Ok so after spending so many hours at the Barney’s Sample Sale twice a year – battling my way through crazy amount of people, trying a suit pant in the middle of the room while keeping an eye on these John Varvatos pants so I’d secured later – the emergence of the online-only sample sales sounded like a great revolution. Nothing new there though since it’s been going on already for close to 10 years in France: for example, check out the absolute leader there (close to 90% market share) at www.vente-privee.com. With an estimated valuation over 800m euros (above $1bn), the company was doing close to $500m revenues in 2007 and, given its business model, is clearly cash flow positive.
Following the appealing model, a couple of startups were created in the US, most of them distincts from each other in terms of market positionnement or marketing tactics. Still an early stage market here, it’s obviously the right time given what’s happening on the economy (after all, one of the best current marketing tactic for KMart and now for Sears is to push a refreshed version of the layaway business model – check out http://tinyurl.com/5fxt5h).
Before we actually take a look at the competition outlook, I want to define clearly what I’m meaning by online sample sale: it’s the business of selling online only apparel (clothes, accessories etc.) at discounted prices. The items sold can be part of current or past collections, from well-known or less-known designers and for men, women or childrens. It’s different from the business of using online as a marketing tool for physical sample sales (think any newletter alert for physical sale or any advertisement on websites). It is also different from the business of selling discounted goods on retailers sites (Barneys.com, Saks etc.) or the occasional 20 to 30% off at the end of the collections.
The companies that are currently struggling to eat each other market shares are (by order of importance / size / credibility
There’s other providers that are smaller but these are the main ones.
Key levers to success