business-features
business-features

Private Sales Burgeon on the Web

The hype and froth over firms such as Vente-Privee, Gilt Groupe, Rue La La and Ideeli are reminiscent of the dot-com bubble.

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Rue La La Website.

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Net-a-porter’s off-price site, The Outnet, holds occasional limited-time sales with no returns on Fridays. Last month, online contemporary boutique Revolve launched a private-sale site called Rewind (at rewind-rewind.com).

Other private sale companies include HauteLook, Ideeli and Editor’s Closet. Woot, open to the public, offers limited time sales on all kinds of closeouts, not usually apparel.

Nor are the sites limited to pure plays. Now brick-and-mortar retailers are adopting the format as well. Since March, Neiman Marcus has experimented with a handful of limited time sales it calls “Midday Dash.” For a few hours last Thursday, the retailer offered a few dozen men’s shoes and accessories from Gucci, Dolce & Gabbana and others at 50 percent off. An

e-mail about the sale was sent only to a select group of Neiman Marcus customers. Neiman’s is testing demographics and buying patterns, said spokeswoman Ginger Reeder, who demurred when asked how shoppers have responded to the format, citing competitive concerns.

“I think the steroid was the recession,” said John Tomich, founder of e-commerce provider One Stop, which recently bought well-known offline sample sale company Billion Dollar Babes and built out its online private sale business. The company has been profitable for years but recently took $13.3 million in funding to expand. “If it were 2005, [private sales] wouldn’t have grown so fast. Everything’s 50 to 70 percent off. It’s going to be interesting to see how brands that aren’t discounting guide their way through this. The behavioral patterns of the customers are changing.”

In general, the off-price business is doing well right now, whereas luxury is not, with companies such as TJ Maxx reporting growth, while sales at some luxury firms are down 20 to 30 percent.

It seems logical to expect off-pricers such as Nordstrom Rack, Ross, TJ Maxx and Loehmann’s to get into the business, but so far at least they have revealed no such plans. (TJ Maxx did not return a phone call seeking comment.) While these off-pricers buy from both middlemen and directly from manufacturers, in the past agreements with brands have prevented them from selling online.

The success of the format may hinge on offering better deals than the traditional off-price format. Gilt Groupe, for example, usually offers 60 percent off, and much of the time the goods are end-of-season, so still available in stores. The site offers a deeper and broader selection of designer brands than traditional off-pricers such as Bluefly. A recent Travota sale, for example, offered spring merchandise at 60 percent off at the same time department stores started their spring sales. A recent Rag & Bone sale offered overstock from the current end-of-season as well as past seasons that had previously been for sale at Rag & Bone’s own sample sales in its showroom. Most prices were about the same as Rag & Bone’s own sample sales. For example, the Boyfriend jean was $98, marked down from $242.

Bluefly typically offers 40 percent off regular merchandise and 20 percent off luxury brands such as Gucci and Prada. Merchandise tends to be one year old. The site also has frequent one-day “take 10 percent off” sales. Like Gilt, Bluefly charges for shipping.

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