From a revenue-generating perspective, Private Shopping Clubs (also known as sample/flash sale (event) sites) are the big success story in social commerce right now (Vente-Privée $1bn+, Gilt $400M+).

Marc Osofsky, ex-McKinsey VP of marketing for e-commerce specialists Optaros has posted a useful review of these member-only shopping clubs where members get access to exclusive online sale events, identifying what makes them work.

With popular e-commerce software such as Magento offering private shopping club modules (video walk-through), private shopping clubs are relatively easy to deploy.  So here’s a top line summary of Marc’s review, listing the critical success factors for setting up a successful private shopping club.

Key Features

  • Exclusivity – Invite-only (requires an invitation from a friend to get in)
  • Name Brands – quality merchandise not just cheap or out of date items
  • Compelling Discounts – priced to drive impulse purchases and loyalty
  • Timed Events – limited sales event at which the merchandise is offered until it sells out or a time limit is reached
  • Regular Events – Sales events always start at the same time
  • One Page Event List – Listing current events to browse
  • Viral Invitations – member get member referral program ($10 reward per new (purchasing) member
  • Social Network Integration (e.g. Facebook Connect/Twitter) easy login and member referrals
  • No Site Search – Focus attention on browsing sale items to encourage impulse purchase (allow filter)
  • Single/No Shipping Fee – Orders stay open for several hours to allow shoppers to make additional purchases and pay only one shipping fee (or additional orders are advertised as having free shipping)

Future Features

  • Fashion Content (Editorial/Articles) – influencing shoppers through richer content around the products on sale.
  • VIP Members – Special club for most valuable members (who have invited groups of people that buy the most) with extra discounts and incentives.
  • Customer Idea Communities – for ideas on future sale events and site improvements
  • Crowd Visualization – visial representation of shopping crowd at beginning of the events to stimulate impulse pruchases
  • Social Analytics – social recommender systems that up-sell and cross-sell based on purchases/browsing patterns of “people like you” (similarity in purchasing history/tastes/social graph)