Social Shopping Climbers

Discussion
Mar 05, 2010
George Anderson

By George Anderson

Social shopping websites such as Gilt.com, Hautelook, RueLaLa
and Woot are the hot new thing in retailing, combining limited time sales with
fashion and home goods from top luxury designers and unique boutique brands.

Pam
Danziger, president of Unity Marketing, calls the new social shopping sites “the
very definition of ‘sticky’". Shoppers are sent emails inviting them
to check back daily to take advantage of deals that only run for a day or
two.

According to Ms. Danziger, social shopping sites combine some of the
best aspects of online and brick and mortar retailing.

“They offer the thrill
of the hunt, the challenge of visiting time and again until the perfect item
is found, and the satisfaction of landing a deal. Plus they are destinations
of choice for the smart, savvy shopper,” she said.

According to a new report
from Unity Marketing, How the Affluent Luxury Consumer
Uses the Internet and Social Media
, one-third of affluent consumers
with an average income of $239,300 have visited a social shopping site
in the past three months, compared to only seven percent in 2007. Young
affluent consumers, those under 45 years of age, are the biggest social
shoppers with 43 percent reporting they use these sites.

“Social shopping
sites are going to continue to grow in popularity among the affluent market,
especially among young affluents. They offer young affluents shopping experiences
that they enjoy: quick action, limited access, and value pricing,” said
Ms. Danziger. “For luxury marketers targeting young affluents,
these are the places to be.”

Discussion Questions: What are your thoughts on the growth
of social shopping sites such as Gilt.com, Hautelook, RueLaLa and Woot? Do you
think this is a model that established luxury retailers may adapt for their own
purposes?

Please practice The RetailWire Golden Rule when submitting your comments.

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11 Comments on "Social Shopping Climbers"


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Rick Moss
Guest
11 years 2 months ago

I couldn’t figure out why all the nondescript UPS deliveries kept appearing on our doorstep until I found out my wife and her co-workers had gotten into Gilt.com. (It’s the closest thing she has to a sports interest 😉

The hook for these services is the sense of urgency — giving customers a sense they’re going to miss out if they don’t check the daily email (sent around lunch hour…pretty smart). Couple that with the impression they’re offering exclusive deals on quality merchandise and the “invitation only” pass-along scheme, and it seems they’re into a winning formula. And there’s certainly no end to which product categories this could work for.

Nikki Baird
Guest
Nikki Baird
11 years 2 months ago
Well, first, I protest the use of the term “social shopping” when applied to these sites. These are flash sale sites, and some may have more social elements to them than others, but they are not social shopping sites – not anything approaching the social aspects of, say, a Polyvore (www.polyvore.com – awesome, fantastic site). The only social connection that Gilt, for example, has, is that you invite your friends to get in on the deals, and you can see which products are currently in other shoppers’ carts as you are shopping yourself (a helpful way to create a sense of urgency around limited sale items). I was just at NRF’s Retail Innovation & Marketing Conference yesterday, and a panel of VCs spoke a lot about the flash sales model–positively. They felt that the flash sales model is difficult to replicate by big brands without some brand dilution. I’m not sure that I agree. While the speed of the supply chain is important, because you want to get your customer’s purchase into her hands before… Read more »
Marc Gordon
Guest
Marc Gordon
11 years 2 months ago

This is hot stuff! It’s got all the elements that make shopping fun for those who like to shop. I think the long term success for these sites will depend on a continued growth in product mix. I also see spinoff sites for such things as vacations, cars, even homes. Can you imagine visiting a site to buy a new car for 20% less than retail, but only within a 60 minute window? That would be very cool.

Will established retailers succeed with this formula? I’m sure they’ll try.

Carol Spieckerman
Guest
11 years 2 months ago

This model would be a natural for luxury brands and particularly for the big luxury brand stables (Gucci, LVMH) and even middle of the road players such as Liz Claiborne and Vanity Fair that are weighting their portfolios toward pure brand marketing plays and owned retail versus cumbersome, inventory-laden wholesale models. Social shopping would allow these companies to directly marketing a “virtual world of brands” to loyal customers, gain valuable data about them and control promotions in the process.

The rub is that, as Gilt and the rest gain momentum, they are already working out exclusives with major luxury brands; jumping into their own social shopping ventures would have them wresting those brands back. One of the brand biggies should buy the cow (a social shopping platform).

Liz Crawford
Guest
11 years 2 months ago
I agree with Nikki–these aren’t social shopping sites. I shop on RueLaLa, and it’s by invitation only. That’s not social shopping, it’s merely exclusivity. The flash sale model though is perfectly geared to the digital life. Shoppers check in regularly, are in-the-know and are able to sort, select and pay in a moment. Can big luxury brands pull it off? Absolutely! Should they? Yes, I believe so. Holding a big sale a few times a year is commonplace–why not online, by invitation? These online invitation-only sales could be part of the regular promotional calendar. While I see sales, I don’t see that luxury (or even bridge) designers have really leveraged the web well on this level. On this note, Kenneth Cole pushes emails that feature one-day-only deep discounts on clothing and shoes. Shoppers who get the notices have opted-in (it’s invitation by the retailer, not a personal friend). The major difference is that shoppers don’t know when Kenneth Cole will offer a sale, or on what. If shoppers could anticipate a seasonal sale, they could… Read more »
Pamela Danziger
Guest
Pamela Danziger
11 years 2 months ago

One major retailer testing the waters on the flash sale trend is Saks. They are moving aggressively into social media and giving the flash sale idea a test.

Anne Bieler
Guest
Anne Bieler
11 years 2 months ago

Luxury retailers who don’t explore and develop a site that combines exclusivity, a loyalty program, and special sales and offers will be watching others reap the benefit. These programs are made for core shoppers, who want to know and participate in the special products theses retailers offer. Retailers can have a much deeper insight to their personal taste and preferences, and address their communications in a very personalized way. Retailers have to stay connected to their valued shoppers or the shoppers will look elsewhere–this is another great way to stay close to these prized consumers who want to be part of the retailer’s shopping experience.

Michelle Voorhies
Guest
Michelle Voorhies
11 years 2 months ago

These sites are an exciting, relatively new addition to the online shopping space. In my opinion, the seeming exclusivity of the shopping experience is one of the largest draws. I seeming because there really isn’t anything exclusive about them, as anyone can get an invite.

One twist I have been watching lately is the addition of new product categories to these distributors. For instance, Gilt has added luxury travel with the introduction of Jetsetter.

I do believe major brands will try to start to play in this space very soon, but I anticipate a lot of challenge, mainly with their ability to remain as nimble as these sites do.

Christopher P. Ramey
Guest
11 years 2 months ago

Isn’t this just Retailing 101? Create a community; feed on greed and fear.

Mark Johnson
Guest
Mark Johnson
11 years 2 months ago

I think the upside is limited. We are facing a new “retail” environment where the frivolous shopping has waned and I think that will be the case for a while. People are shopping, and looking for deals, but the social aspects I must question.

Elizabeth Brooks
Guest
Elizabeth Brooks
11 years 2 months ago
I agree with the comment that these are not “social shopping” sites–the interaction with other customers is fairly limited. This will probably evolve and the smart sites will enhance the Polyvore-style interactive/sharing features. Some issues for brands within the “online sample sale/flash sale” model: Luxury brands risk dilution of value perception by being too available at discount (this is not as much an issue with the mid-to-low range lines that HauteLook carries as opposed to Gilt’s higher-end names). Brands lose control of the customer & no longer have direct-to-consumer communication (thus creating a reason for brands to launch similar functionality on their own sites). Some issues for the sales sites themselves: There are two basic models: purchasing the inventory and warehousing it (Gilt), or merely creating a through-put platform for the brands to set up liquidation (HauteLook). Both have risks. The proliferation of these sites (Gilt, HauteLook, Rue La La, Ideeli, Beyond the Rack, Mintbox, Swirl by DailyCandy, OneKingsLane, etc) creates its own scarcity and quality inventory becomes more and more difficult to source. Some… Read more »
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