When visualizing online membership-driven sales, many people have the perception that this type of retail revolves around receiving one quasi-relevant offer – or daily deal – via email each morning. The daily couponing phenomena peaked during the 2008 recession and seemed to be a shining star of what the Internet could offer to downtrodden consumers.

However, by 2011 consumer confidence began to regrow and suddenly retailers were no longer desperate for a mass liquidation strategy. On the consumer side, inboxes were being inundated with one-off emails from a litany of copycat start-up deal sites and the noise was deafening. As these changes occurred, the business value of daily deal sites eroded and hardened critics will recall the Great Groupon Backlash of 2011. Things were bleak for Groupon and its flash sale site contemporaries, but rather than punt the business model entirely, innovators discovered how to evolve its presentation to create a whole new online shopping experience.

Thus, private event retail (PER) was born. At its core, the PER business model offers consumers exclusive (and often restricted) access to a finite collection of carefully curated products that are merchandised through themed events at very attractive price points. These sites are driven by visually rich, socially engaging storytelling that promotes a browse-based shopping experience and encourages product discovery. Now, rather than having products thrown at them, ala the daily deal email, consumers are invited to participate in their own “personal treasure hunt.” As a result, private event based sites have enjoyed a 50% growth rate over the last five years, and are expected to account for $6B in revenue by 2015.  

This style of retailing has gained traction quickly for several reasons, but here are three that stand out in particular:

1.    Exclusivity

The most successful private event retailers use an “invitation-only” membership strategy. In many cases, this means new users would need to be invited by an existing member. Therefore, the new users’ first touch with the website is often through a trusted family member or friend. Not only does this personal touch encourage a degree of comfort and warmth with the shopping experience, it creates a sense that shopping on a given site is a privilege.

2.    Urgency & Scarcity

Limited-time deals and limited inventory availability add a sense of excitement and urgency to the consumer shopping experience. When an event is launched, it is typically announced through an email or mobile alert. For example, a great email subject line from a private event retailer might mention a brand or two that you’ve indicated a preference for, followed by: “Your Extra 30% Off Expires Today!” Simply stated, yet exceptionally effective when sent to a brand advocate. Keep in mind that most customers acting on offers like this are doing so from their smartphone or mobile device. Be sure your mobile strategy aligns with your PER plans too (Check out this post for more info: Flash Sale Sites: Go Mobile or Die)

3.    Incentives for sending invitations

This is my favorite part. If you’ve had a good experience on a private event retail site, why not encourage others to try it as well? After all, someone you like probably invited you in the first place – why not pay it forward?

Smart private event retail sites will incentivize you beyond your own sense of goodwill. A $10 – $20 dollar credit to your account when a friend makes their first purchase is typically a good motivator. Not only does this encourage users to invite as many people as possible, it creates a more loyal customer by updating them when their invitees make a purchase and their account gets a little fatter.

These three factors contribute to one staggering benefit of private event retail sites that brands can rejoice in: customer loyalty. It is estimated that event-based sales are 300% more effective in driving return customers than traditional eCommerce sites.  PER sites enjoy a repeat customer rate of nearly 75%, versus the traditional eCommerce repeat rate of 40%.

We have a lot more we’re planning to share about PER in the coming weeks, including a white paper that will talk delve into the benefits of PER, key components to a successful event-based experience and indicators that this type of retailing might be right for your business – so stay tuned.

In the meantime, if you have any questions or want to talk with one of our eCommerce and private event retail experts, click here!