This is not an article from The Onion.
I just read in Home Textiles Today today that another flash sale site devoted to offering home furnishings went live yesterday. This is the last straw in terms of my understanding why these are hot investments or how the models are sustainable. LuxeYard, out of Los Angeles, went live yesterday as a result of getting $3.5 million financing from private investments. Oh, and by the way, I went onto the site, became a member and clicked on a link to see the offerings. The link was broken. The site didn’t work. I actually feel sad for them already.
Following is the exact text from HTT:
According to the company, LuxeYard updates the flash sale model by introducing two new e-commerce processes: Concierge Buying and Group Buy. The flash sales website at www.luxeyard.com claims that these concepts shift the pricing and sourcing power from retailers to consumers, by allowing consumers to influence featured products and final prices.
With Concierge Buying, LuxeYard members can request items they would like to purchase at discounted price by posting photos to one of LuxeYard’s social media platforms, which includes Facebook and Twitter. LuxeYard will then source the most popular product as determined by user votes, or a comparable or higher quality product, and offer it on the website at what it says is a fraction of a comparable retail price.
Group Buy allows LuxeYard members to leverage social media to encourage other users to purchase a featured product, which drives product prices down for featured Group Buy items.
Everyone who purchased the Group Buy Item will pay the final lowest price. For example, a member may purchase an item for $100, share the information on Facebook encouraging others to buy the same product, and two days later find out that customer demand pushed the price down to $50. That would result in the original purchasing member only paying the end price of $50.
“Our team identified a significant hole in the explosive flash sale marketplace, realizing the customer experience was not interactive, community-driven or personalized,” said Braden Richter, CEO of LuxeYard. “We empower consumers with our Concierge Buying concept, shifting the sourcing of goods to the consumer. LuxeYard is combining the best of a flash sale with a unique e-commerce platform and an engaging interactive community.”
I do not understand this business model. If they are selling highly desirable branded goods, why would the supplier sell them product at $.20 cents on the dollar and drop ship every item to individual consumers. That doesn’t sound reasonable if the brand cares about its brand. We all understand supply and demand as well as the power to negotiate better prices, but we aren’t talking about widgets here.
Following are some of the other bells and whistles that differentiate LuxeBrand from the other flash sales and bring it into an arena that smacks of Open Sky. (The difference is that OpenSky doesn’t beat up its vendors, dillute the brands, force brands into value-engineering cheaper product and OPen Sky actually purchases and ships the inventory from its own distribution center.)
LuxeYard also features these tools:
• LuxeLife Trendsetters – A community of design professionals provides design curation and offers aesthetic insights, product recommendations and special events exclusively for LuxeYard members. Members may ask the community questions and receive product recommendations. Some of the founding LuxeLife Trendsetters include Nicky Hilton, Daniella Clarke, Faye Resnick, Bobby Berk, Amanda Rosbrook and Forbes Riley. (Oh, like OPenSky?)
• Room Planner – Allows consumers to enter room dimensions and/or upload a photo of the room in which they’d place a product they’re considering, to get a sense for how the item fits with the current décor and layout before purchasing. ( If someone is struggling over a picture frame and requires such a tool then good luck getting them to buy a throw pillow or vase.)
• LuxePop – Allows members to shop at LuxePop stores from their own homes. (I don’t even know what LuxePop is, but we can shop just about anywhere from out homes these days.)
LuxeYard says it offers members home furnishings and décor at up to 70% off standard retail prices. According to a press release from the company, LuxeYard does not hold inventory; manufacturers ship products directly to consumers. (Well, this is why investors love the idea, not why the suppliers and customers will.)
I read of two others that went live last week. Oh, and I am not that well road. So, how many are launching every week? I also have read repeatedly about some of the original ones such as Gilte Group and One King’s Lane continuing to get (what seems to me to be) ridulous amounts of investment money. My assumption is the allure of a company’s generating revenue without buying inventory or having to staff a distribution facility is what is creating such a fervor, or fever.
I rarely use my blog to do anything but show home textiles that I find refreshing and desirable to my non-existent followers. I apologize for my tone with this post. I am stymied by the flash sale site hysteria. I am a member of two handfuls. I was curious in the beginning. I have purchased four items from four different sites in the past and I wasn’t happy with the quality of any of the product. Not only that, I had never heard of any of the brands. I continue to become a emmber of the new ones just to see if any are offering something truly unique, high quality, covetable and to check prices. The merchandise is all starting to look the same and I wonder if I am seeing a more rapid maturation of the TJX brick and mortar business model. I can’t tell the difference between TX Maxx and Marshalls and, with 1000′s of stores, there aren’t enough last season or end of season merchandise to fill their stores. So, branding, royalty agreements and private label programs seem to have become the new way at TJX. They even seem to by the defunt brand names and resurrect them. The only problem for true value seekers is that the quality is often inferior. TJX isn’t what it was. It has kicked butt year after year and has experienced growth during the recession ( no small task), but it isn’t my go to place for high quality branded merchandise anymore.
A couple thoughts and questions. Has the investment world become crazily, stupidly in love with the business model? Is this model even sustainable?What are your thoughts regarding flash sale sites? Do they diminish the brand? Do they have staying power?o you see just a few strong sites as the remaining survivors? PLease educate me.