possibility to shop online represents a convenient
alternative to in-store shopping as consumers can shop independently of time and place
(Okonkwo, 2009). The luxury clientele values the availability and greater variety of products
offered online as well as the intimacy when shopping from home (Liu et al., 2013;
Quintavalle, 2012). Against these benefits the online shopping environment lacks the
possibility to touch, feel and smell the product and to interact with sales personnel (Kapferer
and Bastien, 2012; Okonkwo, 2009) – elements considered even more relevant in the case of
luxury goods. Another issue refers to security concerns regarding payment and delivery of
such precious merchandise (Liu et al., 2013; Wu et al., 2013).
Most of the benefits and concerns described apply to both luxury and non-luxury goods
manufacturers alike. In luxury, however, some marketers additionally fear that making luxury
goods accessible online comes at the expense of brand desirability (Chevalier and Gutsatz,
2012; Seringhaus, 2005). The online accessibility reduces the effort and know-how needed to
buy a luxury item that used to be reserved for the happy few (Kapferer and Bastien, 2012).
Making luxury goods accessible online jeopardizes the fragile perception of scarcity. As a
result, Kapferer & Bastien (2012) consider the online distribution of luxury goods as
"extremely dangerous" as "it very quickly reduces the ‘dream value’ of the brand by
increasing penetration too fast, giving too easy an access to the product to too many non-
qualified people” (p. 249). Similarly, Seringhaus (2005) states: “since the Internet

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 democratizes information access, it diminishes the isolation and exclusivity of luxury brands"
(p. 15). The present paper aims at empirically testing these propositions. More specifically, it
examines the research question: how does the online accessibility and price display of luxury
goods affect consumer perceived scarcity, desirability, convenience, and willingness-to-buy?
In the following, hypotheses on these relationships are derived first. Next, a qualitative pre-
study presents the current managerial discussion on the online distribution of luxury goods.
Finally, hypotheses are tested using two experiments with luxury consumers.
2.2 Online accessibility, scarcity, and brand desirability
First, we are interested in the relationship between perceived scarcity and brand desirability.
In general, we may assume that individuals desire scare goods more than available ones.
Adam Smith (1766) has already pointed: "the merit of an object, which is in any degree either
useful or beautiful, is greatly enhanced by its scarcity" (p. 147). This positive scarcity-
desirability relationship is also suggested by Timothy C. Brock's commodity theory (1968).
Specifically, Brock (1968) states that “any commodity will be valued to the extent that it is
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unavailable” (p. 246). A luxury good may be considered a commodity as it is an object of

positive utility to the owner, transferable to other individuals and typically scarce or
unavailable to the masses through a limited production, high-end prices, and a selective
distribution (Lynn, 1991). Hence, an individual’s desire for a luxury brand very much
originates from its nature of being scarce, i.e. hard-to-obtain for others. This premise may be
explained by (a) an individual's inherent need to be moderately dissimilar to peers
(uniqueness theory; Snyder and Fromkin, 1980), (b) an individual's naïve economic beliefs
that scarce goods confer higher levels of quality and status (naïve economic theories; Lynn,
1992), and (c) an individual's motivation to regain things that have become unavailable
(reactance theory; Brehm, 1966). Overall, a meta-analysis of 41 empirical studies shows
strong support for the positive effect of perceived scarcity on the desirability of a commodity
(Lynn, 1991). Hence, we may hypothesize:
H1. Perceived scarcity positively affects brand desirability.
Second, we are interested in how the online accessibility of luxury goods affects consumer
perceived scarcity. Prior studies show that the level of diffusion negatively affects scarcity
perceptions (Dubois and Paternault, 1995; Lynn, 1991). Similarly, online accessibility is
considered to diminish consumer perceptions of scarcity as it broadens diffusion and reduces
the effort needed to obtain a luxury good (Kapferer and Bastien, 2012). Traditionally, the
offline purchase of luxury goods does not only involve financial effort (e.g. paying high-end
prices) but also cultural effort (e.g. knowing where to get it), logistical effort (e.g. visiting the
store), and time effort (e.g. searching or waiting for it). These efforts make luxury goods
"hard-to-obtain" for others, which represents a relevant source of self-differentiation for
individuals high in need for uniqueness (Snyder and Fromkin, 1980). In the Internet, however,
information about where to get a unique item is more readily available to everyone (lowered
cultural effort). Also, the naïve economic belief prevails that the online marketplace serves as
a low-price distribution channel (lowered financial effort). And, instead of travelling to major
cities like Paris, London, or New York, consumers may quickly shop online at home (lowered
logistical and time effort). Hence, we may hypothesize:
H2. Online accessibility negatively affects perceived scarcity.
2.3 Online accessibility, convenience, and willingness-to-buy
At the same time, luxury goods manufacturers may refer to direct online distribution as a
promising source of additional revenue. Making luxury goods accessible online increases the
overall transaction convenience of shopping luxury goods, i.e. "time and effort costs
associated with finalizing the transaction" (Seiders et al., 2007, p. 145). As compared to in-

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 store purchases, consumers save time and effort and can shop independently of opening hours
and location (Quintavalle, 2012). Convenience ranks highest among consumer motivations for
shopping luxury goods online (Liu et al., 2013). At the same time, transaction convenience
positively affects behavioral intentions like willingness-to-buy (Seiders et al., 2007).
Consequently, we may hypothesize:
H3. Online accessibility positively affects perceived transaction convenience.
H4. Perceived transaction convenience positively affects willingness-to-buy.
Finally, we may assume that affective consumer responses like brand desirability are
positively related to be behavioural consumer responses like willingness-to-buy. In particular,
Reich (2005, p. 185) has empirically shown that consumers high in desire for a particular
luxury good are more willing to buy than those consumers low in desire for that luxury good.
Hence, we may hypothesize:
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H5. Brand desirability positively affects willingness-to-buy.

To conclude, drawing on conceptual considerations and social-psychological theory a
dilution-effect of selling luxury goods online on perceived scarcity and thus brand desirability
may be hypothesized. At the same time, lowering efforts potentially enhances consumer
perceived shopping convenience, which, in turn, is assumed to increase willingness-to-buy.
The conceptual model of hypothesized effects is shown in Figure 1.

– Figure 1 here –

In the following, we first present a qualitative pre-study exploring the current managerial
discussion on the online distribution of luxury goods. Next, we report two experiments
designed to empirically test our hypotheses on the effects of online accessibility and price
display of luxury goods. Table 2 summarizes our research scheme.

– Table 2 here –

3. Pre-study: expert interviews

The purpose of this pre-study is twofold: first, re-confirming the managerial relevance of the
research question before actually testing it. Second, expert interviews help identify managerial
approaches to preserve consumer perceptions of scarcity within the ubiquitous mass medium
Internet. We conducted seven interviews with luxury industry experts (see Appendix A.1)
using a semi-structured interview guideline. The experts interviewed are senior managers at
consultancies and luxury goods manufacturers that are members of national luxury
associations like the French Comité Colbert. They indicate an average job experience of 20
years. All interviews are recorded and transcribed verbatim. The mean interview duration is
58 minutes.
The semi-structured interview guideline comprises three parts: first, general information was
collected, i.e. name, institution, position, job experience, as well as the expert's personal
Internet usage and shopping behavior. Second, as an introduction the expert was openly asked
for her or his personal understanding of luxury, its constituting characteristics and the
importance of exclusiveness and scarcity for luxury goods. Third, the dialogue was narrowed

4
 down to marketing luxury goods online. Specifically, experts were asked for opportunities
and concerns, whether or not luxury goods should be sold online and if so how.

3.1 Controversial attitudes towards online distribution

The interviews show an on-going controversy among luxury experts on whether or not luxury
goods should be sold online. Concerns about online distribution primarily refer to the
potential loss in desirability and the lack of human interaction. Expert F argues that if a luxury
good is "available on every street corner – and this includes online – then it loses parts of its
desirability." Other experts refer to the lack of human mediation as stated by expert C: "In an
online distribution channel you don't have the interaction with the client, which is necessary
to fine-tune your business and transmit this brand world." As a consequence, expert G argues:
“If my financial and economic situation allows it, I would go without e-commerce.”
In contrast, other experts (particularly managers of low-involvement luxury goods)
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advocate the Internet as a channel of distribution. They argue that the "Internet today belongs
to a channel mix one cannot and should not refuse to accept" (expert E). From their
perspective, luxury goods manufacturers must not shy away from a medium which has
become an essential part of consumers’ everyday lives as stated by expert B: “I think, it is our
job to go where our consumers are.” Still, luxury goods manufacturers are very careful in
approaching the issue of online distribution, as expert A admits: “We do see [the Internet as]
an opportunity – admittedly we have been somewhat forced to do so. The luxury industry did
not used to be very open-minded and proactive towards e-commerce. We are very, very
careful.”

3.2 Approaches to preserve brand desirability online

The experts interviewed mention different, possible approaches to preserve a luxury brand’s
desirability online. Expert F emphasizes the importance of compensating for the increased
accessibility resulting from online distribution: “Knowing where to get something is also part
of the luxury buying process, i.e. consumers need to master the code where to access this or
that product. […] If I reduce barriers – that’s what I am doing by selling online – I need to
create even higher barriers elsewhere.” In essence, these barriers refer to the efforts needed to
access a luxury item. The experts mention different approaches to create these “barriers”
online ranging from (1) dedicating a detached area on the website for the online store which is
separate from the traditional product view, (2) giving access to the online store upon
invitation only, (3) offering a dedicated “online only” collection, to (4) accepting online
orders upon request only. In contrast, expert B recommends keeping the online buying
process as convenient as possible for online shoppers: “For our consumers e-commerce needs
to be accessible, simple, and convenient.”
Overall, the expert interviews show a still-existing controversy on whether or not to sell
luxury goods online and if so how brand desirability may be preserved or created. This
controversy calls for further research on how a luxury goods manufacturer should position its
brand online while preserving its fragile perception of exclusiveness.

4. Experiment 1: effects of online accessibility

To test the hypothesized effects of online accessibility (see Figure 1) we conduct an
experiment using a single-factor (i.e. online accessibility), randomized between-subject
design. Four levels of online accessibility apply: (a) find a jeweler nearby (i.e. buy in-store
only), (b) order upon request, (c) sign in for online store, or (d) buy online. In this first

5
 experiment, we test the effects of online accessibility for a high-involvement luxury good
category (i.e. wristwatches) among high-income individuals from Germany.

4.1 Method
4.1.1 Subjects. Participants are 183 high-income individuals from Germany. Income serves as
an approximate approach for identifying participants in luxury consumer surveys since luxury
penetration is higher among high-income individuals (Dubois and Duquesne, 1993; Heine,
2010). This approximation is necessary since actual luxury consumers are “notoriously hard
to access” and the representativeness of student samples remains “questionable” (Heine, 2010,
p. 123). Using a third-party administered online panel we recruited individuals with a
registered monthly household net income of at least Euro 5,000, i.e. the top 14 per cent of the
German population (Statistisches Bundesamt, 2013). On average, subjects are 49 years old, 37
per cent are female, 98 per cent browse the Internet at least once per day and 61 per cent hold
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a university degree.
4.1.2 Procedure. We asked subjects to imagine the fictitious scenario of dreaming of treating
themselves to a high-end wristwatch some day. We use wristwatches as they are not gender-
specific and typically uni-size (Kastanakis and Balabanis, 2012). We further asked subjects to
imagine that they incidentally arrive at the website of the high-end wristwatch producer
Vaupré when occasionally browsing the Internet for wristwatches.
Instructions inform subjects that the brand name Vaupré is fictitious but that the information
given is representative for an existing high-end wristwatch manufacturer. The characteristics
used to describe the brand well reflect that of high-end luxury watchmakers like Breguet,
Patek Philippe, and Vacheron Constantin in terms of heritage, craftsmanship, production
capacity, distribution and price range (see Appendix A.2). Specifically, Vaupré is described as
a privately owned, Switzerland-based, 100-year old watchmaker specialized in handcrafting
mechanical movements. Production and distribution are limited to no more than one 100,000
timepieces p.a. and few retail stores respectively. The average retail price is indicated to be in
the five-digit Euro range.
Next, we ask subjects to further imagine to click on a wristwatch of interest to access the
product view, which shows product images, product information and a set of buttons. Subjects
are randomly confronted with one of four sets of buttons (see Figure 2): (a) group 1 is
confronted with two buttons only, namely “More details” and “Find a jeweler nearby”. In
addition to these two buttons (b) group 2 is confronted with an “Order upon request” button,
(c) group 3 with a “Sign in for online store” button, and (d) group 4 with a “Buy online”
button. Each button is complemented with a brief textual explanation of what subjects could
expect when clicking on a particular button. For example, by clicking on the "Order upon
request" button subjects are said to arrive at an order request form to be filled in and
submitted to Vaupré.

– Figure 2 here –

The two alternatives "Sign in for online store" and "Order upon request" are tested since
they increase the effort needed to obtain a luxury good as compared to the "Buy online"
alternative and thus potentially mitigate the hypothesized negative effect of online
accessibility on consumer perceptions of scarcity. Similar alternatives are also observed in
practice. For example, while the online shopper can instantly order the classic Louis Vuitton

6
 Speedy 30 ("place in cart") or a Piaget Altiplano mechanical watch ("add to bag") he or she is
required to call a hotline first to request the more sophisticated SC Bag PM ("call to
purchase") or the Altiplano Skeleton watch ("shop by phone"), respectively
(Louisvuitton.com, 2015a, 2015b; Piaget.com, 2015a, 2015b).
To control for effects of price display on desirability as shown by Lynn (1989) the scenario
of this first experiment does not explicitly display prices. Subsequent to the scenario subjects
were asked to evaluate the brand described in terms of perceived scarcity, desirability,
transaction convenience, and willingness-to-buy.
4.1.3 Measures. All constructs are measured using established scales (see Appendix A.3).
Perceived scarcity, transaction convenience, and willingness-to-buy are measured on a seven-
point Likert-type scale ranging from "strongly disagree" to "strongly agree". Items for
perceived scarcity (e.g. "to me, the brand Vaupré is rare"), transaction convenience (e.g. "It
takes little time to pay for my purchase at Vaupré"), and (e.g. "If I were going to purchase a
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luxury product, I would consider buying a Vaupré wristwatch") are derived from Vigneron
and Johnson (2004), Seiders et al. (2007), and Dodds et al. (1991), repsectively.
Similar to the dream value by Dubois and Paternault (1995), desirability is measured by
asking subjects how likely they would chose a wristwatch of Vaupré if they were free to
chose a high-end wristwatch as a reward for a contest they had won, i.e. if money was not an
issue (Kastanakis and Balabanis, 2012). An aided recall question format with a randomized
order of options serves as manipulation check.
4.1.4 Pre-test. To ensure the scenario is understandable and realistic we iteratively discussed
its content and presentation with both marketing scholars and uninvolved consumers. A
convenience sample of 46 students tested the complete questionnaire. Results indicate a good
understanding of the scenario, but suggested adding more detail to the description of the
fictitious brand and shortening some of the scales.

4.2 Results
4.2.1 Manipulation check. A series of independent t-tests indicate a successful manipulation
of online accessibility. Aided recall for the “Buy online” button is significantly higher among
subjects who were confronted with this button (Mbuy(SE)=.46(.07)) than among subjects who
were not confronted with this button (Mnon-buy(SE)=.24(.04); t(181)=2.82; p<.01). Similarly,
aided recall for the “Sign in for online store” button (Msign(SE)=.45(.07) vs. Mnon-
sign(SE)=.08(.02); t(181)=6.27; p<.001) and the “Order upon request” button
(Morder(SE)=.46(.07) vs. Mnon-order(SE)=.13(.03); t(181)=4.96; p<.001) is significantly higher
among subjects who were confronted with the respective button.
4.2.2 Confirmatory factor analysis. Confirmatory factor analysis yields a satisfactory model
fit with χ²(30)=39 (p=.121), CFI =.99, RMSEA=.04, and SRMR=.04 (Hu and Bentler, 1999)
and supports the reliability and validity of measurement scales (see Appendix A.3). Indicator
reliability scores for all items exceed .50 (Bagozzi and Yi, 2012). Convergent validity of
perceived scarcity, transaction convenience, and willingness-to-buy proves to be satisfactory
as composite reliability scores are .84, .88, and .93 respectively and scores of average
variance extracted are .63, .71, and .81 respectively. Finally, discriminant validity can be
assumed since for each construct the average variance extracted is greater than the squared
correlation with any other construct (Fornell and Larcker, 1981).
4.2.3 Hypothesis testing. Results of structural equation modeling analysis (see Table 3)
indicate that the structural path between perceived scarcity and brand desirability is both
positive (β=.380) and statistically significant (p<.001). Thus, H1 is not rejected. The

7
 relationship between online accessibility and perceived scarcity is indeed negative (β=-.017),
though not statistically significant (p=.832). Thus, H2 is rejected. The structural path between
online accessibility and transaction convenience is positive (β=.101), though non-significant
(p=.194) leading to rejecting H3. Supporting H4 and H5, both transaction convenience
(β=.265; p<.001) and brand desirability (β=.642; p<.001) positively affect a consumer’s
willingness-to-buy.
Additionally, results of a one-way analysis of variance indicate a non-significant overall
experimental effect of online accessibility on perceived scarcity (F(3,179)=1.29; p=.280).
Pairwise comparisons do not indicate significant differences between any of the four levels of
online accessibility. These findings further support the rejection of H2.

5. Experiment 2: effects of online accessibility and price display

To replicate the effects of online accessibility and additionally test for effects of price display
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we conduct another experiment using a 2x2 factorial design with factors online accessibility
(yes vs. no) and price display (yes vs. no). Other than for the first experiment, we test the
effects of online accessibility for a relatively lower-involvement luxury good (i.e. writing
instrument) among qualified luxury insiders from the US.

5.1 Method
5.1.1 Subjects. Participants are 142 qualified luxury insiders from the US. Luxury insiders are
defined as consumers with a positive attitude towards and some knowledge of luxury brands.
To identify these luxury insiders, we conducted a qualification test with 1,022 US consumers.
Only consumers who meet both of the following two criteria qualify as luxury insiders: (1)
consumers rank in the top quartile in terms of positive attitude towards luxury measured on a
seven-point Likert-type scale using ten items drawn from Dubois et al., (2005). Importantly,
instead of disclosing the actual purpose of the survey (i.e. qualification test for a subsequent
study on luxury) the instructions state that participants are tested for their knowledge about
brands from different, randomly assigned to luxury and non-luxury product segments. In fact,
all participants were confronted with luxury brands. (2) To test for actual knowledge about
luxury brands participants performed six brand-product-assignment tasks, i.e. assigning one
out of four given brand names to a product image (e.g. a Bottega Veneta bag). We applied
cutoff value of at least three correct brand-product-assignments. Out of the 1,022 consumers
surveyed 202 consumers qualified as luxury insiders out of which 142 completed the final
survey. On average, subjects are 32 years old, 37 per cent are female, 94 per cent browse the
Internet at least once per day and 38 per cent report an annual household income of at least
USD 60,000.
5.1.2 Procedure. The procedure is very similar to that of experiment 1. Instead of a high-
involvement good as used in experiment 1 we use a relatively lower-involvement good, i.e. a
writing instrument. Writing instruments are not gender-specific and typically uni-size. Again,
subjects are asked to imagine to incidentally arrive at the website of the fictitious high-end
writing instrument manufacturer Vaupré. Similar to experiment 1, characteristics used to
describe the brand again include heritage, craftsmanship, limited production capacity,
selective distribution and high prices (see above).
On the next page subjects are randomly confronted with one of four illustrative websites
(see Figure 3). The four websites are identical in terms of layout, product images and product
information but differ in terms of online accessibility (“Buy online” button: present vs.
absent) and price display (“$150” price display: present vs. absent). The following four

8
 conditions apply: (a) both the “Buy online” button and the retail price of “$150” are displayed
(see Figure 3), (b) “Buy online” is displayed, “$150” is not displayed, (c) “Buy online” is not
displayed, “$150” is displayed, (d) both “Buy online” and “$150” are not displayed. The
scales used to measure perceived scarcity, desirability, transaction convenience, and
willingness-to-buy are identical to those reported above for experiment 1 (see Appendix A.3).

– Figure 3 here –

5.1.3 Pre-test. We are interested in the sole effect of the presence vs. absence of price display,
not its actual value. To mitigate potential effects arising from prices being perceived as
disproportionately high or low, a pre-test with 57 US consumers is used to identify consumer
estimated retail prices for a Vaupré fountain pen as shown in Figure 3. Consumer estimated
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retail prices ranged from USD 5 up to USD 1,350 with a median retail price of USD 150. This
price is below the price range of Caran d’Ache, Graf von Faber-Castell or Montblanc pens.
However, previous literature indicates an acceptable minimum price for a luxury pen ranging
from USD 100 (Dubois & Duquesne, 1993) to EUR 100 (Heine, 2010).

5.2 Results
5.2.1 Manipulation check. Independent t-tests indicate a successful manipulation of online
accessibility and price display. Aided recall for the “Buy online” button is significantly higher
among subjects who were confronted with this button (Mbuy(SE)=.81(.05)) than among
subjects who were not confronted with this button (Mnon-buy(SE)=.26(.05); t(140)=3.87;
p<.001). Similarly, aided recall for the retail price of “$150” (Mprice(SE) =.77(.05) vs. Mnon-
price(SE) =.12(.04); t(140)=13.35; p<.001) is higher among subjects who were confronted with
explicit price display.
5.2.2 Confirmatory factor analysis. Confirmatory factor analysis indicates a satisfactory
model fit with χ²(30)=42 (p=.070), CFI =.98, RMSEA=.05, and SRMR=.05 (Hu and Bentler,
1999). Also, results approve the reliability and validity of the measurement of transaction
convenience and willingness-to-buy with indicator reliability scores for all items being greater
than .50 (Bagozzi and Yi, 2012), composite reliability scores of .92 and .88 respectively, and
scores of average variance extracted of .79 and .71 respectively (see Appendix A.3).
Convergent validity of perceived scarcity does not prove satisfactory with a composite
reliability of .63 (<.70; Bagozzi and Yi, 2012) and average variance extracted of .38 (<.50;
Fornell and Larcker, 1981). However, for reasons of comparison with experiment 1 we retain
the measure of perceived scarcity in its original form.
5.2.3 Hypothesis testing. Results of the structural equation modeling analysis are reported in
Table 3. Similar to experiment 1 and in support of H1, the effect of perceived scarcity on
brand desirability is both positive and statistically significant (β=.216; p<.05). At the same
time the data does again not support H2 since the structural path between online accessibility
and perceived scarcity is non-significant (β=.015; p=.881). In contrast to the results of
experiment 1, the relationship between online accessibility and transaction convenience
proves to be positive and significant (β=.373; p<.001). Consequently, H3 is not rejected.
Again supporting H4 and H5, both transaction convenience (β=.359; p<.001) and brand
desirability (β=.446; p<.001) positively affect consumer’s willingness-to-buy.

– Table 3 here –

9
 Additionally, results of a two-way analysis of variance (ANOVA) show that perceptions of
scarcity do not significantly differ between subjects who were confronted with a "Buy online"
button and those who were not (F(1,138)=.063; p=.802). Hence, again the data does not
support H2. This "no-dilution" finding persists independently of whether or not retail price is
explicitly displayed. Perceptions of scarcity are not affected by the explicit display of the "$
150" price information. Both the main effect of price display on perceived scarcity
(F(1,138)=.726; p=.396) and the interaction effect of online accessibility and price display on
perceived scarcity are non-significant (F(1,138)=.844; p=.360).

6. Conclusion
Selling luxury goods online has long been expected to come at the expense of a luxury
brand’s desirability. A luxury brand’s concept of exclusiveness is seemingly incompatible
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with the ubiquitous accessibility provided by the mass medium Internet. The present paper
empirically addresses this apparent contradiction by examining the results of interviews with
luxury industry experts and two experimental studies with high-income individuals from
Germany and luxury insiders from the US.
Expert interviews indicate a considerable, still-existing controversy on the suitability of the
Internet as a channel of distribution for luxury goods. Among other challenges, one major,
luxury-specific concern refers to the dilution of a luxury brand’s desirability. This concern has
also previously been raised by Kapferer and Bastien (2012) and Seringhaus (2005).
Results of two experiments do not support this concern. While the findings replicate the
positive scarcity-desirability effect shown by Lynn (1989) online accessibility does not prove
to be a significant determinant of perceived scarcity. The presence of a “Buy online” button
on a luxury brand’s website does not affect consumer perceived scarcity and, thus, does not
dilute brand desirability. This “no-dilution” finding is consistent for both high- and lower-
involvement goods and persists independently of whether or not retail price is displayed.
Interestingly, attempts to artificially increase the efforts needed to purchase a luxury good
online do not prove to be effective. Requiring users to register first or filling in an order
request form (instead of simply placing the product into the digital shopping basket) does not
evoke significantly different perceptions of scarcity.
In terms of perceived convenience, results of experiment 2 indicate that online accessibility
increases consumer perceptions of convenience, which positively affects willingness-to-buy.
This finding is not supported by experiment 1. These differing findings may be explained by
different levels of involvement (lower-involvement good in experiment 2) or differences in
the sample (e.g. younger subjects in experiment 2). Overall, these empirical findings advance
the existing, primarily conceptual discussion on how firms should position a luxury brand in
the mass medium Internet.

6.1 Managerial implications

While stationary retail represents the major source of sales in the luxury goods industry,
online sales are constantly gaining share. Despite this growth opportunity about every second
luxury goods manufacturer is still hesitant to adopt the Internet as a channel of distribution.
After all, deciding on whether or not to sell online represents a multi-faceted business case
that needs to be economically viable. Multiple benefits and concerns apply both from a
consumer (e.g. convenience versus lack of touch) and a managerial perspective (e.g.

10
 additional sales versus loss in exclusiveness). While most concerns equally apply to luxury
and non-luxury goods, luxury marketers additionally face the dilemma that online distribution
may come at the expense of a brand’s appeal of exclusiveness. Our two empirical studies
indicate that offering luxury goods online does not affect consumer perceptions of scarcity
and, thus, does not dilute brand desirability. This “no-dilution” finding applies to both high-
and low-involvement goods, among luxury consumers from both Germany and the US, and
independently of whether retail prices are explicitly communicated or not. If economically
viable, luxury goods manufacturers should not shy away from seizing the growth opportunity
of selling their goods online. In fact, we find partial support that consumers perceive shopping
convenience to be higher when given the possibility to order luxury goods online in addition
to merely locating a store nearby. After all, even in luxury, consumers are more willing to buy
when shopping is convenient and uncomplicated.
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6.2 Limitations and directions for future research

Future research is needed to advance the ongoing debate among executives and marketing
scholars on how firms should position a luxury brand in the ubiquitous mass medium Internet
while preserving its fragile perception of exclusiveness. The complexity of this trade-off,
which arises from the multi-faceted benefits and concerns associated with the online
distribution of luxury goods (see Table 1), remains largely unexplored and calls for further
empirical research. The present paper empirically examines consumer responses to the online
accessibility of luxury goods and is not without limitations. First, subjects are confronted with
a fictitious brand to control for pre-existing brand associations. However, a consumer’s dream
of a luxury brand typically evolves over time. To enhance the external validity of the findings,
future research should test the effects of online accessibility using a real luxury brand.
Second, the effects of the online accessibility of a luxury good are examined rather than the
effect online accessibility per se. To enhance the internal validity of the findings, future
research could investigate the sole effect of online accessibility by confronting subjects with a
regular, non-luxury good, which is not scarce by definition. Third, the scenario asks subjects
to make an immediate buying decision. In luxury, however, the buying process often
represents a lengthy act including multiple interactions with the brand. A consumer may first
encounter a desired luxury good during a city trip to Paris, reconfirm her decision in her home
town and finally buy online – or vice versa. Future research should attempt to account for this
consumer journey. Fourth, the experimental studies presented are limited to new customers.
However, existing customers who feel as members of an exclusive brand clientele might be
concerned that selling online gives access to too many, non-qualified individuals. Future
research should empirically test how the existing clientele responds to the online accessibility
of luxury goods. Fifth, the scenario asks subjects to imagine that they are about buying a
luxury item for themselves, i.e. shopper and consumer are identical. In luxury, however, about
half of sales are made by gifts, i.e. shopper and consumer are different individuals. Future
research should test for differing channel preferences and brand evaluations depending on
whether an individual shops for himself or his beloved ones. Sixth, the studies presented are
limited to monobrand online stores, which allow luxury goods manufacturers to fully control
brand communication and retail prices. Additional research is needed to understand consumer
reactions to making luxury goods available in multibrand online stores like Net-a-porter.com
or Yoox.com. Finally, the fictitious scenario is described using text form and static graphical
stimuli. To increase the external validity of the findings, future research should manipulate
stimuli using a real website setting and measure actual consumer responses like click rates,
time spent on site and actual purchases.

11
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 Acknowledgments
The authors wish to thank the special issue editor and the two anonymous reviewers for their helpful feedback
on earlier versions of this manuscript.

Biographical Details

Philipp Nikolaus Kluge is doctoral student in the field of marketing luxury goods at the WHU – Otto Beisheim
School of Management in Vallendar/Koblenz. His research on marketing luxury goods has been published in the
International Journal of Retail & Distribution Management and Marketing ZFP – Journal of Research and
Management.

Martin Fassnacht is professor of marketing and holder of The Otto Beisheim Endowed Chair of Marketing and
Commerce at the WHU – Otto Beisheim School of Management in Vallendar/Koblenz. He gained his Ph.D. from
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Johannes Gutenberg-University of Mainz and his habilitation (post-doctoral degree) from University of Mannheim.
His research interests include pricing, retail marketing, luxury brand management, and market-oriented corporate
management. He has published in major journals including Journal of Marketing, Journal of Business-to-
Business Marketing, Journal of Service Research, Journal of Interactive Marketing, International Journal of Retail
& Distribution Management, Journal of Brand Management and several others.

Appendix
– Appendix A.1. here –
– Appendix A.2. here –
– Appendix A.3. here –

15
 Selling luxury goods online:
Effects of online accessibility and price display

– TABLES & FIGURES –

TABLES

Table 1. Direct online distribution: benefits and concerns

Benefits Concerns
Managerial
Additional sales
Loss of desirability
perspective
Margin/ profitability
Transparency
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Control
Costs of infrastructure

Client contact
Channel conflicts

Consumer
Convenience
Lack of touch and feel

perspective
Product availability
Lack of human factor

Intimacy
Security concerns

Reduced feelings of exclusiveness

Table 2. Research scheme

Pre-study Experiment 1 Experiment 2
Objective Explorative: Hypothesis testing: Hypothesis testing:
Managerial discussion on online Effects of online accessibility Effects of online accessibility and
distribution of luxury goods of luxury goods price display of luxury goods

Method Expert interviews: Randomized experiment: Randomized experiment:

semi-structured, personal/phone single-factor design 2x2 factorial design

Treatment - (a) Find a jeweler nearby (a) Buy online, $150 price display
groups (b) Order upon request (b) Buy online
(c) Sign in for online store (c) $150 price display
(d) Buy online (d) Neither, nor

Sample 7 luxury industry experts 183 high-income individuals 142 qualified luxury insiders
from France, Germany and Italy from Germany from USA

Product Any luxury good Wristwatch Writing instrument

Table 3. Hypothesis testing

Experiment 1 Experiment 2 Evaluation of
Structural relationship
(coefficient β) (coefficient β) hypothesis
***
H1: Perceived scarcity
Brand desirability .380 .216* not rejected
H2: Online accessibility
Perceived scarcity -.017 ns .015 ns rejected
H3: Online accessibility
Transaction convenience .101 ns .373*** partially rejected
***
H4: Transaction convenience
Willingness-to-buy .265 .359*** not rejected
***
H5: Brand desirability
Willingness-to-buy .642 .446*** not rejected
*
significant at p < .05; **significant at p < .01; ***significant at p < .001; ns = non-significant

1
 FIGURES

Figure 1. Conceptual model

H1 (+)
Perceived Brand
H2 (-) scarcity desirability
Online accessibility H5 (+)
of luxury goods
H3 (+) H4 (+)
Transaction Willingness-
convenience to-buy
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Figure 2. Stimuli experiment 1: four levels of online accessibility

(a) group 1 (b) group 2 (c) group 3 (d) group 4

Figure 3. Stimuli experiment 2: online accessibility x price display

© image of fountain pen by foeoc kannilc (flickr.com, under a CC BY 2.0 license)

2
 APPENDIX
Appendix A.1. Pre-study: sample characteristics
Job experience Interview duration
Expert ID Position Segment Luxury qualification
in years in minutes
Low-involvement Member of Comité Colbert
A Managing Director 16 40
luxury goods and Meisterkreis
Low-involvement Member of Comité Colbert
B Managing Director 29 46
luxury goods and Meisterkreis
High-involvement
C CEO Member of Meisterkreis 14 48
luxury goods
Digital Marketing High-involvement Sportscar manufacturer
D 12 65
Manager luxury goods (prices > EUR 100,000)
Director, Practice
E Consultancy Luxury practice 28 35
Leader Luxury

F CEO Consultancy Luxury practice 28 55

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Academia/ Teaching/
G Professor, CEO 10 118
Consultancy Luxury practice

Appendix A.2. Characteristics of selected high-end watchmakers

Country Year of Movement Estimated Estimated retail price
Brand Ownership
of origin foundation focusa production p.a. range in EUR
Audemars Piguet Private Switzerland 1875 mechanical 26,000 12,000 – 210,000
Blancpain Swatch Switzerland 1735 mechanical n.a. 12,000 – 300,000
Breguet Swatch Switzerland 1775 mechanical 17,000 10,000 – 175,000
Franck Muller Private Switzerland 1997 mechanical n.a. 7,300 – 2,000,000
IWC Richemont Switzerland 1868 mechanical 30,000 3,600 – 190,000
Jaeger-Le Coultre Richemont Switzerland 1833 mechanical 50,000 7,300 – 190,000
Patek Philippe Private Switzerland 1839 mechanical 45,000 20,000 – 600,000
Piaget Richemont Switzerland 1874 mechanical 20,000 15,000 – 45,000
Rolex Private Switzerland 1908 mechanical 1,000,000 3,600 – 36,000
Vacheron Constantin Richemont Switzerland 1755 mechanical 20,000 15,000 – 220,000
Vaupré (fictitious) Private Switzerland 1864 mechanical < 100,000 five-digit
a
Applies to core range. Entry-range and women watches may be equipped with quartz movements.
Source: company websites; Braun (2013); Watchuseek.com (2013)

Appendix A.3. Measurement scales

Construct Experiment 1 Experiment 2
Items
(Source) ρIR ρCR ρAVE ρIR ρCR ρAVE
Perceived scarcitya To me, the brand Vaupré is exclusive. .604 .836 .632 .517 .643 .382
(Vigneron & Johnson, 2004) To me, the brand Vaupré is rare. .770 .415
To me, the brand Vaupré is unique. .517 .268
Transaction conveniencea Vaupré makes it easy for me to conclude my transaction. .646 .882 .714 .619 .918 .790
(Seiders et al., 2007) I am able to complete my purchase quickly at Vaupré. .790 .873
It takes little time to pay for my purchase at Vaupré. .722 .903
Willingness-to-buya If I were going to purchase a luxury product, I would consider .848 .928 .812 .839 .878 .712
(Dodds et al., 1991) buying a Vaupré wristwatch (writing instrument).
My willingness to buy a Vaupré wristwatch (writing instrument) .886 .704
would be high if I were shopping for a luxury brand.
The probability I would consider buying a Vaupré wristwatch .718 .614
(writing instrument) is high.
Desirabilityb Please assume that you won a contest. As a reward you receive n/a n/a n/a n/a n/a n/a
(adapted from Dubois & any luxury wristwatch (writing instrument) of your choice. How
Paternault, 1995) likely would you choose a Vaupré product?
a
Measured using a seven-point Likert-type scale ranging from “strongly disagree” to “strongly agree”; bMeasured using a seven-point rating
scale from “very unlikely” to “very likely”; Index: ρIR = indicator reliability; ρCR = composite reliability; ρAVE = average variance extracted