Innovative Retailer – Vente Privee

Brought to you by Retail Insider and PCMS

The Name: Vente Privee

The Place: Headquartered in Paris but offices all round Europe and operating online.

The Story:  Let me tell you a story about stock. About 40% of a clothing company’s stock will, for example, sell at full cost. Then they will sell another 50% during Sales periods at a reduced price of maybe 30-50%. That leaves a 5-10% stubborn-to-sell pile that languishes in warehouses. The company has lost interest to be honest having long moved on to the next season’s collection. And that’s when they cry ‘Help us, Vente Privee’.

Right, so then they shift it: Yes, as you so elegantly put it. Vente Privee specialises in private ‘flash sales’ where at a much greater reduction, up to 65%, they relieve retailers of that final tricky 5-10%. And let me tell you there is serious money in the remnants of last season’s collection.

How much money?Wait for it. Euros 1.3 billion in 2012. Vente Privee is the brain child of CEO Jacques-Antoine Granjon and held its first sale in February 2001. It then spent those first formative years perfecting the model with the help of the young computer genius co-founder Ilan Benhaim. Customer satisfaction, according to Benhaim, is the key driver: ‘If disappointed you will never see that customer again.’ And there are currently 18 million of them around the world. He believes that humility is the order of the day.

Ilan Benhaim: co-founder, Vente Privee

And it’s a French company you say… well, well.  Anyway, between 2004 and 2008 they really started flying. Revenues went from Euros 5 million to Euros 350 million.

I don’t think that’s actually possible: Well it is. He admits it was ‘a good problem’ but the speed of growth meant that they had to hold very tight to control development. People said they could maybe hold two to three hundred flash sales a year – now 12 years on they do 500 a month. But it’s okay because, boy, is this a well-controlled company (control is Benhaim’s very favourite word) which is always working to a defined phase of development.

I’m glad to hear it. And what stage are we in right now? Stage four if you must know but first we will go through the other stages otherwise you won’t learn nuffin’. Stage one – the founders (who still hold 80% of the company) developed the right business model, IT was internalised shortly after launch, and customers got the standardisation they expected. This leads swiftly on to Stage two – industrialisation. In the beginning Vente Privee was paying other people to learn how to supply such a business. Non, non, non said Benhaim, we should be learning how to do it ourselves. So they did, and now the company has 180,000 sq m of distribution facility. Some 80,000 orders a day would be impossible to outsource anyway so it’s a good job they did.

Yes, the production of the images that drive your sales? The digital content is produced in what he calls ‘an invisible factory’ making 8,000 new items daily.  Then there was customer service, which comes in two levels, the first has a 30-second response time and is an information service and then level 2, which employs 120 native speakers and provides the solutions. Customer service is ‘on top of the pyramid’ at Vente Privee not the bottom because they want to know what is going wrong first.

Dare I ask about Stage 3:  You may indeed – rationalisation. The question, do we need it? was asked of everything. Things that bought value were kept, and it was au revoir to everything else. This brings us bang up to date and Stage 4.

At last, is this the one where you sit back and buy a racehorse? No, muppet, it’s the one where you expand into an international presence to be reckoned with. The focus is strongly European but there is a joint-venture with American Express, which obviously has a ready-made customer database to make any retailers mouth water. And for now those two continents provide enough work for Vente Privee. Benhaim reckons China won’t be on the cards because the company is only interested in long-term retailer partnerships and China ‘would not need us for that long’.

Okay, that’s interesting, now tell me about the relationship with retailers: They are dealing with brands that do not want to be sold in TK Maxx but need an online showroom that does not diminish their value. I can show you how strong the link is when I tell you that Vente Privee has recently opened a consulting arm (Benhaim is the CEO) to help retailers realise their multi-channel potential. The clients Benhaim works with break down as follows: 50% of them are existing Vente Privee clients, 25% are other huge consumer brands looking for strategy advice, and 25% are not in the same field at all such as La Poste. If e-commerce equals 5% or less of their sales then he will take them on, if it is more then he reckons they are mature enough to do it themselves. And companies actually want Vente Privee to launch products for them now because it has become a brand in its own right with supplier retention rates to die for. But its real expertise seems to be in yield management.

Fashion: not the only thing of interest for Vente Privee
Give me an example: Disney Land Paris. Wanted to do a ‘flash sale’. Fine, said Vente Privee but let’s just think about this for a moment. Selling tickets is a bit easy, how about you sell nights at your resort hotels as well. And make sure you give us your 100 weakest upcoming nights. Result – after one week 28,000 nights had been sold and 115,000 tickets. Disney Land were really rather happy.

So, are holidays a growth area for them? What Vente Privee wants to do is to keep upping the offer in any categories you could mention. As Benhaim says you didn’t know you wanted it until you saw the offer so as many offers as possible in as many categories is the general idea. That keeps the 80 million visits per month steady. They have decided not to choose or try to second guess which offers the consumer might like. One email goes out with every single offer on it so ‘the customer can segment themselves’. As soon as Vente Privee realised that lots of the 2.5 million daily unique visitors to the site were not buying anything this became a story about volumes. And also about localisation.

But doesn’t everyone love a bargain: Yes, or as he delicately puts it ‘there is a general economic response to discounts’, but to sell 80% of the Sale stock in Germany you can get away with a 55% discount. In the UK or America it will have to be more like 75% off. In France sales periods are regulated by law, in the UK you have companies which operate a near continuous Sale. In Spain you could open a sale at 7am but there is no point because they don’t start buying online until 11am. In the UK 7am would be just fine.

And how is business in the UK? Well, Vente Privee has 537,000 customers in the UK so it’s not huge and in fact a couple of years ago they decided to run the UK operation from France as it was so close and the British office was closed but there are hints of an announcement imminently on that.

And what else does the future hold? Around 30% of sales through mobile commerce channels are expected. Benhaim maintains you cannot differentiate the online shopper from the high street shopper anymore as they are the same person with a computer in their pocket. But most retail brands do not yet understand the smart-phone revolution (although he concedes that the UK is more advanced than Continental Europe on this.) But in time they will.

Would that be with a little help from Vente Privee Consulting? D’you know I think it just might.

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