New E-Commerce Site Offers Luxury Goods, Vegas-Style
Sorry, we just couldn’t resist the trite sound bite! Unlike the timed flash sales of the Gilt Groupe, Ideeli and Rue-La-La, whose members addictively rush to the their sites daily to snap up luxury items ahead of other members at a given discount price, ToVieFor is a brand-new form of online luxury sales addiction with more than a little bit of Las Vegas type-betting risk involved in its limited-time selling events. Members can actually name the price that they’re willing to pay for handbags and accessories they’re dying to own!
That’s right – instead of set discounted prices for an array of post-season or excess inventory items in the timed “fire-sales” of the others, ToVieFor posts a date and time for the sale of a limited number of a specific in-season, hot item, such as a Burberry knotted check sling bag. A member who is dying for that bag logs in to the sale at the prescribed time with one or two “credits” necessary to play (cost of 99 cents, cheaper in bulk). The auction starts at the full suggested retail price of the bag. Then as the clock starts to tick down, so does the price. The more members participating, the faster the price drops.
Now it’s “white-knuckle” casino time. Just like dying for the ball in roulette to drop into one of your bet- upon red numbers, you must bet on how low you believe the price of the bag can tick down to, at which point you hit the “buy” button. However, your low price guess (and bet), along with the bag, are lost if any of the hundreds of other members hits the buy button ahead of you (at a higher price). You also lose the credits, albeit at a buck or so each, it’s no big loss.
ToVieFor didn’t invent this selling tactic. The Dutch have been using the “clock auction” in their wholesale flower markets for centuries. However, this is the first time it’s being used to sell luxury goods, and so far, the concept is a huge success. Within two weeks of launching in October, the site had 2,000 members, and sold out of each lot in every one of its five sales within 20 minutes of the auction start time, with winners paying on average 40% off the full retail price. Future sales will occur daily, and include goods from partners including Marc Jacobs, Coach, Kenneth Jay Lane, Alexander Wang, Reed Krakoff, Richemont, and others.
DON’T LET THE ADDICTED DIE OFF
Once ToVieFor develops addicted heavy users, they want to keep them coming back, and not lose them to the frustration of too many losses. So, just as Vegas wants to keep their high-rolling addicted gamblers coming back by providing airfare and free rooms, ToVieFor offers its frequent players some discounts and incentives such as a gift card for a price discount of the brand they may have lost out on, and Burberry may also follow up by emailing a coupon to the loser for 20% off.
WHAT’S THE TAKE FOR THE BRANDS?
Obviously, the ToVieFor business model is also a great marketing tool for the luxury brands. First of all, as mentioned, unlike Gilt Groupe and Rue-La-La who buy excess inventory or post-season merchandise, ToDieFor purchases only in-season, most popular items from such iconic luxury accessory brands as Valentino, Marc Jacobs, Ralph Lauren, Versace, Coach, Kenneth J. Lane, Burberry, and many others. And, since ToVieFor is only buying a very small number of items, as few as five or as many as fifty, which may be vied for by 200-500 members, the brands see scarcity in driving the losing players to the brand’s site or store where they might pay full price, or at least a coupon or gift card-discounted price.
WHAT’S THE TAKE FOR ToVieFor?
There are three revenue streams for ToVieFor. Members must purchase one to five “credits” to participate in each sale, (99 cents each as mentioned, and cheaper in bulk). Secondly, they keep the margin between their wholesale purchase of the items and what they sell them for. Initial gross margins have been around 60%, not including downstream commissions earned on any sales made to customers they redirected to the brand’s websites or stores, either through coupons, gift cards or other incentives.
So, check out ToVieFor, but watch out! It could be habit-forming.
ToVieFor and many other entrepreneurs are targets of FashInvest, a unique new service that fosters such entrepreneurs by bringing them together with investors seeking the next UnderArmour, Gilt Groupe or Tory Burch. Fashinvest will hold its first annual capital conference on December 15th at New York’s Fashion Institute of Technology (FIT). Keynoters are: Neil Cole, CEO of Iconix Brands; legendary designer Norma Kamali; and Rue La La Founder and CEO Ben Fischman. If you are interested in seeing breakthrough new business models across the retail, fashion and branded consumer goods industries and hearing from the entrepreneurs behind them, visit fashinvest.com for more information.