Private Shopping Club Set for First Year of Profit after 7 Years, the UK’s largest online private shopping club with over 3 million users, is predicting its first year of profit after almost 7 years.

executives_secretsales’s : Sergio Dias, Nish Kukadia, Sach Kukadia, Michael Cody and Silva Cody treated the winners of a competition on their site to an evening at The Play Room bar in London’s Soho.

Founded in 2007 by Nish Kukadia, his brother Sach, and Michael and Silvia Cody, is the UK’s largest online private shopping club. With over 3 million users and around 600 partner brands – including Dolce & Gabbana, Christian Dior and Alexander McQueen – the company hosts two to four day flash sales of significantly reduced luxury fashion, accessory, beauty and homeware brands.

Starting From Scratch

Now based in Notting Hill, London, with a staff of over 100, started out in a basement service room in Park Royal, surviving off a £100,000 bank loan guaranteed against the founder’s homes. In the first two and a half years Kukadia reports “each of us took less than our lowest paid member of staff. We were living on a shoestring, working in a bootstrapped business, wondering why we were doing it”.

Initially they built a site that could cater to 30,000 members, their target number for the first four months of business. But within four weeks they had the 30,000 members. And whilst competition almost immediately arrived on the scene, was starting to attract attention.

Multimillion Pound Investments

In early 2010, secured significant investment from Brands4Friends, Europe’s leading online private sales company. Then December of the same year saw eBay acquire a large minority interest in as they purchased Brands4Friends for just under $200 million. Although eBay has no rights or direct involvement with, the acquisition accelerated a further multimillion pound financing round. In January 2012 held their fourth round of funding, which raised £6.3 million from a syndicate of investors led by Doughty Hanson, Pentech Ventures and OCP innovation.

Building a Future

According to eBay’s own research, private shopping clubs now account for around 20% of online fashion sales in Europe. Paris-based Vente Privée – the flash-sale founder, which launched in 2001 – recorded a gross turnover of £1.1 billion in 2012, a 22% increase on the previous year. But whilst 2012 saw grow their total sales 22% to £10.8m, the company made a loss of £3.9 million. They are set to record another year of loss for 2013. But that is set to change this year.

Kukadia, who says is a volume business with profit dictated by membership, estimates that 3.5 million to 3.6 million users would see them break even. Last year’s first TV advertising campaign, which invigorated membership and built confidence and credibility in the brand, was the first step in realising this aim.

They have also launched loyalty schemes and plan to move their partner brands more upmarket, in moves to appeal to their key user base. Thanks to their recent significant investment round, they have been pouring finances into developing CRM technology to deliver more relevant offers to users. And they are working on a app to be launched early this year. And so having set strong foundations for the business, it’s finally time for to see rewards.

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