In 2004, Ben Fischman, a young serial entrepreneur, became the CEO of an online retail store SmartBargains.com. As the name suggests, the website sold all sorts of items ranging from apparel to household goods at deep discounts. The business strategy was to purchase merchandise from other companies that wanted to cut down slow moving inventory or out of season goods, and then offer these great deals to its customers. While the brand “SmartBargains” was straightforward – focusing on the high value of its product and prices – its functional appeal dwindled by 2007, and much enthusiasm died out due to increased competition from big and small companies. Faced with slowing sales and reduced traffic, a re-positioning of the brand was needed.
With a new name and focused product offering, Ben Fischman launched a new company and brand, “Rue La La” in the following year. Although it had the same business model and principle of purchasing clearance items and selling them at discounts to consumers, the new brand effectively added the emotional component of the brand that was missing in SmartBargains. The website was now only selling to “select” consumers (those who were invited by an existing member), and promoted its products by emphasizing limited time sales that lasted 24 hours or a few days.
In its first year of business, Rue La La gained more than 1 million users and reported net revenue of $28 million just in its third quarter of 2009, according to DirectMarketing. Not only did they take off, but GSI Commerce acquired the company for $350 million in 2009, while Ben remained as its CEO until 2013. The emotional spin of exclusivity paid off.
Likewise, even for craft breweries, coffee shops, restaurants, pet stores and retail shops to name a few, small business owners can control demand or create curiosity and exclusivity with their own unique merchandise. Once you grab the attention of customers with curiosity and secure them with exclusivity, your business is highly likely to succeed.