My impression of the CEO of One Kings Lane from his tanned, jolly Twitter photo was not at all congruous with the tall, shrewd figure I saw on stage. This man looked as if he planned to deliver a great talk, and he did. I found Doug Mack’s talk to be one of the more clear and compelling ones from the FedEx Social ECommerce Event and, given my recent interest in private sale sites, I was also pretty interested to hear what he had to say.

Mack reported that 15% of home decor will be sold online by 2015. Sales would be derived mainly from women customers who are much more social (read: viral) users than men.

One Kings Lane (OKL) started out in 2009 and now boasts 2M members. Their business encompasses both Silicon Valley AND Silicon Alley. The company also reports that 75% of their sales come from repeat shoppers.

So why all the growth for private sale sites? Mack explained 4 factors, or what he called “pillars”.

1) Cultivating a Daily Habit and some Serendipity vs. Occasional Hunting behavior
I admit that I don’t perceive OKL’s daily morning emails as junk. Instead, I want to see what goods they have curated and consider to be tasteful. I WANT exposure to beautiful things.

2) Curated Selection vs. Massive Breadth
Mack talked about the paradox of choice. Too many and we fall apart. Curated goods get more screen real estate and are celebrated more. Apart from that, I think it’s the bread and butter of these experts to know what is good; I expect them to deliver on their years of experience. Trust and reputation in the curator is critical here.

3) Urgency and Fun vs. Pure Convenience
I don’t know if I would be into this personally, but I can see how the game mechanics here can be exciting for many avid shoppers. You know there is a limited quantity of the item; you also see items selling out; you want to be the one to snag it over the others. Follow up thought: wouldn’t it be great if some of OKL’s customers chose to be public, and customers could actually SEE who got what items and have a discussion around it? Would probably add a lot of drama to the shopping experience and not all positive, but hey, those who don’t need it don’t need to go public.

4) Social Commerce vs. Shopping Alone
Everything became “social” as soon as customers started posting ratings and reviews about their purchases. “It’s a Darwinian world we’re living in,” Mack said in a kind of reverential but happy tone, referring to how the great companies will succeed faster and the not-so-great will tank faster.

From a business operations perspective, what’s so special about a private sale site? Mack shared with us having to undo all of his previous learnings on how an ecommerce site works:

• OKL has unique merchandise 365 days a year so there is no such thing as keeping inventory.
• Nor is there a real supply chain. Mack called it “transient supply” and described it as “complex”. OKL’s 3rd party logistics providers and FedEx need to work together to get the product from supplier to customer. I imagine the purchased supplies getting shipped in bulk to a distribution center somewhere in the states and then going out via FedEx. I am also imagining a lot of customer with VERY high expectations surrounding the delivery of these unique goods.
• Off-the-shelf/standard tech solutions will break. Everything has to be custom developed.
• Customers are dying to hear from OKL. Mack previewed some customer emails demanding to be put back on the mailing list.
• Suppliers win. Gives them exposure, brings new sales to their own sites, and gives them access to the coveted retail distribution channels.

Where is the private sale industry going?

I couldn’t say it was all that clear or obvious to me, but Mack believed that only the first movers could win at this point, that there would be leveraging of big data, and that segment leaders would start moving into new verticals, new geographical markets and adopt new business models.