[tweetmeme]Members-only web retailers are a niche segment of ecommerce retailing that thrives on exclusivity. They are invite-only stores or private shopping clubs that require a person to be approved as a member before they can shop the items offered by the store.
These stores are characterized by their brand name offerings of products such as women and men’s clothing, gourmet food, designer home furnishings – all offered within 48 hours sales window.
Private shopping sites typically buy the excess merchandise directly from luxury brands and designers, and then mark items up to make a profit. Given the exclusivity of membership, these sites are attractive to high-end designers as offering their products on these private shopping clubs doesn’t diminish the image of their luxury brands, as compared to getting their products sold in discount stores like Ross or TJ Maxx.
One of the most popular members-only web retailers today is RueLala.com http://www.ruelala.com. To join, a person has to be invited or join their waiting list. It describes itself as “invitation-only online destination where Members discover premier-brand, private sale Boutiques.” Each designer offering is called a “boutique.” A Max Mara boutique may include upwards of 20 items available for purchase.
This alternative model of selling on the Web has seen tremendous growth in the past couple of years, spurred by the recession and consumers’ need to cut spending and find better deals. According to Internet Retailer, the site has more than 1.8 million members. In 2009, RueLala.com generated sales of about $157 million.
In addition, a number of factors make this model thrive today:
- Heavy emphasis on word of mouth. Existing members must recommend new members, with incentives given if they bring in new members. Thus, there’s the built-in mechanism to spread the word about the business.
- Sense of urgency in shopping. Each RueLala.com boutique is open only for 48 hours, and items are sold out very quickly. These stores operate on a “you snooze, you lose” model: once an item is placed inside the shopping cart, users are pressured to either shop some more or pay in two minutes. Otherwise, the item will be available for sale again. This means fewer abandoned shopping carts.
- Appointment shopping. Every 11 a.m., RueLala.com members receive an email letting them know of the boutiques open that day. They can then view the items for sale for each boutique, until shopping starts at noon. In some members-only websites with tiered membership (paid and free), the paid are given priority shopping access and can shop an hour earlier compared to other members.
Category: Business Strategy