Monday, April 29, 2013

Who Says No One Shopping ?

Adam Bernhard still have the scars that he slept on the couch when he started the company three years ago - right across from his desk in downtown Los Angeles office of HauteLook. At the bottom of the stairs, the maze of studios, photographers and stylists to shoot high-end skinny jeans and slouchy bag that makes Bernhard luck.

Unexpectedly, a fortune in retail. It is no secret that over the past three years, the retail category was drunk - and no part of more than a luxury. But during that time, a new generation of entrepreneurs has sprung up and took the opportunity: They picked up an abundance of luxury and create a membership only, sample sale website that brings excitement door-buster sale online , with prices as much as 80 percent off.

To say that the site has become the hottest retail area understatement almost silly: While second-quarter sales at brick-and-mortar luxury and department stores increased 4.5 percent from a year earlier disappointing, taken HauteLook sales 275 percent. Private online sample sales category generated $ 1 billion in revenue last year, and some say it grow to $ 8 billion over the next five years.

All sites - the first is Gilt Groupe in November 2007, followed by HauteLook and Ideeli - Target consumers crave what they can not afford and love nothing more than bragging rights and being exclusively. Launched sales every day and typically run only 36 to 48 hours, which turned out shopping event, and they train customers to check their inboxes every morning for fresh, new merch - and to purchase items They do not even know they wanted. While the actual elbow can not fly, at 9 every morning, hundreds of thousands of visitors whipped into a frenzy over $ 400 Carolina Herrera dress or $ 80 Chloe sunglasses.

Of course, the private sale site is not really private, they are open to anyone who signs up. But the membership of the illusion is strictly controlled to protect the image of the brand being sold, including Oscar de la Renta, Vera Wang and Christian Louboutin. Unloading goods at off-price stores could mean product languished on the sales floor for months, but a private flash sale site, the items are hidden from search engines and appear only for a number of people for a limited time.

Niche with dozens of players, from $ 500 million in startup companies still in beta testing. Venture capital flows - $ 112 million in the last six months alone. Clothing and accessories have proven to be extremely useful site expands to include furniture, hotel and cruise package, gym membership, gourmet food and wine. But as the excess goods become more scarce, they see the inevitable shakeout.

"The idea of ​​easy sales," says Sucharita Mulpuru, e-commerce analyst at Forrester Research. "It is getting access to inventory the hard part." And more than one site of inventory taking, risk more. "You're a retailer with goods that no one wanted in the first place."

That's why Bernhard doing things differently HauteLook: He did not buy the stock, generated sales of leading brand names and took 30 percent of revenue. Like other private sales site, HauteLook clean exhaust, but offer marketing support, resulting in a piece of video content with each designer. Bernhard Dashboard 2.0 software enables brands to follow their sales in real time to see what is selling, where the items are selling and what styles are selling in which countries. There is also a channel that allows them to see how many people go on sale and the ability to compare sales benchmarking against similar brands.

HauteLook, which is profitable since March, with 176 employees producing 205 sales in June, moving hundreds of thousands of items from the warehouses to the same shore. Revenues are expected to top $ 100 million in 2010.

Bernhard was spent many years in the garment industry, first as a kid hanging out at the office of his California Mart, the customer, and then selling floor at Fred Segal in Los Angeles. At that time, she had hair down to her waist. Now, her hair cut short and spiky gel cap with a reputable, his uniform of jeans, a brand that sells, including blazer and button-down Dries Van Noten for.

Before HauteLook, he was running errands in the business of film production, sharing and Mulberry Street Pizza executive posts at Stanford, contemporary clothing company. In 2004, the business part of the kick, and he created a company called Liquid8 license inventory, sample sales held by sororities at UCLA and USC. HauteLook flow of the project, but instead of asking your students to participate, he asked everyone. And now, it's 2.7 million takers.

We settled in to hear more about the future of retail - but not the old couch Bernhard.

Are you worried about launching the economy?

Every time there is a dramatic shift in the way business is done, a chance. Since we are in the business of a broker, we are beginning to see the value of inventory pile up. We also know the zeitgeist has changed. There is a stigma associated home with lots of shopping bags. Buying something at a discount with a badge of honor. People are talking about how they have deals with something that is contrary to how things are expensive. So we took a chance and changed the way people shop.

What is the advantage of click-and-mortar retail?

The main difference is scale - the ability to touch people in a different place is wonderful. Total infrastructure will need to have as many members as we have not perhaps brick-and-mortar.

We returned merchandise our site every night, so every day we have eight to 10 new sales. That enables customers to new discoveries every morning. They do not know they want to buy something, but we gave a show and we just happen at the end of the bargain. You physically can not do it in a bricks-and-mortar.

Goal-based shopping that occurs at Amazon.com, where you know you want something, put in a search term and buy it. I believe the future of online shopping is what we do, discovery-based.

What are the hottest merchandise this now?

Everything from premium denim with big name designers for fast mode. Our children and home business has grown dramatically. We sell Omaha steak. We have California Floral & Home - These are fake flowers, and our customers adore them. Tool. Who would have thought I could sell the couch? We sell kitchen, bed and bath, Rug from ABC Carpet & Home.

What works in terms of price?

Screaming, "Discount!" Goal when we started was not less than 50 percent. In some low-margin business, though, the various discounts. But customers realized it was because the goods are not sold very often. For beauty products, for example, we are making 35 percent.

And technology?

We have a shopping cart to start with a page of checkout. Three pages of the checkout is not good.

How can you HauteLook from the ground?

A negative working capital model allows us to grow without having to collect a lot of money. With Liquid8, we have infrastructure, overhead is minimal and profitable business that much capital for it. We wish to take advantage of cheap things to develop new ideas. But no one heard about in the industry. So I had to convince the brand. We build relationships HauteLook, and the first year, I ordered each sale itself. Now we have 30 people on the team brand, and we have over 1,000 brand partners.

Once you know it works?

As soon as we had our first few sales, we knew we had something special. The first is the Development by Erica Davies. The line is not there now, but that does not mean it is not a good sale. The second is the Rock & Republic, who is still working with us today. We brought Terry Boyle, our COO, in July '08. She put some infrastructure in place, and in April 2009, we raised $ 10 million in our first. This year, we raised $ 31 million. We are against those who raise $ 100 million. It can be done.

How? What is attractive to investors?

They saw it as the future. In this way detection-based shopping resonated not only with ready-to-wear, but also to all categories of travel in jewelry products at home.

Is there going to be a shakeout or consolidation between the flash-sales site?

The better players have more items to sell will continue to pull away from the pack. And I believe the multi-category player will survive. If you find makeup in your inbox every day, it is not so enticing.

If you are all competing for the same customers?

There's a lot of crossover. But as people know if their store Nordstrom, Saks, Macy's or Bloomingdale, occurring in a flash-sale. We stand for California casual. Our customers believe in a great pair of jeans takes you anywhere. They are open to the stylish, designer Handbags and watches, designer shoes or something that resembles a shoe designer. Nordstrom and Bloomingdale, where they put us. Gilt can Bergdorf Goodman. I would also love to Fred Segal. We can sell all the same brand as the other people out there, but we did it this way California-casual style more along than exclusive, and it is important to us.

How do you get the message?

Are two friends who tell two friends and grabbing blog and retell our story. I do not have a marketing team for 18 months. We bought Google ad words and costs about $ 20,000 per month, being frugal, trying to find different ways to get the message. We owe it to the business blogosphere.

How can you convince top selling brands HauteLook will not tarnish their image?

We encourage brands to make only three or four times a year. And if they can move the stock to us in eight days, it is much better than putting the floor to store off-price day after day. Manufacturers are looking for flash-sale format as a way to protect their brands and reach a diverse customer did not reach before. We found that 75 percent of people who buy the brand in the end our website go to post-sale website brand, 50 percent have post-sale buying brand, and 20 percent purchased from the brand at full price post sales.

With brand partners are not you?

Über-luxury people who are not playing in the room. Some vertically integrated retailers have not jumped well. I love to see the Victoria Secret, Abercrombie & Fitch, J. Crew and Gap brand. Everyone is coming up with a new way of shopping.

When you start, there's a lot of excess inventory. Now, there's a slight excess.

Many. We have more brands that want to sell us than we have space.

What do you proceed?

Food and wine, experience and services, which include massage, gym membership, wine tastings and other matters related to relaxing life-style of our customers.

We also started to organize our customer's experience with geo-targeted offers.

Any advice for people who go to retail?

Do not!

Seriously?

I'm not bullish on retail right now - the economy is not stable enough to start something innovative. But if you have a new twist, go for it. If you have an idea and you are persistent, you can make it happen.

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