Rue La La, Gilt, and Groupon: Friends or Foes?



Online sales are only growing in popularity, so let’s work with (not against) them

Contrary to popular reports, Rue La La, Gilt Groupe, and Groupon are not the devil, so put away your torches.

For those who aren’t avid cyber-shoppers, here’s some background: Rue La La and Gilt Groupe run a similar model of online private sales. Each is a limited event offering up to 70 percent off top-tier brands of apparel, jewelry, and home goods. (The sites are now even venturing into travel.) Groupon offers big discounts too, but with a twist: Instead of selling products, Group­on posts daily local deals that require shoppers to visit a retailer.

Sites like Rue La La and Gilt pose the clearest threat to retail ­jewelers. They offer the same brands you carry, and possibly the exact designs you once sold, at a much lower price. But consider this: They cater to millions of daily shoppers, many of whom are first discovering jewelry through these sites. And there is no question that the sales help brands clear out dated merchandise. Consumers receive daily e-mails putting jewelry designers like John Hardy, Honora, and Judith Ripka next to fashion names like Michael Kors, Vera Wang, and Donna Karan. Many of the customers who see the limited selection during these sales eventually visit retailers to find newer selections.

Rue La La recently offered Chanel.

Cynicism toward online deal sites has caused many jewelers to ignore rapidly growing models like Groupon. This burgeoning sector locates new customers for local businesses via group buying. On Groupon, consumers are incentivized to share deals in order to reach critical mass for the offer to be viable. It is quickly proving to be the ultimate acquisition tool to ensure that new buyers walk through your door. Recently, Laura James Jewelry in Charlotte, N.C., offered a $35 deal for $75 worth of product. For the deal to be valid, 20 customers needed to buy (thus, the incentive to invite pals). More than 150 accepted. And here’s an interesting stat: Groupon CEO Andrew Mason says that once they’re in the store, customers spend an average of 60 percent more than what they paid online.

Still, we have to be smart with these services: Use online opportunities sparingly; you don’t want shoppers sitting around waiting for the next sale. Brands should wait a considerable span of time between launching a product and selling it online. They even need to consider having conversations with retail partners about moving out the merchandise that will be closed out online.

Naturally, Rue La La, Gilt, Groupon, and their Internet neighbors have not received the warmest welcome from local jewelers. Yet these sites are only growing stronger. We all need to overcome our concerns and find a way to make these sites work for everyone.