EcommerceBytes-NewsFlash, Number 2717 - January 13, 2012     2 of 4

RueLaLa Lays off Staff and Absorbs SmartBargains Discount Site

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The Boston Business Journal said Rue La La laid off 65 employees in Boston and other locations on Thursday as its parent company Kynetic plans to fold sister property SmartBargains into Rue La La. While SmartBargains sells offprice "department store" items, Rue La La sells upscale branded items to members only at a significant discount during 2-day sales events, called "flash sales."

In 2009, GSI Commerce acquired Retail Convergence, which owned both sites - Rue La La, a members-only flash-sales site launched in 2008, and SmartBargains.com, which sells off-price merchandise across a wide cross-section of categories launched in 1999. At the time of the acquisition by GSI, RueLaLa.com membership had grown to 1.2 million members.

Less than 2 years later, eBay acquired GSI Commerce as part of its strategy of catering to large brands and retailers. As part of the acquisition, eBay sold the assets of several of GSI's businesses including 70% of Rue La La. GSI founder Michael Rubin formed and led the new holding company, Kynetic, in September consisting of Fanatics, Rue La La and ShopRunner, and eBay retained minority interests in ShopRunner and Rue La La.

EcommerceBytes readers might remember SmartBargains as one of the first of the large retailers eBay brought onto the site through its revolutionary Large Merchant Services onramp in 2008. Its sister firm Rue La La takes a very different approach to retail liquidation.

At an Etail conference for retailers in Boston held in August, Rue La La executive Mark McWeeny talked about the company's approach to working with brands. "Here's our excess inventory" is not really the brand's story. Rue La La asks its clients what's great about their brands and helps them use the sales as a marketing tool, aiding discovery and introducing the brands to consumers. The company even limits how frequently brands can run flash sales to maintain brand integrity.

According to an interview with Boston Globe columnist Scott Kirsner in mid-December, Rue La La's founder Ben Fischman said, "When we were spun out (from GSI Commerce), it was kind of a "died and gone to heaven" scenario. We became a private company, with no institutional or venture investors or private equity."

There's no word yet if Kynetic will retain the SmartBargains brand as it "folds into" Rue La La. Rue La La's press contact did not respond to a request for comment for this article.


About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.


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