Online Sample Sales - E-tailers Beware!
Previously shoppers in major cities such as New York, London, Paris and Los Angeles were the only ones privy to one of the best kept secrets - the designer sample sale! Shoppers typically line up for hours on end and rush to get designer outfits at stellar prices. Some sample sales require exclusive invitations and set up allocated appointment times in secret locations all over the city. Traditionally sample sales include a narrow selection of high end merchandise with limited inventory at ridiculously reduced prices for a very short amount of time. Now shoppers all over the country are getting access to sample sales that were previously only accessible to the fortunate few to be at the right time and right place.
Over the recent year, there has been a rise in the phenomenon of online sample sale websites. While the retail industry has seen a decline in sales this past year, online sample sale sites are doing relatively well in this recessionary climate as shopaholic women (and men!) with a taste for high end fashion are drawn to this online guilty pleasure.
While there are a few top contenders that have taken the market by storm, the market is starting to see more and more e-tailers attempting to grab a piece of the pie. Some of my favorite sites are:
Gilt Groupe offers invitation only sales on men's, women's and children's fashions as well as home decorations. Each Gilt sale starts at noon ET and lasts 36 hours and features specific selected styles from a single designer. Membership is by referral only.
Hautelook organizes exclusive 12-48 hour online private sales from fashion and luxury lifestyle brands. Membership is free and prior to each sale, members are sent an email notice announcing the brand and start date/time of the sale.
Another sample sale website is Ideeli . It's easy to sign up and free to join for their 2nd Row membership. However, to get access to more exclusive sales and shop one hour earlier than other members, you can upgrade to a 1st Row membership for $6.99 a month (billed annually). They also offer giveaways and other fun stuff.
According to a recent article in the Wall Street Journal, entitled “Designer Bargains, for the Invited”, “The private-sale business avoids two common pitfalls of online commerce: low margins due to inventory costs and spending on online ads. Marketing centers on email blasts to members. And by carrying only a few dozen styles, often out of season, the sites are able to keep a lid on inventory spending.
Margins of roughly 35% trounce the single-digit margins for many physical retail stores, and are even higher than Amazon.com Inc.'s North American gross margin of around 25%”
There are certain elements of the business model that make the shopping experience more appealing to customers and urge consumers to not only convert quickly but also to purchase high ticket items online. The exclusivity of membership, the urgency of limited inventory and time allotted for each sale, the access to high designer brands such as Oscar De La Renta, Christian Louboutin, Dolce and Gabbana, Jean Paul Gautier, Diane Von Furstenberg – have managed to create a high sense of customer loyalty and are able to get customers to visit the site regularly (often daily) and convert at a much higher rate than other online sites. Shoppers know that if they like something it’s either buy it instantly or lose out on the item to another shopper. The experience creates a virtual tug of war which is not typical of the online shopping experience.
There is a lot of untapped potential in this online sample sale retail space, with a rise in new categories and social commerce. The customer experience can be greatly improved, and there is a lot of opportunity to leverage the customer loyalty that has been generated by the experience. In my opinion though, it has the potential to change the expectation and the shopping experience of online retail consumers. Prior to the online sample sale, my online purchases were limited to browsing. I certainly never spent large sums of money online, but now I find that most of my shopping is done online during the sample sales. I enjoy learning about new designers and eagerly await each sale to see what steals I can find online. Happy shopping and if you need a membership referral to any of these sites let me know!
