Online retailing giant Amazon is to close Buy VIP, the shopping club it acquired seven years ago.
The company had paid €70 million for the Spanish company that at the time had 6 million members and a turnover of €130 million, and focused on selling out of season stock at discounted prices.
It had high hopes for expansion, but a spokesman said the business had remained unprofitable.
Retailing analyst Mirco Warschun at AT Kearney said Amazon had failed to attract the very top brands that could be sold to a select customer list.
Buy VIP had been relatively successful in Germany: a study by consultants EY showed that 20 ercent of online shoppers had visited the site. Some 17 percent of shoppers meanwhile had visited a similar club run by Rocket Internet startup Zalando, called Zalando Llounge, and ebays brands4friends had attracted 16 percent of online shoppers. Germany's Otto group has also managed to set up a successful site Limango, which hit sales of €152 million last year.
Amazon’s key mistake appers to have not curated the contents of the site carefully enough. Customers of these upmarket shopping clubs want a few, carefully selected offers. Amazon flooded them with deals. Amazon also offered the service to its Amazon Prime customers, and undermined its air of exclusivity.
Florian Kolf leads a team of reporters covering the retail, consumer goods, luxury and fashion markets. To contact the author: [email protected]