Sunday, April 12, 2009

For The Sake Of Consistency...

...I have decided to further analyze the appealing nature and trend of "sample sale" online fashion retail companies, a la the previously discussed Gilt Groupe, as well as many other websites that have followed suit; namely, RueLaLa.

New slogan: "At least thanks to Ruelala you won't be this deep in debt"...? Work in progress.

RueLala has the same structure as Gilt.com in that it is a subscription-based, high-end fashion retail company that provides customers with a selection of a few designer's collections at a staggering discount (50% or more) for a brief amount of time (no more than three days). RueLala uses fixed, promotional pricing for the merchandise sold through their website; they mark their merchandise at a price that could not be found at the designer's sale rack, but limit the offer for a short period of time, as a means to create incentive within the members to invest in the product before the opportunity is lost. Also, the amount of inventory is limited, and many experienced RueLala members know that products sell out way before the sale has ended. By limiting the amount of merchandise as well as the amount of time that the fixed promotionally discounted prices are available, RueLala is creating a limited supply, high-demand environment which increases the likelihood of consumers purchasing the product.




Designer sunglasses+over 50% off+only one pair left= MUST. BUY. NOW.

Considering that this company is considerably green in the online retail industry, actual figures are not readily accessible. Regardless, its pricing plan seems to be effective in that there has been lots of consumer response, whether it be through blogs, the increasing amount of membership, and the attention of the media. They are, in a sense, doing designers and their clients a favor by taking unprofitable merchandise of their hands for a small price and then marking it at a price that is profitable for them, and incredibly appealing to consumers. That way, everybody wins. Considering the success of this business model and the increasing amount of companies utilizing it, I'm sure that RueLala won't be shutting down anytime soon. What I am curious about, however, is how the saturation of this type of online business will effect companies such as Gilt and RueLala's profits in the long term. It will be interesting to see if there is room in the webisphere for all of them, or will they have to stomp each other down with their 70% markoff Christian Louboutin heels. Only time will tell...

40 comments:

Kurt said...

Good post, Kristin. it's clear they use the fixed promotional price strategy at this site. Now if only those C. Louboutins would go on sale my daughter would be happy.

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Kristin:
You've earned 5/5 points for overall blog quality based on your competent cases analyses and having some additional content on your blog. Plus, you had other followers!

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