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Online Private Sales: The Year Ahead

Online private sales have been the surprise hit of the retail world.

The runaway hit that is online private sales has taken the retail world by surprise and racked up impressive growth in a short time.

Last year, GSI Commerce acquired the site RueLaLa.com for $350 million in cash and stock. Rue La La and another e-seller, Gilt Groupe, both grew quickly in their first 18 months in business. At the time GSI bought Rue La La and its sister company, off-price Web store Smart Bargains Inc., the two were expected to post revenues of $230 million with a loss of $500,000. Gilt, meanwhile, generated $170 million in revenues in 2009 and projects it will do sales of $500 million in 2010, according to the company.

The channel — which specializes in running online sample sales, usually for a members-only clientele — has attracted significant talent, venture backing and many imitators. Even retailers like Neiman Marcus, Saks Fifth Avenue, Net-a-porter and Bluefly have been experimenting with flash sales.

Rumors that Amazon has been looking to buy the French firm that started it all, the $813 million Vente-Privee, have been emphatically denied by insiders. But don’t discount the possibility of more surprises in this arena, from acquisitions to new entrants, possibly from brick- and-mortar discounters like T.J. Maxx or Loehmann’s.

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