Lululemon’s E-Commerce Sales: Key Initiatives And Prospects
E-commerce sales trends
Online or e-commerce sales have become a favored retail channel for consumers. They’ve grown steadily over the years, both in absolute terms and as a percentage of overall retail sales. They’re also cannibalizing brick-and-mortar store sales. Due to this trend, most retailers have adopted an omni-channel sales strategy, offering sales via company websites as well as retail outlets. LULU’s competitors, NIKE (NKE), Under Armour (UA), VF Corporation (VFC), and The Gap (GPS), have also ramped up their online platforms, as they’re becoming an increasingly popular selling channel.
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Lululemon Athletica (LULU) first started selling through its websites in 2009. Since then, the share of online sales in the company’s revenues has steadily increased. Direct-to-consumer (or DTC) sales, which include online sales and sales made over the phone, went up from 4% in fiscal 2010 to 16.5% in fiscal 2014. DTC sales consist mostly of online sales. Online sales grew 27% year-over-year in 3Q15.
The company operates brand-specific websites in the US and Canada and country-specific websites in certain countries in Asia and Europe. LULU is looking at online sales as a key growth driver. It’s planning to keep enhancing its e-commerce websites to improve customers’ experience.
This year, LULU launched online warehouse sales in Canada and in the US. It offered products at a discount with a limit to the number of items customers could buy. Limited-time initiatives like these create excitement around the brand even when it’s offering discounted products.