Members Only: Is Subscription Shopping Worth the Hype?

by admin

Members Only: Is Subscription Shopping Worth the Hype?

Sample sales used to mean waiting in line for hours, dodging manic shoppers wielding fistfuls of merchandise, and rushing madly to find the best deals. That might be a good way to score a discount, but few people have the patience or stamina to show up at an unmarked warehouse in the middle of the afternoon to fight over clothes they don’t even have time to try on. Yet despite the fact that the experience is thoroughly exhausting and stressful, the feeling of being in the know always made the shoppers feel like part of an exclusive club of fashion elites. 

Members-only shopping Web sites have taken the best part of sample sales—the huge discounts—and moved them online, where die-hard shoppers can grab the deals with the click of a mouse. Members get email notifications about upcoming sales, whether on handbags, sunglasses, menswear, or shoes, and then they can do all the mad dashing from the comfort of their home or office cubicle. Devotees of the sites profess that the “flash sales,” so named for their here-one-minute-gone-the-next quality, allow them to get designer merchandise that they might not otherwise be able to afford, as well as steep discounts on items they would have bought anyway. 

Discounts with Discretion
The largest three sites—Gilt Groupe, Ideeli, and Rue La La—have been in operation since around the end of 2007, but it was the recession that really jump-started their success. Thriving designers are usually extremely hesitant to discount their merchandise, because they want to protect the integrity of their brand—after all, there’s no cachet to a Prada bag if it’s bought for 50 percent off at T.J. Maxx—so during their first years of operation, these companies had a hard time convincing designers to sell their merchandise on the sites. But after the disastrous 2008 holiday season, so much was left unsold that many designers were forced to find a way to unload the items and make any sort of profit possible. 

You probably won’t find this season’s hottest styles being sold at flash sales. The merchandise on offer is more likely unsold items from previous seasons. Some designers are even rumored to create collections exclusively for the sites, using lower-priced fabrics or less intricate construction techniques, in order to sell them at lower prices. Given the choice, designers would obviously prefer to sell their merchandise for full price, but the carefully cultivated feeling of exclusivity and luxury at members-only sites provides a good fallback option for items that need to be discreetly unloaded in a hurry. Plus, the discount sales attract new customers to the brand, those who will hopefully someday pay full retail price. The customers themselves don’t mind that the merchandise isn’t current, because for many it’s a low-cost way to enter the world of high fashion. 

Wham, Bam, Thank You, Glam
The sales are still frantic, just like traditional sample sales. Most flash sales last only a day or two, and with customers (mostly affluent young women) ready at their computers when each one starts, supplies don’t last long. There’s little time for hesitating, debating, or price comparison. There’s also no storing a cartful of items to mull over for the day; Ideeli empties shopping carts after ten minutes of shopping, and the most desirable items on Gilt often sell out almost instantaneously. The trick to getting your hands on the best finds is to click without hesitation. 

BusinessWeek estimates that the top three members-only Web sites raked in approximately $300 million in revenue in 2009, with even more growth predicted in 2010. They’ve branched out from apparel, footwear, and jewelry to begin offering skincare products, lingerie, home furnishings, children’s wear, cosmetic procedures like Botox, books, and vacation packages. To maximize revenues, Rue La La even offers consumers the option of opening a premium account beyond the basic free membership; customers who pay a small monthly fee can get early access to sales. Gilt now offers membership in Gilt Noir, which grants top-spending customers early access to sales, as well as to other special events, like wine tastings. 

But as Gilt, Ideeli, and Rue La La have grown, traditional retailers are getting in on the flash-sale game, too. Daily Candy launched its own members-only site, Swirl, and other retailers have begun launching their own versions of quick private sales to their online customers. An improvement in the economy could also spell disaster for private-sale sites, since they could find it harder to acquire merchandise. When more people are buying full-price items in the store, there are fewer leftovers to mark down. 

Tricks of the (Rag) Trade
Discounts of up to 80 percent don’t come without caveats, and there are a few things about the sites customers need to know before they purchase. 

  • “Exclusive” isn’t always exclusive. Sites may advertise themselves as “members only,” but it’s usually easy to get access. Ideeli grants accounts to anyone who asks. Gilt and Rue La La state that they require a referral from an existing member, but a quick Google search will turn up dozens of links to invitations.
  • Shop early and click often. Items begin to sell out immediately when they go on sale. If there’s something you have your eye on, don’t hesitate. Flash sales are the Internet equivalent of women yanking things out of each other’s hands and racing to the register.
  • Check the return policy. Before you make a purchase, know the site’s policy on returns and exchanges. Most sites offer only store credit, no cash back. Gilt provides refunds, but only within a strict window of time. On some sites, there’s no return at all for beauty products, accessories, or other nonapparel items.
  • “Retail price” is relative. The sites don’t always use the actual MSRP to calculate discounts. Sometimes they estimate what a retailer could have sold the item for, or they estimate what a Web-exclusive item might be worth. Even with the discount, there’s a chance that the item could sell for less elsewhere. 

Besides offering amazing discounts on established designers’ products, members-only sites are also a great way to showcase up-and-coming designers who need exposure. Millions of people are signed up for subscription shopping, so members-only sites are probably here to stay, at least for the foreseeable future. After all, everybody loves a bargain … especially when you don’t have to leave your house to get it.