Some of the hottest places for home goods are online flash-sale sites.
Designated for “members only” but easily accessible to anyone who wants to opt in, flash-sale sites borrow from some of the oldest tried and true retailing techniques, but package them in such a sophisticated way that affluent, web-savvy consumers are flocking to them in droves, and the sites themselves are popping up faster than mushrooms after a summer rain.
The ever-widening channel includes established players One Kings Lane, RueLaLa, HauteLook, and ideeli, along with newcomers MyHabit (from Amazon), Frooogal.com, and a members-only component to saksfifthavenue.com. And although many of these sites started out in clothing and accessories (with the exception of One Kings Lane, which has been 100 percent home goods since its inception), they have very quickly seized upon home furnishings as a prime selling opportunity.
The home category “is wildly underserved online. There’s not the equivalent of home online, like there is for other areas such as apparel,” said Susan Lyne, the former head of Martha Stewart Omnimedia who is now the chairwoman of Gilt Groupe, the parent of several members-only sites that launched Gilt Home this summer.
All of these sites work on the same principal and use the same mechanics. Every day, typically at noon, the sites post their special deals of the day, which are available for a limited time only and often at a significant discount. Many of the sites have evolved from a depository for overstocks to a mecca for carefully edited and curated merchandise.
Flash-sale sites are staffed by marketing experts who have lured knowledgeable buyers away from the brick-and-mortar competition to be what many buyers really want to be—merchants. Of-the-minute flash-sale sites are in tune with what people want and how they shop.
“Consumers are really responding to this model, as are our suppliers,” said Doug Mack, CEO of One Kings Lane. “It’s fueling dramatic growth. We’re really busy.”
Flash-sale executives like to point out their rate of return visits. Gilt has well over 3 million members, but it’s not about the number of members you have, according to Lyne. “You can buy members. What’s important is the daily traffic and conversion rates; you look for regular visitors. Our average member visits eight to 12 [times] a month, an average day sees many hundreds of thousands of people. We have some 125,000 to 150,000 members lined up for that noon bell [when the new sales start]. It’s an appointment shopping aspect to what we do; we own that noon hour. People make it their business to come two to three times a week. There’s a level of engagement, we should be able to convert them.”
Here’s a look at how some of the leading sites are luring visitors and converting them into loyal customers.—Allison Zisko
Targeting the “shelter junkies” — its core home buyer reads consumer publications like Architectural Digest and Elle Decor — Gilt Home has “performed incredibly well for us. Whatever we bring to the table, we’re selling a vast majority of it,” Susan Lyne, chairman of Gilt Groupe, told HFN. That includes thousands of $20 candles as well as a $10,000 bed, which not only sold out but had a significant waiting list, she said. “People will spend money if they feel it has intrinsic value or something special.”
Launched last year and currently accounting for about 15 percent of Gilt Groupe’s business, Gilt Home continues to grow, with the acquisition of Decorati.com in March and the summer appointment of Jason Goldberger as general manager of Gilt Home and Tom Delavan as editorial director.
The home site will also relaunch this fourth quarter, adding more content into the mix, similar to what its newly launched Gilt Taste site, headed by Ruth Reichl, gives members. “It will still have a curated approach and an editorial point of view,” Lyne said, but “we’ll bring more content into the mix,” such as how-to, shelter editorial. In addition to its flash component, Gilt Home will add full-priced products to the merchandise offering, with one-of-a-kind items and an edited selection of furniture, rugs, bedding, lighting — as well as go “heavy on the decorative accessories.”
Categories that do well now on Gilt Home include bedding and dining/tabletop, as well as rugs. “I would not have expected that going in but [rugs are] a very good category,” Lyne said. High-end kitchenware is also strong — “interestingly, a much stronger category with men,” she said. “It’s the gear aspect of home.” Gilt Home works with about 400 brands.
The Gilt Groupe advantage is that it crosses so many categories, Lyne added. “We are truly a lifestyle site,” in a variety of categories, such as women’s apparel, men’s apparel, travel and more. “Other sites are focused on a couple of categories, such as fashion or home,” she said. “We moved from a fashion brand to an upscale lifestyle brand. We have a great mix and huge opportunity.”—Andrea Lillo
After establishing itself in accessories and ready-to-wear, ideeli plunged into home two years ago under the guidance of retail veteran Janee Ries. Virtually every home category is represented here (some of its earliest vendor partners include Orrefors Kosta Boda, Lenox, Nourison and Revman) and its home business is growing “at a tremendous rate,” according to Ries. Ries and her team, which now includes three buyers and three assistants, shop virtually every home-related trade show—and then some—and pride themselves on a curated collection of brands presented in a lifestyle setting and often tied to a merchandising event. A Tommy Hilfiger fashion show, for instance, will inspire a spread of Tommy Hilfiger clothing, accessories and bedding. Ideeli constantly creates themed shopping opportunities based on what it thinks its customers will want, Ries said. “It’s great brands,” Ries said. “I think that speaks for itself.”
The site is geared toward time-starved women who love the concept of one-stop shopping and the thrill of a deal (sales begin at 12 every day, or at 11 a.m. for “first row” members who pay $84 annually for the privilege of a one-hour jump on the crowd). Ideeli reaches the affluent, aspirational consumer with an average household income of $107,000. The average age of the ideeli shopper is 33.
Ideeli provides relevant, up-to-the-minute information and assistance to both its customers and its vendor partners, executives said. Vendors are invited to participate in online question-and-answer sessions with consumers about products, and the additional information gleaned from those sessions is incorporated into product specs the next time around. Ideeli also works with its brands, offering “marketing and inventory solutions,” according to Ries, that include things like giveaways and brand promotions through social marketing channels. “It’s really very flexible,” Ries said. “You can turn to ideeli for a variety of solutions.”—Allison Zisko
Home is the fastest-growing product category at HauteLook, the four-year-old, Los Angeles-based members-only shopping site. Last year, sales of home products rose a whopping 460 percent, and—according to Kecia Hielscher, HauteLook’s vice president of home—the company believes that home will post another triple-digit increase this year.
HauteLook was founded in 2007 by its current CEO, Adam Bernhard, who had it in mind to create a platform that connects premium lifestyle and fashion brands to savvy shoppers. In home, this means carrying items “that can help create an instant room makeover,” Hielscher said. This merchandise now includes furniture, rugs, decorative accessories and bedding.
“HauteLook members are passionate about the latest styles and trends,” Hielscher said. “These categories are growing consistently, as members can update their home no matter their taste, space or budget with these types of items, which are offered at up to 50 to 75 percent off.”
In terms of its key brands, Hielscher said its line of home accessories from designer Marlo Lorenz, which first appeared in 2009, is “a perennial favorite with members.” Today, she said, Marlo Lorenz events move more than three times the number of units and generate more than four times the number of orders as the brand did in its first event.
Another brand that gets strong responses is California Modern Classics in furniture, whose first event took place in June 2010. “This was one of HauteLook’s first tests of furniture,” Hielscher said. “Would members buy high-ticket, high-touch items online? The answer was a resounding ‘Yes.’” California Modern Classics events now move three times the number of units and garner more than double the revenue of that first event.
The site’s success has brought recognition from another lifestyle retailer—Nordstrom, which acquired HauteLook in March. HauteLook continues to operate independently, with no plans to integrate it into the Nordstrom corporate structure. “However,” Hielscher said, “there are clearly ways that we can collaborate on a number of subjects, particularly around sourcing of merchandise, that benefit both companies and complement each other’s strengths.”—David Gill
One Kings Lane
One Kings Lane is unique among members-only, flash-sale sites in that it only sells home furnishings. The site, founded by former fashion sales executive Susan Feldman and web development executive Alison Pincus, distinguishes itself through tastemaker tag sales that feature products from interior designers, and through the container sale concept, which centers around the idea of global buying trips that bring treasured finds to your doorstep. That process of discovery—of presenting unique yet affordable products—is what drives business at One Kings Lane, according to CEO Doug Mack. It is also the reason why very few of the products featured on the site come from big-name brands. “On any given day, people probably know about 20 percent of the brands,” said Mack. “The balance is heavily skewed toward lesser-known brands.” Those brands, according to Mack, are presented “extremely well, in an elegant way” and thus earn customer loyalty.
One Kings Lane relies on the curatorial expertise of its buying team, which is culled from the executive ranks of specialty and department stores like Barneys and Takashimaya. The concentration on home furnishings—and the fact that similar product sales “hang together”—set the company apart, he said. “We are really unique in that we are focused exclusively on the home market.” At this time, the company has no plans to stray from that strategy. “We believe you can do a good job only if you are focused on home,” Mack said. “We believe it’s the best way to serve our customers.”—Allison Zisko
Fab, one of the newer online retailers in the members-only site category, was founded by long-time friends Jason Goldberg and Bradford Shane Shellhammer. Initially called Fabulis, a social networking website for gay men, it changed its focus — and name — when the men saw an opportunity to sell design brands online, and launched this past June.
“I’m a modernist and Jason loves design,” said Shellhammer, who serves as Fab’s chief creative officer. “Gilt has shown that this is a serious business; there’s a lot of money to be made for designers and companies. But no one was doing it for the brands we’re selling.” Fab.com’s employees have a strong home background and include people who used to work at such places as The Conran Shop, The New York Times T Magazine and Design Within Reach. “Everyone here is a design junkie,” he said. Given that, the home category will be an important part of the site and about 70 percent of the merchandise overall, he said. Product categories include furniture, tabletop, art, lighting, mattresses, rugs and wallpaper. But “the product can be anything that’s well designed — whether that’s a wine bottle, travel, any product you can buy.”
On its first day of operation, the site offered such items as signed Milton Glaser posters, Plumen light bulbs and Emeco chairs. The Emeco chairs sold out in 24 hours, while the “hands-down best seller” were the Milton Glaser posters. “He’s a legend, and it was a way to get something iconic for only $120,” said Shellhammer. The Fab.com team was hesitant about putting the Plumen light bulbs up for sale, as the brand is not really known in the U.S. and wasn’t discounted very much on the site, but it did very well, he said. “So now we’re thinking about what other products we can launch online or won’t be discounted as much.” Fab.com is working with well over 200 partners.
Shellhammer believes the sweet spot will be items in the $100 to $200 range. “A lot of people can commit to that, even if you don’t have a lot of money. It’s easy to pull the trigger.”
Fab.com also has an inspirational wall so members can share images and ideas, and a blog and other content will come in the future, he said. “We have a million ideas for the Fab voice.”—Andrea Lillo