It’s a week or so late for April Fools, but social commerce hype around group-buy and private-sale sites has spawned several parody sites…
At group-buy site nopuorg.com (groupon spelt backwards) you can get 75% off unlimited trampolining, 79% off Finger and Things spa treatments, and half price dating venues. The deals are syndicated directly to Flitter and Yearbook.
At private-sale site GuiltyLook.com members can participate in exclusive flash sales of… private sale sites such as Gilt, HauteLook, RueLaLa and Ideeli at incredible member-only prices.
The mind behind GuiltyLook is Bob Schwartz, experienced e-commerce expert, and from the site Schwartz offers a useful overview and analysis of the Private-Sale market. In brief, this is what Schwartz has to say on the Online Private Sale / Flash Sale market:
The Business Concept: Private Sale sites bring the powerful aspects of the sample/flash sale on-line.
The Value to Customers: Excitement of screaming great deals plus limited inventory only available for a short time period with exclusive access.
The Value to Brands: Ffast way to liquidate excess inventory in a very short time plus a “closed membership environment” giving brands a level of “plausible deniability” they need (”it could be a safe discounting venue”).
The Opportunity for Startups: Proven business model, established success stories (e.g. Vente-Privée), simple and inexpensive technology (opensource Magento has a private sales module).
The Winning Strategy: Grow your Private Sale business by building a brand into a leading discount retailer brand.
The Market Structure: three tiers of players.
- Tier 1 (Large (1M+ monthly visits)) Gilt, HauteLook, RueLaLa, Ideeli, BeyondTheRack
- Tier 2 (Medium (200K monthly visits)) OneKingsLane, EditorsCloset, BillionDollarBabes, TheTopSecret
- Tier 3 (Small (100K monthly visits)) Totsy, Swirl (by DailyCandy), JackThreads, TheMiniSocial, TheFairest (Hiatus)
- Beyond Waste Management: The Private Sale market lives off poor inventory management, selling overstock items – but manufacturer and retailer inventory management is getting better… Traditional retail has responded with MFO (made for outlet) goods – but this may not work for private sales.
- Future-Proofing for Good Times: The Private Sale business has worked well in recessionary times with budget-conscious customers – will the appeal remain when the good times return.
- Keeping Private Private: The Private in Private sales allows brands to discount goods without eroding brand value – or at least provides plausible deniability that it does so. But it is on private sale business interest to make private sales ever-less private to sell more. Will this conflict of interest end the ‘suspension of disbelief‘ that you can discount without diminishing brand value?
- Working With, Not Against: The paymaster of the manufacturer is the traditional retailer chain; upsetting the hand that feeds you by opening up a parallel private sale channel is not smart. Private sale businesses need to work out how to work with traditional retail, not against it.