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direct-internet-catalogue
direct-internet-catalogue

Online Private Sales: The Year Ahead

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

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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.