Online shopping site ideeli aims to attract luxury brands by only letting a select group of women through its virtual red rope.
“We want to make sure that our core audience appeals to our brands and advertisers,” said CEO Paul Hurley.
This means women who are willing to drop $995 on an Oscar de la Renta purse but who are probably even more excited to score that clutch for $259 during one of the site’s sales.
The invitation-only web site isn’t turning away investors, though. The startup on Monday said it grabbed $3.8 million in its first round of funding from Kodiak Ventures and angel investors.
Given the success of French members-only e-commerce site Vente Privée and invite-only Gilt Groupe’s recent funding announcement, a snobbish trend seems to be emerging.
“I think that it [invite-only membership] can work both ways. It can create an environment that appears exclusive and appeals to a certain group of customers,” said Patti Freeman Evans, a senior analyst at JupiterResearch. However, restricting membership can stunt a site’s growth and keep it from reaching critical mass.
“It’s sort of like having a restaurant without a name on the door,” said Ms. Evans, who has yet to receive an ideeli invitation. “If you become hot, it’s okay. If not, it’s not so good.”
If you’re deemed worthy of a membership, the New York City-based startup offers women's luxury accessories at 50 to 90 percent discounts, plus weekly giveaways. Similar to competitor Gilt Groupe, items are available for only a limited amount of time. Unlike Gilt Groupe, sales center on a specific item, like a Jimmy Choo bag or Burberry bracelets, rather than a sampling of items from a specific designer.
The limited sale times help the site maintain the sense of scarcity that is important to luxury brands’ cache, said Mr. Hurley.
Members can drool over the upcoming sale items in the preview section, but in an effort to further amp up excitement, the site keeps sale start times secret. Those who sign up for the free membership receive email notifications when sales begin. For $7.99 per month, premium members receive sale notifications via cell phone text messages and are granted access to sales an hour early.
“We’re changing office behavior,” an ideeli representative said. “People are bringing their cell phones into meetings because they don’t want to miss the text message.”
Ideeli’s blended business model of social shopping, premium subscription, e-commerce, and advertising made it an attractive investment, said Chip Meakem, general partner at Kodiak Ventures.
“There’s a certain gaming quality to it,” Mr. Meakem said. “Users love it.”
The site has attracted more than 10,000 members since its test launch in May. And although the company claims rapid viral growth over the last several weeks, it does plan to temper growth based on the number of products available. Besides, it wouldn’t want to ruin things by letting just anyone in.