In one of the larger exits so far in the flash sales business, retail chain Nordstrom has acquired flash sales site HauteLookfor $180 million in Nordstrom stock and three-year earn-out of up to $90 million. HauteLook has raised $41 million in funding.
Thanks to the immense popularity of members-only, online sample sales, HauteLook has grown to 4 million members since launching in 2007. The site offers massively discounted sale events in women’s fashion, men’s fashion, accessories, kids’ clothing and toys, travel and home and beauty.
The basic idea behind the flash sales model is this: designers ad retailers, such as Marc Jacobs or Versace, place excess inventory on a sale site at 50 to 70 percent discounts over a several day period. The sales are private, available only to members, with upcoming sales from brands announced via emails. You can get invites from other members or request invites via the site.
The flash sales space is definitely competitive; and the amount that HauteLook sold for isn’t entirely surprising. Two years ago GSI Commerce bought RueLaLa in a deal valued at $350 million. Gilt Groupe, has been raising huge amounts of money, growing its user base at a rapid pace and turning a strong profit. In December, Gilt raised another $15 million, bringing the company’s total funding to nearly $100 million. At one point Gilt was valued at $400 million but that number has surely increased over the past year. And an IPO could be in the near future.
One Kings Lane, has also recently raised a large amount of money and is growing like a weed. And there are a number of independent players like Ideeli, BeyondTheRack and others who are still growing at a fast clip.
The concept has even attracted retail giants like eBay, Saks and Neiman Marcus, which are now jumping on the bandwagon to offer their own private sales, a market which Nordstrom clearly wants to enter the space. I wouldn’t be surprised if other larger retailers snap up niche, smaller flash sales sites over the next few years.