Analysis of Vente Privée

Description of the business: A Merchant model

The website aims at selling branded goods, through time-limited sales, making high discounts from retail prices.
Most often, the brands have a strong brand image, trendy or sexy.
Actually, these brands often have a lot of stock, but cannot display huge discounts on their storefront windows.



Customer groups served

The customer groups served are linked to the marketing tools created to approach them. These are very strong tools:
– Realization of great trailers to promote the sales
→ Brand image is preserved as the website tries to be very trendy
– The welcome page changes very often
– A blog emphasizes the new trends, exhibitions, lifestyles etc.

Therefore, the target customers meant to be sensitive to these marketing tools are:
– Women/ Men interested in trends
– Urban people
– Families (kids clothes sales, linen, kitchen accessories, gastronomy)
– New products/ new targets: financial products (AMEX), travels


Sustainability of the model

Vente Privée has a very strong position on the market. The creator had a long experience in the industry offline. And the retailers want to work only with the predominant actor: 1 sale is enough to clear the stock, due to the number of active members (3.5 million of customers, 7 million signed in).
Vente Privée represents a real supermarket with high quality products. Nevertheless, a possible risk can be a dilution of the brands' positioning.


Revenue sources

The sales represent the main revenue.
Additional revenues come from partnerships with artists, exhibitions and luxury brands in rosebuzz.
For example:
– Patricia Kaas for the release of her new album
– Shopping suggestions through shooting with Cerruti, Gucci clothes etc.

Other potential revenues could be generated from the sale of the audience and the sale of the customer database.


Online/offline model?

The model of pure discount sales has been applied offline for a long time, with clearance sales and outlet stores for ex. But it was dangerous for the renowned brands to display huge discounts in outlet stores, because they could not control the future of their goods.
Now, the website enables the brands to get rid of the stock quickly, so that it does not affect the brand image.
Moreover, the site is built in order to enhance the brand’s DNA and universe (through trailers, rosebuzz etc.)
Second, it is not a pure model, and all the partnerships created in rosebuzz could not exist offline.


Summary of article : http://vente-privee.blog.lemonde.fr

1. Vente Privée represents a real online supermarket, and the range of the proposed discounted goods keeps growing.
A new step forward has been taken in September 2009 with the sale of the Bank product American Express Card.
→ Vente Privée is getting further from its original concept.

2. Vente Privée is undoubtedly the largest actor in the online clearance industry. But there are many niches and emerging actors.
Vente Privée represents « only » 60% of the market, and this share is meant to decrease.

3. One of the principle on which Vente Privée relies on is the buzz marketing. Thanks to word-of-mouth and buzz, customer acquisition cost is very low.

4. The opportunity of the crisis for the online clearance industry is high:
the e-business growth is decrasing at the moment, but still remains positive by 11% !

5. Evolution of the business model:
More and more clearance websites begin to open their own online stores, without any discount.
We also observe conversion into editorial websites, such as 24h, or Vente Privée’s rosebuzz blog.


Application of Vente Privée's model to another industry: the Hotel industry.

The online model would enable independant or chain hotels to propose discounted rooms during low occupancy periods (week-end for business hotels, winter for Riviera hotels, day-use for airport hotels etc.)
This would decrease their RevPar but increase their Occupancy Rate.
As the hotel industry has a very high operating leverage (very high fixed costs _electricity, staff etc._ and much fewer variable costs _linen, amenities etc.) it would end up in additional revenues that would cover the few additional variable costs.

Moreover, such a website would be very convenient for hotels with high-end brand image. They could this way make additional revenues through discounts without displaying these discounts on their front windows.




In conclusion, this model could perfectly apply to the hotel industry.

As a matter of fact, The website Voyage Privé resorts more or less to the same concept.


It is slighly different as it proposes more complete packages, with hotel and air transport. Therefore, it must be more complex to manage, as they must deal with different kinds of supplier to create each package.
The website Voyage Privé meets a great success. The users who actually purchase a travel represent a small percentage of the signed-in members (low« taux de transformation »); but that is because buying a trip is somehow different from buying a T-shirt (more involvement). The price is as well higher, and therefore, the amounts of the sales balance the smaller number of sales.