Interview: Flash Growth at HauteLook.com
Listen to an in-depth interview with Kerry Bennett,
director of marketing communications for Hautelook.com. See the RetailWire
Podcast below…
Social
sales, flash sales, sample sales – a new breed of websites offering discounted
merchandise for a limited time only are taking off and among the most popular
is HauteLook.com, which has attracted over two million members in the U.S.
and Canada since it first launched in September 2007.
HauteLook partners with
brands in a variety of product categories allowing the designers to select
both the merchandise and pricing of items sold. The retailer handles fulfillment
for all orders with a warehouse positioned on both coasts to expedite orders.
“Unlike some other competitors in this space, we typically don’t buy
the merchandise up front,” said Kerry Bennett,
director of marketing communications for HauteLook. “So we partner with them (brands) every step of the
way, from deciding when their
event is going to be, what inventory is going to be available, what sizes and
what amount. We produce the event in-house entirely. They get approval over
it, and then — while the event is going on — they get clear visibility into
all the metrics of the sale. At the end we place an order with the brand for
just what’s sold.”
Ms. Bennett said the site’s merchandise
falls under the “casual chic” tent.
“It’s that kind of style we are really trying to cultivate,” she
said. “It’s
very real world; it’s very wearable. When it comes to your home, it’s very
accessible and that’s something that members really respond to on our site.
It’s finding these brands that they know but also finding brands that they
don’t know that fits into this style.”
Meeting the needs of its members has led HauteLook
into new product categories.
“We started with women’s apparel and accessories and that’s certainly
a very core business for us, but we’ve expanded pretty quickly into men’s,
into kid’s, into beauty, which is a huge business for us. Also, into home.
We’ve had Omaha Steaks on the site a few times, and people love them,” said
Ms. Bennett.
“We’ve just had our first event with Exhale Spas, which is a chain of
spas and fitness centers in the country and that did really well for us —
more of an experiential thing. I think we will probably explore that as well,” she
added.
The site’s rapid growth has taken the company somewhat by surprise. “We
literally did not have a marketing department six months ago, so it was really
a business built on word of mouth,” said Ms. Bennett. “We had over
a million members before we started marketing, and even today 60 percent of
our buyers are coming from either direct referrals, directly from the site
or word of mouth from members. So really, the virality of the business was
not something that you typically see so quickly in retail. It’s something that
really took off and we continue to be really, just thrilled by.”
Discussion Questions: Why do you think flash sales sites appear to be catching
on so quickly with consumers? What do you think about HauteLook.com’s business
model? Will we see mainstream retailers start to move aggressively into this
space in the near future?
Consumers love an unexpected bargain and flash sales provide both. You never know what is going to be featured, but you know it’s going to be at a good price. This seems like a win/win for consumers and manufacturers.
The fact that HauteLook does not have to buy the merchandise upfront gives it an enviable advantage, in that it is not on the hook for product that does not sell. It can seamlessly move from one sale to another without the baggage of unsold merchandise. This will make it difficult for mainstream retailers to jump on the bandwagon.
If they don’t buy the merchandise directly, then the only key point is to make sure the fulfillment is processed quickly or communicate the expected delivery date to the consumer.
Everybody loves a deal/sale. The site is nicely laid out and intuitive to shop and share with friends. It’s easy. The concerns I have include whether they are working with enough brands on a regular basis to provide a wide enough array of products and deals. The other thing that I wonder about is how many shoppers are willing to check it every day to see what’s on sale.
We may have discovered something new here. New for me and for many consumers and retailers; but something HauteLook.com has been massaging and tweaking for several years now.
Consumers are always looking for the edge. This is a new and innovative edge. Watch out friends, we are going to be seeing more of this in the near future. Other retailers and at least one airline, Southwest, have been doing something similar. Southwest comes out on Tuesday with their new, exciting bargain deals. They use a “ding” to let those signed up know there is something new and lower priced to see on the website. I think Stein Mart, the retailer primarily in the South and East through the mid-Atlantic area, does something similar to let their customers know about new bargains. But nothing as unique and creative as this.
We are a nation of consumer followers. When word of mouth really hits the social media world other consumers and sellers are going to jump all over this new bandwagon.
ideeli, rulala, Gilt Groupe, LuckyChic, Swirl…and it doesn’t stop there. A shopper signs up for two or three of these sites, gets a morning email, checks out what is available. Buys or not and in 15 minutes is done. In that time, she sees more merchandise with more bargains than she could see at the mall in a full days worth of shipping.
And she doesn’t have to think hard about it. If she wants it she buys, if she hesitates it will be out of stock. So there is even an urgency to buy.
From an operations point of view, the retailer is executing a very short and inexpensive supply chain and doesn’t have to worry about inventory or OOS. It is almost a perfect model.
This segment is booming and is open to almost anyone. Software designers are offering flash fashion templates like they offered shopping cart templates just a few years ago.
Will mainstream retailers move aggressively into this space? eBay already has. Amazon will likely. Wal-Mart will have some positioning difficulties because their basic price points are too low and their fashion cache is not too high. Gap and Banana Republic have nothing to offer.
Macy’s? The demographic that supports flash fashion will never spark to buying from someplace called Macy’s.