Thanks to a surge of consumers looking for deals in the recessionary economy, private online sample sales, which offer highly discounted merchandise from luxury retailers looking to unload excess inventory, is becoming a fast-growing business. BuyVIP, a European private online shopping club with more than 3.5 million members, just secured $14.9 million in Series A funding from Kennet Partners, Bertelsmann Digital Media Investments, 3i Group and Molins Capital. BuyVIP’s American counterparts, Ideeli and Gilt Groupe have also been able to latch on to this expanding market where big-name designers like Calvin Klein, Zac Posen and Givenchy sell last season’s clothes, jewelry and handbags to shoppers at significant markdowns.
Now, private shopping club One Kings Lane is trying to be the online sample sale for affordable designer home wares and furnishings. The first 100 TechCrunch readers who sign up here will get a $25 credit towards any purchase.
Like Ideeli and Gilt Groupe, One Kings Lane is an exclusive invitation-only shopping destination, featuring high-end designer home goods at prices that are discounted by as much as 70% (everything on the site is at least 40-50% off retail price). One Kings Lane offers its sample sales during a 72-hour window, alerting members of sales via daily emails. The online site buys the excess merchandise directly from the designers, and then marks items up to make a profit. One Kings Lane cuts costs by outsourcing its e-commerce operations to e-business provider Auspient Inc.
One Kings Lane co-founders Alison Gelb Pincus and Susan Feldman say that invitation-only online “shopping clubs” are incredibly attractive to high-end designers because the exclusivity of the clubs doesn’t diminish the image of the luxury brands. Sites like Overstock.com or retailers like TJMaxx also offer discounted, excess merchandise but don’t have the luxury connotation attached to their names. Pincus adds that retailers are still able to take advantage of the potential buying power of shoppers across the Internet but not at the expense of tarnishing the brand.
One Kings Lane appears to be growing at a rapid pace in its first week of business. Already the site has tens of thousands of members. Pincus and Feldman say that because of the recessionary economy, consumers are trolling the internet for deals and they hope to make their site an easy way to find high-end home goods at discount prices. The sales are pretty good. Popular high-end Archipelago candles were discounted by over 50%, for instance, while they are being sold for full price on Nordstrom.com. Competitor Bluefly.com, which is an open site that also sells marked down luxury goods, has a wide variety of deals on home goods and will likely be a formidable opponent to One Kings Lane. Bluefly also has high-end, designer merchandise, including flatware from Vera Wang and Hermes, and shoppers aren’t restricted to a 72-hour window to buy goods. At the moment, One Kings Lane has a handful of designers featured and will definitely need to grow its roster of brands to create a loyal user base. BuyVIP currently features over 400 different brands. And part of BuyVIP’s new capital will be used to expand to new geographies, and a US expansion could grow the site’s 3.5 million user base even further.