The Lowdown on Sales Sites

Lately, different members of website have sent links to websites that either operate as shopping clubs or private member-only sample sales, looking for ways to replicate that business model.

First, let me explain a little bit about the difference between those types of websites and typical off-price retailers. Most of these sites that are very popular have invested heavily in advertising and marketing to build a very large base of subscribing members. Whether the memberships are free or paid, most of them boast that they have hundreds of thousands, or maybe millions, of registered members. This creates a built-in audience for any type of product that they’re trying to sell. For the most part, these companies are not buying merchandise from the off-price market and selling it. Many are actually acquiring the merchandise on consignment or they are purchasing the merchandise but they negotiate payment terms so they do not have to pay for the merchandise until after the sale has concluded.

Typically, they will have the merchandise in their warehouse getting prepared for the sale, and thirty to sixty days after the sale has concluded, whether that was a one day sale, a one week sale or a one month sale, they pay the vendor. Also typically, they’re returning any unsold merchandise. This is very different than someone who is going to a jobber, looking to buy a handful of brands, or a specific brand. The main difference is with this large base of members or subscribers, these companies can buy or consign very large quantities of a single brand. Typically most jobbers do not have very large quantities of a single brand. Sometimes that happens, but a lot of times it does not.

This type of shopping has become a preferred way for a lot of these brands to get rid of past-season inventory. Many of the smaller companies are actually selling in-season inventory because they’re trying to build up their own customer base, because online sample sales have a higher cachet than having your merchandise on eBay or on a discount website, because you cannot view the merchandise without being a member so it’s not necessarily advertised to the public. The products do not show up in shopping feeds, and they do not show up in Google searches or Google products or any of those other comparison shopping sites that show the lowest retail price. Therefore, it may not be common knowledge to most customers that that brand is even sold at a discount during one of these sample sales online or from one of these member-only shopping sites. It gives the impression that you need to be in the know to even know how to get it at a discount, thus it helps these manufacturers protect their brand integrity.

Trying to emulate this model costs a lot of money and if you’re going that route or if you’re going to even attempt to go that route you typically cannot do it in the regular off-price market because you need to be able to go directly to those brands to negotiate those purchases.