But now the mobs are moving online, to sites like Gilt, Rue La La, One Kings Lane, Ideeli and HauteLook. On the Web, the shopping is just as competitive, but it is no longer a blood sport.
The private-sale sites — a misnomer because most of these so-called exclusive sites are open to anyone who signs up — have become a thriving corner of online commerce. Sites using the same “while supplies last” approach have sprung up recently to sell home furnishings, beauty products and travel packages.
The business model is simple: sites buy mostly overstocked clothing and accessories from brand-name designers, then discount them deeply. Shoppers rush to get the deals because the items are often gone in a few hours.
The sites try to recreate the rush of a warehouse sample sale, minus the trampling and shoving, but they borrow as much from the Home Shopping Network as they do from Saks Fifth Avenue. After shoppers add an item to their cart at Gilt, for example, they get a 10-minute countdown before they lose the item.
More mainstream retailers are also adopting the idea. Saks, for example, is holding 24-hour half-price sales on brands like Herve Léger. Others are using the idea for holiday promotions. By discounting one item at a time, the retailers attract bargain-seekers and avoid the deep discounting done storewide last year, thereby protecting their profit margins.
Private-sale sites are attracting brand-name investors. Kleiner Perkins Caufield & Byers, the venture capital firm that backed Google and Amazon.com, invested on Wednesday in One Kings Lane, which sells home decor. Gilt Groupe raised $55 million from Matrix Partners and General Atlantic, and Rue La La’s parent company was recently acquired by GSI Commerce for $180 million. The concept seems tailored to recessionary times. Any guilt that consumers feel over spending thousands of dollars on unnecessary items can be replaced by bragging rights for finding a killer bargain.
It works for the fashion industry, too, because as the economy slumped, stores deeply cut inventory, which left some designers with excess stock, depending on their production calendars. Some high-end brands view the sites as a place to unload inventory without sullying their image by having their merchandise appear on Overstock.com or on the racks at Filene’s Basement.
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