Internet shopping clubs are the latest trend, with manufacturers using them primarily for clearance sales

Windelbar, an online platform that sells branded goods to logged-in members at drastically reduced prices, has posted revenues of €3.5 million for the first quarter of 2015 – an increase of almost 115 percent on the same period last year and a clear sign of the important position that shopping clubs now occupy in the field of e-commerce. Windeln.de, its parent, has been a listed company since May and is therefore obliged to report its figures. Other players in this sector tend to be more coy, divulging neither their business performance nor number of members. Limango, however, is prepared to say that its shopping community is currently growing by 500 members a day and that it sells as many as 30,000 items a day in Germany alone.

Whatever the precise truth, it seems clear that this business model is booming. According to Olaf Kolbrück, chief editor of the trade portal Etailment: “Things look good for the shopping clubs. They’ve been largely able to insulate themselves against the price war in the online marketplace, not least because a direct price comparison is difficult when you’re dealing with limited offers only available to club members.” On the other hand, the number of operators in the market shows that the market is growing exponentially and that competition is therefore on the up. As such, Kolbrück sees sound long-term prospects for clubs that are linked to a major online retailer – as is the case for the majority of platforms in the baby and children’s segment.

The clubs promise their members “great deals every day” and lure them with reductions of up to 80 percent. They can offer such discounts because, as a rule, goods are merely reserved and then only purchased from the manufacturer when actually required – i.e., a consignment-based business model that minimizes warehousing costs and greatly reduces planning risks. “It’s vital we ensure a smooth process,” says Laura Schulte, head of Windelbar. “Our brand partners have to offer us attractive and quality products but also be able to guarantee that these get to us as soon as possible after a sales promotion has finished.”

According to Schulte and others, some brands directly approach shopping clubs in order to be included in their collection. That said, acquisition remains a crucial part of the business. “Our buyers are permanently on the lookout throughout Europe for new and attractive brands that we can offer to our members,” explains Martin Oppenrieder, managing director of Limango. “We’re interesting not only for top brands but also for the small, less-well-known labels. By including them in a sales promotion, we can help them get themselves better known among a broad target group in the family market.”

Limango also offers brands the opportunity to target a group of fashion-oriented consumers with a sporty lifestyle. This is what all the shopping clubs promise their partners: direct targeting of a relevant consumer group with minimal wastage. Gerd Hirsch, managing director of Kidisto, also underlines the other factors that benefit the manufacturer, such as first-class product presentation and marketing support via newsletters and social media.

As for the brands themselves, their attitude toward shopping clubs is lukewarm. “Our focus is on the traditional retail sector,” explains Oliver Rauch, sales director at Playshoes. His company uses Windelbar and Kidisto exclusively for the purpose of clearing discontinued lines and surplus inventory. “We’d be shooting ourselves in the foot if we were to sell regular goods at below the listed price!” he says. Corinna Gielen from casafeli agrees. From time to time, she makes limited numbers of her main product – a so-called womby bag for swaddling babies – available to Windelbar. Naturally, she hopes that this will boost brand awareness, but the real reason is to shift discontinued materials, including fabrics, which she sells there by the metre. “Windelbar is perfect for that,” she says. But there is no way she would use shopping clubs on a regular basis.

And yet, despite their mistrust, manufacturers of all sizes still play the exclusive discount game. Procter & Gamble, for example, uses it to clear old-style Pampers packs following a product relaunch. By contrast, small newcomers experiment with shopping clubs largely for marketing reasons. “We don’t make any profit, because the already minimal margin is swallowed up by the extra discount given on the wholesale price,” says Sabine Avella from the handmade label tjuk tjuk. In other words, the hope is that it will make the product better known. According to Avella, she has not yet registered an increase in online orders or hits on the tjuk tjuk website, but she says it is still too early to tell for sure whether it has paid off.

The top shopping clubs for the babies, kids and family segments:

• Kidisto (Adeo GmbH)

• Limango (MyToys GmbH in der Otto Group)

• Vip Family (Babymarkt.de GmbH)

• Windelbar (Windeln.de AG)

By Julia Bröder