History's biggest legal transfer of wealth has been spurred on by the Internet stock explosion.
Today, creative etailers are trying to trigger another one by encouraging the online rich to transfer their wealth into the trappings of a millionaire lifestyle.
Everyone from Merrill Lynch to the publishers of Millionaire Magazine will aspire to become portals for the wealthy. But, according to analysts, the premise may be flawed.
Wealth alone is not enough of a shared experience to drive Net behaviour. More important is what the wealthy need their money for, and what they like to spend it on. Affluent traffic will diffuse across thousands of sites that speak to particular goals, like philanthropy and interests like yachting.
At Millionaire.com you don't have to be rich - yet. The site offers advice and online classes to assist aspiring millionaires. Robert ‘Rusty’ White, the president and chief executive of Millionaire.com, is best known for creating the Robb Report, a magazine that caters to those living a ‘luxury lifestyle’.
White intends to make Millionaire.com the online portal for the rich. "They can get their stock quotes, investment advice and sports news," he said.
Life of luxury
In late September, Luxuryfinder.com will launch, going after an even more upscale clientele.
Through its virtual speciality store, Luxuryfinder.com will offer only the highest-end goods and services, including a range of products from Asprey & Garrard, caviar from Daniel, jewellery from Seaman Schepps and Angela Cummings, men's accessories from Calvin Klein, ties from Sulka and Brioni, leather goods from Ghurka, and charter jets and fractional aircraft ownership from Executive Jet.
The site will additionally feature hundreds of other products, many of which will be offered for the first time on the Internet through Luxuryfinder.com, such as luxurious and exciting trips.
Online watch seller Ashford.com and online diamond retailer Internet Diamonds are both in the same jewellery space. And established retailers like Tiffany also have an online presence, although in Tiffany's case, all purchases must still be done over the telephone.
They are not the only companies going after the affluent. The recently launched Foofoo.com targets upwardly mobile young professionals who are looking for luxury goods and services. The site features content supplied mostly through partnerships with magazines like Men's Health, Food and Wine and Elle, and sells goods from retailers and brands like J Crew and Cigars International.
According to Connie Ling, CEO of Foofoo, the site is for people who are affluent or on the way to being affluent: "People with an active lifestyle, interested in experiencing things, in being healthier, wealthier, better looking and less stressed." The site is segmented into two primary areas, iWoman and iMan.
And companies like Designersdirect.com, Netsetgoods.com and even Sotheby's have got into the business of ignoring bargain basement prices in favour of pashmina shawls and diamond earrings.
There is a market here. Analyst firm Jupiter Communications predicts that 74 per cent of households with incomes over $75,000 will be online by the end of the year.
"Many commerce players regard the highest income families as the lowest hanging fruit. People who value time more than money, or who have less time than money are prime candidates for a range of services and products that are now being offered online," said Jupiter analyst Mike May. "In retailing it makes sense to either compete on value or at the high end. To sit in the middle and try to serve everybody opens you up to competitors across the board.”
But Blaine Mathieu, senior analyst at the Gartner Group, believes that until increasing bandwidth allows a truly immersive experience - for example, a businessman taking different yachts out for a virtual spin - ecommerce will account for only a tiny percentage of the transactions in this category.
He explained that luxury items are almost the polar opposite of the low involvement, low priced products that have currently been the darlings of ecommerce.
"It is possible that high-income consumers will use the Internet to shop for such luxury items, but promoting actual purchasing will be much more difficult," he said.
Just who are the affluent? Forrester Research identifies them in three groups: the Gen Xers, under 35 and comfortable with PCs and the Internet; Boomers, 35 to 50 and like foreign cars and cable television; and Seniors, over 50 and grew up with radios and the telephone.
"Are the rich different today? Yes. There are more of them, more are self-made and they're younger, more cynical and more technologically enabled. The richer they are, the more they want to use the Web. Those with more than $2 million have the strongest intent to use online tools," said Shelley Morrisette, an analyst at Forrester.
The fastest growing segment of wealthy people is the new millionaire who is technologically needy. These people want access to their accounts all the time and they want it immediately.
"People of means no longer delegate. The old world of the trust fund baby waiting around for the cheque to arrive by courier, that type of money is losing relevance. Like Bill Gates and Richard Branson, people make money today from intellectual assets, not physical ones, and that impacts how they want to run their money," Morrisette said.
Or as the famous American bank robber, Willie Sutton, said when asked why he robbed banks, "because that's where the money is."
Forrester surveyed more than 2600 affluent North American households and found that they are technology optimists. More than one in three said they like technology and that it is important to them. Forty eight per cent of the affluent households in North America are online versus 33 per cent of the overall population. They use the Net for a variety of reasons: more than 86 per cent send email, 79 per cent surf the Web and 46 per cent research product purchases. Almost half have made purchases online.
Once online, the affluent are the most likely to view stock quotes, seek financial guidance, visit financial sites and complete financial transactions.
Forrester believes that the players with the greatest potential to change the competitive landscape are emergent midtier firms that fill the gap between discount and full service. By combining automated transaction and advisory tools with access to a live advisor or assistant, firms like Fidelity and Schwab will service the affluent well enough to attract and keep their business.
Forrester analyst Morrisette explained that today's wired 45-year-olds will grow older and richer. More of today's affluent will go online. And more online households will become affluent.
"Consider that by 2010, almost $13 trillion of wealth will be transferred to baby boomers from their parents. The result? The rapid adoption of the Net by affluent households will impact all players."
So how long do private banks, luxury car makers and top designers have before an incoherent Web strategy disables them? According to Professor Bernd Schmitt of Columbia Business School, "within the next five years, the Web will be so tightly integrated into the daily life of the affluent that any company that wants to service them and isn't there, will suffer."
Forrester also asked Thierry Klein, director of Paris-based online luxury retailer Galeries de Versailles, why luxury retailers adopt the Net so slowly. His top two reasons were, immature technologies that can't replicate the experience of shopping in a boutique, and the pervasiveness of Net-wary Europeans in luxury retailing.
The biggest challenge for these new high-end sites will be turning browsers into loyal buyers. Luxury consumers are generally less price sensitive than mainstream shoppers, but they often require more TLC.
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