If all eyes weren’t already on the online private Sale market, then news that sector heavyweight BrandAlley has experienced a 70% sales leap and fellow player Cocosa is scrapping its membership barrier is sure to put it in the spotlight.
Private Sale sites have flourished in these austere times, garnering new customers for brands by offering an online version of the coveted sample Sale, but instead of needing to be in-the-know with the fashion crowd, all you have to do is register.
To suppliers, the sites serve to clear large quantities of excess stock without damaging brand integrity. To customers, they are a place to find daily updated offers from their favourite brands at up to 80% off. The sites get away with offering such big discounts by limiting promotions to just a few days.
Now Cocosa, which was acquired by former Harrods boss Mohamed Al Fayed in July, has shaken up the sector by dropping its membership requirement.
Cocosa managing director Gwynn Milligan says: “We are delighted that our luxury shopping experience and exclusive discounts will be available to everyone. We are looking forward to creating long-standing relationships with new customers every day.”
The switch in strategy poses a big question for other private Sale sites in terms of which, if any, will follow.
Taking down barriers
Private Sale lifestyle etailer Secretsales.com counts BrandAlley, Vente-privee, Cocosa and The Outnet as its main competitors. The company’s co-founder and buying director Sach Kukadia says Cocosa’s decision was right for it in light of where it sits on the luxury end of the spectrum, but won’t be right for all such sites.
“Secretsales is very mass market, while Cocosa is very premium,” he says. “For them, dropping the barrier is an opportunity to open up and compete with the likes of Net-A-Porter and My-Wardrobe.”
Secretsales.com’s membership stands between 1.5 million and 2 million and, according to Kukadia, there are no immediate plans to drop its membership wall. “We found that having a wall increased our conversion rates. And a lot of the brands we work with prefer to have their integrity protected by having a register-first policy,” he says.
Verdict Research retail analyst Honor Westnedge says: “The whole point of having private Sales is to make it feel more exclusive. Obtaining membership is very easy, you can get it in about two minutes, but it still feels more special than going to a regular online retailer.”
Cocosa’s was a tactical decision, says Westnedge, most likely made after careful monitoring of consumer movement online. “They might have noticed a lot of people going to the site but not hanging around because they were put off by needing to register first. So for them it would increase purchase potential to remove that obstacle.”
She does not, however, foresee Cocosa suffering any fallout from dropping this element of exclusivity, as it is the Sale strategy that drives its sales. “The real success of these sites comes from offering discounted brands for short sharp Sale periods – that’s what’s attractive in times of reduced discretionary spending.”
Meanwhile, private Sale etailer BrandAlley, which is part-owned by News International, posted a 70% sales increase for the first nine months of this year. It attracted 75,000 new customers and sales rocketed to £23m over the period, boosted by new brands available on the site. It works with labels including Ted Baker and Dolce & Gabbana, selling goods at discounts of up to 70%.
Everyone’s a winner
BrandAlley chief executive Rob Feldmann puts the sector’s ongoing success down to simple economics. “The economy is tough and tight for consumers, transport prices are going up, as is petrol – all this means customers are thinking long and hard before they make purchases,” he says. “They might not be able to afford the product at the full price but they can at a discounted price.”
And the brands win out too since they offload stock but avoid it being put on permanent promotion – something that can kill their premium values.
“We work directly with brands that are desirable. Brands like the fact it’s a four-day Sale and they’re not permanently discounted,” says Feldmann.
BrandAlley is experiencing growth across the board – in fashion, beauty and homewares. “The brands we work with are all looking for new customers to drive business. If they work with us as part of the four-day Sale they’re picking up new customers,” says Feldmann.
BrandAlley is not looking to follow Cocosa’s lead by removing its membership barrier, but it is thinking about broadening its appeal with an online catalogue, which would allow its members to shop the various brands outside of the flash Sales on the site.
Data from online research firm ComScore shows like-for-like growth in unique visitors for online private Sales’ leading companies is rocketing.
In the year to August, unique visitors to Cocosa rose 38,000 to 95,000. BrandAlley added about 800,000 unique visitors in the period, rising from 153,000 to 956,000. SecretSales.com added 11,000 unique visitors in the 12 months, taking it to 296,000.
This swelling of the UK market could attract more players. In May, Amazon debuted its version of a private Sale site, MyHabit, in the US. There have been no signals yet to suggest the model will be replicated in the UK, but if it did come here, would there be room?
“A company like Amazon has the resources to explode on the market,” says Kukadia. “But there are a number of players already competing for the same space – it’s almost reached saturation.”
Room for one more?
Feldmann argues there is room for at least another one or two to enter the market. And Westnedge believes that because people already know and trust the Amazon brand, any new venture would benefit from that trust. “New customers know how it works online and they would much rather go with a brand they have used before. But it will really depend on brand choice. If they offer brands not available on other sites there will be less of an impact on others.”
Online retail consultant Leon Bailey-Green says the market is becoming tougher. “There’s less fashion products available. Since the recession brands are making less so it’s very competitive [to get brands on the sites].”
If Amazon was to enter the market, Bailey-Green says it’s not a dead cert it would dominate.
“You can’t underestimate the brand relationship the sites have. Many have built it up over four to five years.”
Rise in number of unique visitors to BrandAlley in year to August
Rise in number of unique visitors to Cocosa in same period
Rise in number of unique visitors to Secretsales.com in same period