Private sales, “private events” or “spot sales”, as are they’re often called, are becoming increasingly popular amongst online business owners who want to simultaneously move excess stock and keep their names valuable in customers’ eyes.

Is it a trend? Well, if the …

a) amount of workshops designed to teach business owners about the ins-and-outs of private sales and the

b) number of services offered to help organize private events from invitation allotment to after-party cleanup

are any indication…then, yes.

All of this proves that online private events aren’t as “out there” as they may have seemed just a few years ago. And really, I’m surprised they took so long to catch on- especially considering their success in Europe.

Some background:

Private events are characterized as having limited goods and opportunities to buy those products at real or perceived “premium” prices. Invitations are few and lead times for the sales are usually only a week in advance. It goes without saying that the time frame during which to buy is finite- and that adds to customers’ sense of urgency to buy.

Private sales have four main effects:

1. They put customers in front of your inventory
2. Customers believe that they’re part of special opportunity
3. Stock’s perceived value is increased
4. Customers feel urgency to snap up the products before they’re gone

You can probably see why private sales have become something that business owners are interested in.

But what’s great about these effects is that they can be maximized. How? Well…

Updating websites in real time

Updating a website to reflect purchases as they occur only increases the sense of urgency that your customers are likely to feel. However, the way in which you update the website can drive up sales even more. For example, instead of taking a product off the available products page after it’s been sold, you may want to instead replace its “Buy Now” button with a big “sold out” note. Remember that your customers enter your private sales under the impression that they’re competing against an unseen number of other buyers for a few products…so play up on that.

Choosing the right discount percentage

Discounts offered at 30%-70% are often enough to entice loyal customers and prospects alike. Because customers can be logged, you can track their shopping habits closely and gain insight into how well certain products go over with them. And because your products are offered so appealingly, private sales can be the best ways to encourage conversions.

Going viral

Because private sales are mostly developed around popular brands and high-ticket items, there is the idea that customers with higher discretionary income are more likely to respond to private sales. Microsites are often the answer for established online businesses with private sales geared towards that sort of customer base. But what about average retailers that may not have the resources that their larger counterparts do? Kristina Knight suggests harnessing the power of social networks to segment target markets and get the word out about the sales.

Protecting exclusivity

If you’re worried about the exclusivity factor (how does anyone keep anything private on the Internet?), you’re not alone. Customers are, too. They know that once invitations hit the Internet, there’s a good chance that they’ll become open to anyone capable of using a search engine.

But you can protect the exclusivity of your sale and your customers’ desire to participate in it by only allowing customers who’ve received a legitimate invitation to participate.

There’s also the option of allowing only registered customers to send out invitations of their own. The way these can be tracked is up to you, but some businesses use numbers- a certain number of unique codes that customers can give to friends that can be used to gain access to the sale. Think of them as secret passwords capable of being traced back the original holder.

And that’s the great thing about unique codes- their trackability. It means that you can reward your customers for bringing in more customers (maybe through higher discounts). On the other hand, it can help you decide whether or not you want to invite certain customers again if you find that your sale has been devalued by the posting of unique codes on the Internet.

Private sales aren’t without their criticism, of course. Many have pointed out that private sales might be harder pull off if you’re a smaller business or if you don’t employ a strong marketing force. Even extensively discounted merchandise needs to be advertised so that it can move.

But when the alternative to getting rid of excess stock is eBay, where’s the money in that for you? And where’s the fun in that for your customers?