Online Private Sales Clubs: An Emerging Model of Fashionable E-Commerce at Promotional Prices

Online Private Sales Clubs: An Emerging Model of Fashionable E-Commerce at Promotional Prices

Ana Isabel Jiménez-Zarco (Open University of Catalonia, Spain), María Pilar Martínez-Ruiz (Castilla la Mancha University, Spain), Silvia Sivera-Bello (Open University of Catalonia, Spain) and Sandra Vilajoana-Alejandre (Open University of Catalonia, Spain)
DOI: 10.4018/978-1-61520-611-7.ch037
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Abstract

Considering the advantages of the Internet for commercializing a vast array of products and services (Steinfeld and Whitten, 1999; Webb, 2002), it is little wonder that more and more companies have decided to offer a broad array of products online (Jiménez, 2005). Some companies even have chosen to use the Internet as the exclusive channel for selling products and services. When they follow this route, one of the most successful sales models has been the online private sales club, a multibrand outlet format that relies on a strong, free-flowing relationship among the company, the supplier, and the consumer (B2B2C). The model also adopts an attractive and innovative (relational, emotional, holistic) marketing strategic orientation that combines the attractiveness of traditional marketing elements, including prestigious brands, sales promotions, and exclusive distribution, with marketing elements specific to virtual markets, such as viral communication, intensive customer relationship management (CRM) systems, and secure payment methods.
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The Business Model: Adaptation Or Innovation Of The Outlet?

The outlet business model and online private sales clubs offer several similarities that may induce some doubts about the origin of the latter model. A priori, it might seem that online private sales clubs simply represent an adaptation of the traditional outlet model to virtual markets. However, the presence of certain strategic and tactic elements, particularly of this commercial format, prompts us to argue instead that online private sales clubs are innovative instead of adaptive.

Outlet Model

The outlet model grew out of conventional markets in the United States and reached Europe during the 1980s and 1990s (Figueras, 2004). Its business formula is quite simple: An outdated or defective product frequently produced by a prestigious or high-quality brand, ships to outlet stores that sell the product at a lower price than is usual in traditional retail stores (Barthélemy, 2006).

The benefits for both the producer and the client are clear. The producer earns revenues from obsolete or faulty products and can sell excess stock and collections of samples without damaging its image. Many firms therefore recognize the outlet format as an ideal complement to selective or exclusive sales systems. Because producers must renew their offers frequently, especially in fashion industries, they need a system that enables them to sell seasonal excess adequately and quickly. The advantages for the client derive from the ability to acquire various products (e.g., apparel, designer objects, sports articles) from famous and popular brands at discounted prices.

The success and expansion of this commercial format has been extensive; in some commercial markets, traditional outlet stores have evolved from small storefronts located in the city surroundings (Figueras, 2004) to vast stores located in city centers and malls, including in some cases entire centers dedicated solely to outlet stores. Thus, in the same arena, consumers can find outlet stores that sell different brands. The ambience and services offered often do not differ from those provided by traditional stores. However, the disposition and display of products may be less visible.

Key Terms in this Chapter

Viral Marketing: A broad array of word-of-mouth strategies designed to encourage both online and peer-to-peer communication about a brand, product, or service.

OUTLET: A commercial establishment specializing in the sale of goods of popular brands, often obsolete or faulty goods.

CYBERMEDIARIES: Intermediaries that act in electronic markets to bring together buyers and sellers or those with particular information or service needs.

PAYPAL: A firm in the electronic commerce sector that enables the transfer of money between users with e-mail accounts. It offers an alternative to traditional payment methods. PayPal also processes payment requests in electronic commerce and other Web services and earns a percentage of the amount transferred in each interaction.

HOLISTIC MARKETING: “Holistic marketing is the design and implementation of marketing activities, processes, and programs that reflect the breadth and interdependencies of their effects. Holistic marketing recognizes that “everything matters” with marketing –customers, employees, other companies, competition, as well as society as a whole –and that a broad, integrated perspective is necessary” (Keller and Kotler, 2006: 300).

EMOTIONAL MARKETING: A marketing orientation that tries to attract clients by using feelings and emotions that should bond the client to the firm in the long-term.

E-ATMOSPHERICS: The creation, shape, and evolution of Web site designs to enhance site stickiness, encourage final purchase decisions, and promote positive postpurchase feelings.

Business-to-Business (B2B): Trading between firms (not between a business and end consumers), characterized by (1) relatively large volumes, (2) competitive and stable prices, (3) fast delivery times, and (4) often deferred payments.

BRAND: A word, name, symbol, or combination of these elements that identifies the goods and services of a person or firm and distinguishes them from those of competitors.

BUSINESS-TO-CONSUMER (B2C): Activities that commercial firms develop to reach end clients or end users directly, including electronic media.

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