"We have strong feedback that consumers enjoy new shopping experiences, in particular this private sale venue. There's a sense of urgency and excitement to it," said Dennis Baldwin, a principal in RueLaLa stakeholder Breakaway Ventures of Boston, which invests in retail and whose principals include former Reebok chief executive officer Paul Fireman.
The brands don't mind putting their discounted wares online, since only members can see them. Each sale features a single brand and lasts for only a few days.
How big could an online sample sale company get? Pretty big, apparently. Vente-Privee.com, the six-year-old French company that started the boom, is making approximately $500 million a year and has spawned more than 70 competitors in France, according to BusinessWeek. (It is also venture backed.)
Baldwin is betting the opportunity in the U.S. is even bigger, since America has more brands, and e-commerce is more developed here.
New York's Ideeli, backed by $3.8 million from Kodiak Ventures and others, recently hired David Manela of Vivre as vice president of strategic marketing. Rachel Barnett, previously of Me & Ro, Tommy Hilfiger and Oscar de la Renta, has come over as chief financial officer.
Gilt Groupe of New York, which received $5 million from Matrix Partners, was cofounded by Louis Vuitton, Bulgari and eBay veterans Alexis Maybank and Alexandra Wilkis Wilson. Chief operating officer Jennifer Carr Smith hails from Polo Ralph Lauren and other staff come from Bergdorf Goodman, Saks Fifth Avenue and Giorgio Armani.
RueLaLa's president Leslie Smith was previously at Reebok and its licensee Ralph Lauren Footwear.
Competitors include HauteLook, Top Secret, Editor's Closet and Regent's Secret.
ENVIABLE POSITION: Influential bicoastal boutique Opening Ceremony plans to launch its first online store this fall. The Web site will be just as big as its New York store with more than 100 designers, plus it will feature the occasional special project such as online collaborations with artists, said co-founder Humberto Leon. "We have a lot of customers who live in states other than New York and California, as well as a lot of international clients who e-mail us daily," he said. Plus the store's one static Web page gets more than half a million hits a month.