Bulk shopping has always been cheap. But this concept till now had not been applied to online shopping. But due to the recession many companies were left with unsold inventories. Hence several companies have now decided to use the bulk formula on the net as well. One can now get great discounts on some websites after getting their membership. Most sites have free membership also so no surcharge headache.
But how do these websites work? Websites such as Gilt work on the “Block, Sell and Ship” model. The site requests the brands to set aside a certain number of merchandises that they want to buy. Then the members on these sites select the products. The website then gets the product shipped to its office, from where it sends it to the buyer. Some sites buy directly. They look at the brands inventories and then purchases whatever it wants.
The plus point here is that the brands give a better discount on getting rid of the inventory, but the website faces a risk of accumulating an inventory of its own. This business seems to be picking up. For example, Gilt raked up $500 million in revenue this year up from last year’s $170 million.