France’s Vente-Privée founder Jacques-Antoine Granjon revealed more details on his business model. In an interview with the German Manager Magazin ("Der Marken-Messias", German link) he openly comments on the profit margins:
"'We earn by adding approximately 30% margin to the product price', said Granjon.
Nevertheless, with the production infrastructure he has, outside observers could find it hard to imagine that he has reported profits for the last three years."
Insiders see differently. At the recent Pangora Congress (German link), the Vente-Privée CEO illustrated his successful business model in detail.
One can’t undervalue that Vente-Privée pre-finances all product stock far in advance. Vente-Privée places orders with it’s suppliers only after the end of a sales campaign: that is, after the end customer orders.
The users, who for the most part pay immediately, receive the delivered goods several weeks later. And the suppliers are also not paid immediately. Thus, Vente-Privée has ample cash in hand at all times.
What only very few of the imitators can pick up on: Vente-Privée has developed in the first five years of operation (2001 – 2005) an elaborately constructed sales system that can only be profitably run if all the sub-aspects are known and considered. Anyone can open a shopping club, but at present only a few are profitable.
Even more surprising is how shopping clubs (in Europe) continue to be able to pull large sums of investment money. And that includes clubs which although obviously good at (costly) user acquisition, don’t seem to understand the sales principles enough to be able to survive the market in the long run.
This week Germany's leading shopping club Brands4Friends raised $13m (EUR 10m) in the third round of funding.
Originally posted in German by Jochen Krisch, translated by Jason Soo.
Comments