As the retail industry continues to closely watch the daily deal and flash site model for what “lessons” can be learned, it has become clear that exclusivity and excitement are the key components of success.
During this week’s Shop.org Annual Summit in Boston, MA, Rue LaLa CEO Ben Fischman sat down with Sucharita Mulpuru, VP & Principal Analyst, Forrester Research, for a candid Q&A. Fischman highlighted the growth of the mobile channel, as 28% of Rue LaLa’s business comes through mobile devices, and as much as 38% on weekends.
Mulpuru pointed to the recently released State Of Retailing Online Report (SORO), which found that 29% of retailers have grown their businesses via social marketing strategies.
“Social is often about a lot of ‘small wins,’” Mulpuru said. “When we dug more into the data [of the SORO report], we broke out two segments of respondents: one group of retailers who agree that social strategies have helped to grow business and then everybody else. They are grouped as social ‘optimists’ and ‘pessimists.’”
Although social optimists did report a significant higher percentage of sales that can be attributed to social (3.5%), pessimists indicated that they were generating approximately 1.6% of sales from social.
In addition to a strong focus on social integration, Fischman said he attributes Rue LaLa’s success to its ability to create excitement and engagement, which keeps shoppers coming back for more. “Great retailers have always created tremendous value and excitement as to why you
go into the store, whether it’s because items are going to sell out quickly, there’s unique value, a limited edition, or brand new, all those tools [can be leveraged] to create energy for the consumer.”
While the surge of daily deal and flash sale sites has taken the retail industry by storm throughout the last few years, Fischman said the economic downturn has affected the business model.
“[During the economic downturn] brands were looking for unique and elegant solutions to move through opportunistic merchandise,” he noted. “The smart brands knew the recession would at some point end, but they also knew they needed liquidity.”
The recession provided a jumpstart of sorts for Rue, because it motivated brands to try out the channel. The company, once a subsidiary of GSI Commerce, has been operating privately since June 2011, after eBay acquired GSI Commerce in March 2011. “The transaction that we consummated with GSI provided investors with surprising liquidity after a year and a half,” Fischman noted.
Credential Memory: The Key To Success
e-Tailers are increasingly tapping new technologies and tools to streamline customer research, browsing and ultimately, buying. Because Rue LaLa’s business model is built on the urgency to purchase (a limited quantity of items are on sale for a limited time), the company has streamlined the checkout process for shoppers by collecting and storing member information. Ultimately, Fischman said, this helps the company maintain shopping cart abandonment below 12%.
As an invite-only shopping site, Rue LaLa relies largely on the impact of social media to continually grow its business. “The only way social works for us is if it’s a completely integrated experience,” Fischman noted. “Eighty percent (80%) of our members come to us from friends inviting friends — now that’s social! All the innovations we’re putting through our business, we release through these social channels on a regular basis. Just doing standalone advertising via Facebook or Twitter can be as ‘hit or miss’ and any advertising can be. We make sure there’s full integration from social and mobile channels. Every time we launch a new initiatives we think about how to integrate it into social.”
Retailers in general struggle to understand the value of social media, according to the SORO Report. A majority (62%) of retailers said returns of social marketing are unclear. Mulpuru noted that this number has remained relatively consistent in recent years.