Gucci and Me – Namit Goel

I have asked myself this question lately, how did premium fashion brands use online private sales to make this concept the latest shopping trend in India? Brands have struck the right chord with bargain-hunting fashion aficionados who wish to own prêt-a-porter at a very low price and also sell off their excess inventory by tapping the aspiring market. What more, since it does not have a negative impact on the brands’ image from a consumer standpoint, a variety of luxury brands ranging from apparels, home furnishings, bags and shoes can be bundled and sold quickly. It is however a private club and you need to be invited.

It works like this; private shopping sites buy excess merchandise directly from premium brands and designers; then they mark up the price for a profit and offer them at a heavy discount only to approved members. This membership is available by invitation from current members who have registered online or by applying online and then being subjected to a wait list. The product catalogue is then exclusively mailed to the approved members according to the buyers’ interest and buying behavior. This is gauged through social networks such as Facebook and Twitter. Since the merchandise is available for a limited time period during a sales event, I found the shopping experience to be fun, exciting and fast-paced. I saw deals on products disappear fast. It sounds like a very good business model, but sheer shopping popped another question in my head. If the idea is to make it available only to a limited range of members, how does this business scale and make money?

To find answers to my question I called up one of these websites and they told me that the number of members is not important; it’s all about having the right members who are passionate about the product offerings and are willing to buy them. I feel the answer to my question can be found in value added features that private shopping sites offer. These sites have started monetizing and increasing the business through viral invitations where each member will earn reward points per new member brought in. There are special clubs for premium members who have a propensity to buy lots online and they will receive extra discounts. A well thought of technical representation of the shoppers, their demographics and economics will be streamlined at the beginning of the event to stimulate impulse purchases. Special social recommendation systems will be set in place to up-sell and cross-sell based on purchases and browsing pattern of the customers.

Of course, all these features will soon fade away as more competitors arrive; but it all depends who will aggregate a large spectrum of luxury brands and designers on to their side. I believe this space will be red hot soon and will see a series of fund raising transactions at a mind-boggling valuation, followed by a period of consolidation in 3 to 5 years time. Sounds like its deal time, doesn’t it. But it will be great to hear your thoughts about the same and I would suggest talk to your chic friends, they will probably know what websites I am talking about.


About Deepak
Venture Capital and M&A advisor, Entrepreneur, Startup enthusiast..

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