We sale experts know a good thing when we see one, so last week’s news that the magical marriage of the words “private” and “sale” have raked in billions in venture funding and profits combined, comes as no real surprise. Consumers, greedy for designer duds but ever conscious of spontaneous purchasing, have  been eating up private sales from places like Gilt and Rue La La. Unlike typical online sales from sites like BlueFly and Overstock, the new generation of sale sites studied their fashion-forward consumer and added a few word that were sure to lock them in.

Private: adj. 1. Pertaining to or affecting only a small group of persons, ; individual; personal. 2. Removed from or out of public view or knowledge; secret. 3. Confined or intended only for persons immediately involved, confidential. 4. Of having special privileges or services.

Sale: n. 1. A special disposal of goods at lowered prices.

The success of these websites may have took the industry by surprise, but social psychological research has long shown that people are more attracted to things that raise their image of self and enhance their self-concept. Take into account the way designer duds play into status. Pair that with the positive way social class, or even perceived social class, has on self-esteem, and getting an exclusive invite to a Gucci sale makes us feel warm and fuzzy wuzzies all over. And the results seem almost too good to be true.

As a seasoned sale searcher, you know how it works, but for the record, these private online sales are for members only. Sale items and designers can only be viewed by members -membership attained by invitation or acquired by simply signing up. Sales run for about 36 hours on average with hot items selling out in minutes. The time limit creates a sense of urgency while the exclusivity allows consumers to feel their purchases are special. And they are! Designer items discounted up to 70% off are no common occurrence, even here in Recessionville, USA. France’s Vente Privee is the pioneer of online private sales. In the states, Rue La La and Gilt Group are our most well-established, designer-saturated sites with runners up including Ideeli and Haute Look.
According to Brian Tunick of J.P. Morgan Chase, the off-market prices has been roughly estimated at just under $30 billion dollars per year. Rue La La, which received $25 million in funding, has made a pretty penny in the past three quarters estimating over $100 million in revenues. Same with Gilt Group, who scraped up about $45 million in venture funding and expect to turn profitable in the next few months estimating their fiscal year sales to reach nearly $400 million bones.

And there are more to come. Rumor has it Daily Candy is going to launch it’s own private sale site featuring both established and emerging designers. As always, we’ll let you know.

Emma Dinzebach

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