Members-Only Shopping: Worth the Hype?

Over the last year, I've received an influx of e-mail invitations to exclusive, members-only online shopping sites. These sites promise whopping discounts on normally high-priced, luxury goods in a fun and socially interactive shopping environment. What recession?

Three sites in particular--Gilt Groupe, Ideeli, and Rue La La--have done quite well. Targeted at both male and female customers, these sites hold exclusive sales of various products, such as clothing, home goods, and accessories. Like a country club, they're members-only; to join, you must get a referral (a sign-up code) from a member.

But, as with every too-good-to-be-true online offer, there's a catch--actually, a few. The sales usually last only two or three days, and stock is limited. If you're on the fence about an item, you have to make up your mind quickly before it sells out. On top of that, the sites have tricky return policies (or none at all), so if the item you buy doesn't work out, you might be stuck with it. And in the end, you may not even be getting the great deal you think you are.

The Clock Is Ticking

Rue La La, for instance, alerted me that a Marc by Marc Jacobs sale was starting. By the time I got to the sale, most of the items in my size had sold out. I found a pair of cute shoes and put them in my cart, but upon checkout I hesitated. The countdown clock in the corner told me
I had a few more hours, so I fought the urge to splurge. Later that day, I checked on the shoes again--they were sold out.

The ticking clock, the discounts, and the knowledge someone could grab an item before you do are a recipe for impulse buying. And in this economy, the temptation to buy discounted goods is especially strong--and dangerous. All three sites have seen rapid increases in membership and sales despite the downturn.

"It definitely can inspire some impulsiveness," says Paul Hurley, Ideeli CEO and one of its founders. "But the prices are so spectacular that it hurts less."

But are they? I cross-checked a few items with listings on Amazon, PriceGrabber, and Shopping.com. I found a jacket at Rue La La for $149 in limited sizes. At Amazon I saw the same jacket for almost $90, in multiple colors and sizes. But these sites also score exclusive deals with merchandisers, so you really can find some steals. For example, the Rue La La price I saw on a certain espresso machine was at least $300 less than on any other shopping sites.

Restrictions on Returns

All three sites have some sort of return policy, but you should read the fine print. Gilt Groupe's and Ideeli's return policies apply only to certain products (clearly marked under the item's price). Ideeli refunds store credit, not cash, so if you needed that money for rent, too bad. Everything on Rue La La is returnable, but like Ideeli, it's for store credit only.

Gilt Groupe, Ideeli, and Rue La La aren't the only such sites around, and more are sure to come. If nothing else, they are excellent (and fun) shopping tools. Take claims like "exclusive" and "discount" with a chunk of salt, read the fine print, and you may log off with a great deal.

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