SecretSales is an example of a Product business model. It purchases excess or out-of-date inventory from fashion retailers and resells it to retail customers at a discounted price. The company operates a website through which customers browse and purchase items. It maintains its own warehouses or rents warehouse space, and contracts with third party distributors to ship products from the warehouses to the end customers. Customers pay SecretSales directly through the website.
Founded in 2007 by brothers Sach and Nish Kukadia, SecretSales turnover grew from £2 million in 2008 to £20 in 2012. Sales in 2013 grew 70 percent compared to sales in 2012, and its most recent full year financial results ending 31 December 2014 disclosed increased registered members by 22% to 3.7 million. Revenues increased 39% to £25.2 million, while 60% of revenue is now generated via mobile devices (up from 50% in 2013).
CUSTOMERS – WHO THEY ARE:
SecretSales customers tend to be upmarket fashion consumers that are web-savvy and comfortable with shopping for various products, including clothing and accessories, online.
ENGAGEMENT – VALUE CREATION PROPOSITION:
SecretSales offers customers the opportunity to purchase upmarket fashion products at reduced prices. It creates a sense of exclusivity by branding its sales as “secret” available only to “members”.
SecretSales also recommends certain products to users based on their browsing and purchasing history, and sends a personalized newsletter to each customer with product suggestions and sales alerts.
DELIVERY – THE VALUE CHAIN:
SecretSales procures excess inventory from fashion brands. Fashion brands like to sell their excess inventory in this way as, by selling only behind an online membership wall, SecretSaels can protect the image of the fashion brand (who don’t like to appear to be heavily discounting). This means SecretSales can procure premium branded inventory at low cost.
SecretSales sets a start time for the sale (each sale lasts only 4 days - to promote an idea of scarcity and further protect the brand image of the supplier). It communicates this start time to a list of relevant members along with a list of items for sale. Heavily tailored digital marketing campaigns let particular customers know when sales (of items they are likely to be interested in) are going to happen that are relevant to those customers’ particular tastes.
SecretSales takes care of all distribution to customers. Everything held in SecretSales’ inventory will be shipped quickly (for a fee).
SecretSales tracks customer behaviour on its website to gain insights on consumer behavior. Over 300 million unique website visits have been tracked.
MONETIZATION – VALUE CAPTURE:
Membership on the site is free to consumers. Monetization is on the basis of making a margin on the sale price of each item sold through its website. SecretSales may also make a margin on postage costs for sending products to consumers.
Essential Retail website: http://www.essentialretail.com/essential-ecommerce...
SecretSales website: https://secretsales.com/
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Secret Sales Blog: http://thesecret.secretsales.com/2013/05/a-day-in-...
Written by Benjamin Surdeau and edited by James Knuckles under the direction of Prof Charles Baden-Fuller, Cass Business School. This case is designed to illustrate a business model category. It leverages public sources and is written to further management understanding, and it is not meant to suggest individuals made either correct or incorrect decisions. © 2016
Published 21 April 2016