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rue la la Turns out WalMart and Amazon aren't the only retailers finding shelter from the economic storm. A small group of invitation-only retail sites are establishing growth with high-end product and shrewd marketing.

The three attracting the most attention are Gilt.com, ideeli.com, and RueLaLa.com. Gilt has a high powered executive team including DoubleClick founder Kevin Ryan and former Martha Stewart Omnimedia CEO Susan Lyne. The three share a basic business model. You get an invitation from a member, you join, you get a preview of a designer boutique event, then you buy. First come, first served. Stores magazine reports that Gilt has added membership each month since its November 2007 launch. RueLaLa claims membership in the "hundreds of thousands." Ideeli also has "hundreds of thousands of members" and doubled its business during the fourth quarter of 2008 over 2007, according to fashion industry trade JC Report.

The positioning and marketing tactics differ among the sites. Gilt is glossy. It uses event marketing at major fashion shows to get the word out. RueLaLa is funky. Ideeli is clean, with a lot of white space and has a co-marketing deal with InTouch magazine for potential members to join via published invitation codes. 

As privately-funded start-ups revenue numbers are not reported for any of the three. While membership numbers are way up, it is not known whether those members are spending money, or just browsing. However, there is growth here, which would be easy to lay at the feet of discount-hungry consumers and an abundance of unsold luxury fashion goods. But something else is at work here. The invite-only sites have unpredictable inventory, which builds buzz. They have also taken different and provocative paths to their customers. For now, they have found a new business model and innovative marketing strategies.

For now, that is. Undoubtedly, Neiman Marcus, Nordstrom's, and Saks have duly noted the success of invite-only stores. It is inevitable that one of them, or all of them, will launch a new brand online to capture this market. And then, as they say in the fashion business, the newcomers are going to have to "work it."


Published 6 March, 2009 by John Gaffney

John Gaffney is US Editor at Econsultancy. Follow him on Twitter

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