Secretsales is set to make another loss this year, but the online business is anticipating its first year of profit in 2014 following rapid growth in membership.
The flash Sales company this week published its results for the calendar year 2012, in which it grew total sales 22% to £10.8m. It made a loss of £3.9m, which co-founder Nish Kukadia attributed to its spend on developing aspects of the business, including infrastructure, marketing and expanding the team.
But the fourth quarter of the year saw an 84% increase in sales, largely thanks to Secretsales’ first TV advertising campaign.
“The campaign was essential for setting the foundations for our business, which is all about building scale,” Kukadia said. “It’s a volume business, and what dictates our profit is membership.”
The etailer had accrued 2.5 million members by the end of 2012 and is expected to reach 3.1 million by the end of this year. “[Membership] was really invigorated by TV advertising – it helped build confidence and credibility in the brand,” Kukadia said. “What we’ve seen since is a real step change.”
Secretsales is expected to make a loss of around £3m for the current financial year, but Kukadia said it would “absolutely” be in the black in 2014. Kukadia estimates membership of 3.5 million to 3.6 million would see it break even.
To reach that stage the team is working on several developments, including an app, which will be rolled out in the first quarter of next year, as well as continuing to attract big-name brands to tempt in new members. Kukadia noted the success it had seen with onesie brand OnePiece last Christmas as evidence its members, who earn £75,000 a year on average, want “desirable brands, not just luxury ones”.
After extensive customer research Secretsales launched a loyalty scheme, and Kukadia said this would evolve into a second phase in which members receive points for sharing information or recommending products from the site. Big spenders will also be offered exclusive access to some brands.