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These luxury goods companies, particularly the beauty/cosmetics brands such as Sephora, behave much more like software companies than many realize. High upfront

These luxury goods companies, particularly the beauty/cosmetics brands such as Sephora, behave much more like software companies than many realize. High upfront capital requirements but extremely high gross margins and recurring business models. The biggest difference is the emphasis on brand, where really only Apple has done an equivalently strong job imo.

rcme 3y ago
Brand is the raison d'être of luxury good companies. No one wants to spend $10k on a random leather bag. On the other hand, people will use whichever digital service offers the best experience. E.g. people use Google because it produces the "best" search results, or they use Amazon because it has the best selection, lowest prices, and fastest delivery time. That's basically the exact opposite of a luxury brand. In tech, the focus is much more on delivering value. Even Apple, which does have a strong brand, has built their brand around having the best products.
- ftxbro 3y ago
  > In tech, the focus is much more on delivering value. Even Apple, which does have a strong brand, has built their brand around having the best products. It looks like their branding is working, if people think this!
  - mannerheim 3y ago
    I haven't ever owned an iPhone, but I use an M1 MacBook for work, and it's indeed a very good laptop. Decent performance with a 20-hour battery life for $1k, there really is nothing else like it on the market right now.
- hackitup7 3y ago
  The brand and the value are interlinked for these luxury retailers. Like part of the value of having a Louis Vuitton bag is the fact that people see me with a Louis Vuitton bag. (The same is actually true of an iPhone as well but there are more stats and specs around it)
MuffinFlavored 3y ago
> The biggest difference is the emphasis on brand, where really only Apple has done an equivalently strong job imo. What's easier to develop: a handbag/sunglasses/perfume/linen/fabric based clothing or R&D on microprocessors to make the world's leading smartphone in terms of innovation, fit + finish, etc.?
- pjc50 3y ago
  > R&D on microprocessors to make the world's leading smartphone in terms of innovation, fit + finish, etc.? Some of this R&D also happens in Europe even if the parent company or ultimate manufacturer is American.
- TrapLord_Rhodo 3y ago
  Developing and selling are two different things. Developing microprocessors has KPI's. Developing clothing doesn't. The first is technical, the second is social. Pointing to the apple example, which Steve was more important? The technical one or the social one?
  - MuffinFlavored 3y ago
    > The first is technical, the second is social. I am extremely interested in stats like: what percentage of LVMH customers/buyers should be purchasing their products at all from a financial-wellness perspective? How are they so successful at selling the allure of "our products send a positive message of wealth + status in society"? Why do people (who common don't actually have wealth of any kind) find themselves victim/attracted to this marketing message?
    - lancesells 3y ago
      > Why do people (who common don't actually have wealth of any kind) find themselves victim/attracted to this marketing message? Why do people watch tv or movies, or read and post comments on HN? There are very clearly better things to be doing with your time and life. In the end it makes someone feel good for however long.

rcme 3y ago

Brand is the raison d'être of luxury good companies. No one wants to spend $10k on a random leather bag. On the other hand, people will use whichever digital service offers the best experience. E.g. people use Google because it produces the "best" search results, or they use Amazon because it has the best selection, lowest prices, and fastest delivery time. That's basically the exact opposite of a luxury brand. In tech, the focus is much more on delivering value. Even Apple, which does have a strong brand, has built their brand around having the best products.

ftxbro 3y ago
> In tech, the focus is much more on delivering value. Even Apple, which does have a strong brand, has built their brand around having the best products. It looks like their branding is working, if people think this!
- mannerheim 3y ago
  I haven't ever owned an iPhone, but I use an M1 MacBook for work, and it's indeed a very good laptop. Decent performance with a 20-hour battery life for $1k, there really is nothing else like it on the market right now.
hackitup7 3y ago
The brand and the value are interlinked for these luxury retailers. Like part of the value of having a Louis Vuitton bag is the fact that people see me with a Louis Vuitton bag. (The same is actually true of an iPhone as well but there are more stats and specs around it)

MuffinFlavored 3y ago

> The biggest difference is the emphasis on brand, where really only Apple has done an equivalently strong job imo. What's easier to develop: a handbag/sunglasses/perfume/linen/fabric based clothing or R&D on microprocessors to make the world's leading smartphone in terms of innovation, fit + finish, etc.?

pjc50 3y ago
> R&D on microprocessors to make the world's leading smartphone in terms of innovation, fit + finish, etc.? Some of this R&D also happens in Europe even if the parent company or ultimate manufacturer is American.
TrapLord_Rhodo 3y ago
Developing and selling are two different things. Developing microprocessors has KPI's. Developing clothing doesn't. The first is technical, the second is social. Pointing to the apple example, which Steve was more important? The technical one or the social one?
- MuffinFlavored 3y ago
  > The first is technical, the second is social. I am extremely interested in stats like: what percentage of LVMH customers/buyers should be purchasing their products at all from a financial-wellness perspective? How are they so successful at selling the allure of "our products send a positive message of wealth + status in society"? Why do people (who common don't actually have wealth of any kind) find themselves victim/attracted to this marketing message?
  - lancesells 3y ago
    > Why do people (who common don't actually have wealth of any kind) find themselves victim/attracted to this marketing message? Why do people watch tv or movies, or read and post comments on HN? There are very clearly better things to be doing with your time and life. In the end it makes someone feel good for however long.