This web app uses cookies to compile statistic information of our users visits. By continuing to browse the site you are agreeing to our use of cookies. If you wish you may change your preference or read about cookies

close

Why Privalia's Business Model is so successful?

Get all the answers

Embed code:

x
Copy the code below and embed it in yours to show this business model canvas in your website.

Privalia’s Company Overview


Privalia is a leading online fashion and lifestyle retail platform headquartered in Barcelona, Spain. Founded in 2006, the company operates as an online outlet store, offering customers access to top brands at highly discounted prices. Privalia operates in several markets including Spain, Italy, Mexico, and Brazil, offering a wide range of products from clothing and accessories to home decor and electronics. The company's mission is to inspire people globally to express their personal style and make the best fashion and lifestyle brands accessible to everyone at unbeatable prices.

Privalia's business model is based on the flash sales concept, where it sells products from renowned brands at discounted prices for a limited period of time. The company acquires products from brands at a lower cost, usually surplus stock, and sells them to the members of their private online community. The flash sales typically last between 3 to 5 days, creating a sense of urgency for customers to make their purchases.

As for the revenue model, Privalia generates income primarily through the sale of products. The company purchases products at a discounted rate from brands looking to clear their inventory and sells them at a higher price point, though still lower than the original retail price. This difference between the purchase and selling price is Privalia's main source of income. Additionally, Privalia also earns revenue through shipping fees charged to customers. The company has also introduced a premium subscription service, Privalia Unlimited, offering members benefits such as free shipping and early access to sales, providing an additional revenue stream.

https://www.privalia.com/

Headquater: Barcelona, Barcelona, EU

Foundations date: 2006

Company Type: Private

Sector: Consumer Services

Category: eCommerce

Digital Maturity: Fashionista


Privalia’s Related Competitors



Privalia’s Business Model Canvas


Privalia’s Key Partners
  • EBay (owner)
  • Investors
  • Suppliers
  • Brands
Privalia’s Key Activities
  • Sales
  • Marketing
  • Procurement
  • Inventory management
  • Business development
  • IT maintenance
  • Customer service
  • Legal
  • Financial
  • Quality
  • Human Resources
  • Operations
  • Traffic acquisition
  • Advertising
Privalia’s Key Resources
  • Brand
  • Platform
  • Community
  • Networking
  • Expertise
  • Technology
  • Employees
Privalia’s Value Propositions
  • Privalia is the leading online-fashion outlet in Spain and Italy and is present in Brazil and Mexico as well
  • Privalia is a website that organizes short-term sales campaigns for top brands at discount prices
  • The best brands in the world at unbeatable prices
  • "cool shopping" experience
  • To offer its members the best deals in fashion and home products
  • To provide the best online shopping experience to its members
  • To offer the best brands at unbeatable prices to its members
  • To provide the best customer service experience to its members
  • To offer the best deal to its members
  • To offer the best job to its employees
  • To be the best company for its suppliers
  • To be the best investment for its shareholders
  • To be the best company in the world
Privalia’s Customer Relationships
  • Recommendation
  • Word of mouth
  • Social media
  • Online and offline channels
  • Customer service
  • Self-service
  • Co-creation
  • Personal assistance
  • Customer satisfaction
  • Customer feedback
  • Customer support
  • Customer loyalty
Privalia’s Customer Segments
  • Massive market
  • Women 25-45 years old
Privalia’s Channels
  • Website
  • App
  • Social networks
  • Blog
  • PR
  • Events
Privalia’s Cost Structure
  • Cost of goods
  • Platform development
  • IT infrastructure
  • Staff
  • Marketing
  • Logistics
  • Distribution
  • Customer service
  • Taxes
Privalia’s Revenue Streams
  • Privalia is a private online shopping club which organizes 3-day sales of branded products with discounts of up to 70%
  • The company earns from the commission on the sales it makes to its customers
  • It's free for customers to join
  • Privalia Unlimited subscription offering members benefits such as free shipping and early access to sales

Vizologi

A generative AI business strategy tool to create business plans in 1 minute

FREE 7 days trial ‐ Get started in seconds

Try it free

Privalia’s Revenue Model


Privalia makes money by combining different business models. Below, you will find the list of the different monetization strategies identified for this company:

  • Online marketplace
  • eCommerce
  • Subscription
  • Fast fashion
  • Discount club
  • Group buying
  • Curated retail
  • Customer loyalty
  • Digital transformation
  • Cross-selling
  • One-off experience
  • Ultimate luxury
  • Reseller
  • Niche retail
  • Remainder retail
  • Spectrum retail
  • Channel aggregation
  • Channel per purpose
  • Cash machine
  • Demarketing
  • Digital
  • Fashion sense
  • Ingredient branding
  • Long tail
  • Regular replacement
  • Self-service
  • Brands consortium
  • Lean Start-up
  • Membership club
  • Mobile first behavior
  • Experience
  • Experience selling
Analytics


Market Overview
  • Patterns
  • Sectors
  • Categories
  • Companies
  • Right click on the nodes to explore

Privalia’s Case Study


Privalia's CASE STUDY

When we think about companies that have redefined the eCommerce landscape, Privalia stands out as a compelling success story. Established in Barcelona, Spain, in 2006, Privalia has emerged as a leader in the online fashion and lifestyle retail sector, operating as a premier online outlet store. The company's journey from inception to becoming a key player in multiple markets, including Spain, Italy, Mexico, and Brazil, offers valuable insights into innovative business strategies and effective market penetration.

The Genesis of an Innovative Model

Privalia’s foundation was built on a simple yet transformative business model: flash sales. Inspired by the necessity to provide customers with top brands at discounted prices, the founders envisioned an online marketplace where surplus stock from renowned brands could be sold quickly and efficiently. This concept not only benefited customers, but also addressed the problem of excess inventory for brands. According to a Harvard Business Review article, surplus inventory can represent 20-30% of a retailer's total inventory, leading to financial strain and storage issues (HBR, 2022). The company's business model revolves around procuring surplus stock at lower costs and offering these products to their private online community via flash sales. These sales, often lasting between three to five days, create a sense of urgency among customers—a psychological trigger well-documented in consumer behavior studies (Cialdini, 2009). This time-sensitive model has proven highly effective in driving quick purchases and maintaining a dynamic sales environment.

Privalia's Unique Value Proposition

In an industry as competitive as eCommerce, Privalia’s differentiation lies in its razor-sharp focus on delivering exceptional value to its customers. What truly sets Privalia apart is its curated retail experience. Each flash sale campaign is meticulously planned, offering members access to top-tier brands at prices significantly lower than retail. For instance, discounts can reach up to 70%, a figure that far exceeds typical promotional markdowns (Privalia, 2023). Additionally, the company's mission—to inspire global personal style by making the best fashion and lifestyle brands accessible at unbeatable prices—resonates well with consumers. This mission translates into several customer-centric value propositions, such as offering a "cool shopping" experience, delivering quality and variety, and simplifying the shopping process. These elements collectively drive high customer satisfaction and loyalty.

A Multi-Faceted Revenue Model

Privalia has demonstrated a keen understanding of diversified revenue streams, which has been critical to its sustained growth. Primarily, the company generates income through the sale of these discounted products. By purchasing at reduced rates and selling at higher, yet still competitive, prices, Privalia maintains a robust margin. Additionally, revenue from shipping fees contributes to the company’s financial health. Recognizing the potential to enhance customer value and loyalty, Privalia introduced Privalia Unlimited—a premium subscription service. For an annual fee, subscribers enjoy benefits such as free shipping and early access to sales. This not only adds a stable revenue layer but also fosters deeper customer engagement.

Leveraging Digital Transformation

Digital transformation lies at the heart of Privalia's operational success. The platform’s digital-first approach is evident in its seamless user interface, intuitive mobile application, and strategic use of data analytics for personalized customer experiences. The company uses advanced AI algorithms for inventory management, optimizing sales campaigns, and predicting customer preferences. As noted by McKinsey, companies that successfully leverage data in such ways see up to 5-10% increases in sales and 2-5% improvements in overall productivity (McKinsey, 2021). Furthermore, Privalia’s strategic use of social media and digital marketing amplifies its reach and engagement. With a robust presence on platforms like Instagram and Facebook, Privalia taps into the power of word-of-mouth and social proof, essential elements for sustaining interest and driving traffic to its flash sales.

Cultivating Customer Relationships

Understanding the need for strong customer relationships, Privalia has invested significantly in nurturing trust and loyalty among its user base. Their customer service team offers personalized assistance and addresses queries promptly, while automated systems efficiently handle routine interactions. The company also actively seeks customer feedback and leverages it to improve the shopping experience continually. Word-of-mouth and recommendations form a cornerstone of Privalia’s customer acquisition strategy. Satisfied customers often share their experiences, attracting new members to the platform. A survey by Nielsen highlighted that 92% of consumers trust recommendations from friends and family over other advertising forms (Nielsen, 2022), underscoring the potency of this approach.

Strategic Partnerships and Growth

Privalia’s strategic alliances have substantially bolstered its growth trajectory. Partnering with eBay, brands, and investors has provided necessary capital, technical expertise, and market penetration opportunities. These partnerships enabled Privalia to navigate complex markets and scale operations efficiently. Specifically, eBay's investment in Privalia was pivotal, offering not just financial backing but also strategic insight crucial for global expansion (eBay, 2020). The company's flexibility and adaptability have facilitated entry into diverse markets like Brazil and Mexico, each with distinct consumer behaviors and industry dynamics. By localizing its operations and aligning with regional preferences, Privalia successfully captures market share and drives sustained engagement.

Conclusion: A Blueprint for Success

Privalia’s journey exemplifies how innovative business models, underpinned by strategic agility and customer-centricity, can thrive in the competitive eCommerce landscape. By offering a unique value proposition through flash sales, leveraging digital transformation, and nurturing strong customer relationships, Privalia continues to set benchmarks in the industry. The success of Privalia stands as a testament to the power of strategic vision and operational excellence. For businesses aiming to scale in the digital age, Privalia's case study provides invaluable lessons in harnessing the full potential of technology, fostering customer loyalty, and maintaining financial vitality. By focusing on what truly matters—providing unparalleled value to customers—Privalia has not only carved out a niche for itself but has also set the stage for future growth and innovation in the eCommerce sector.


If you enjoyed this content, you’re in for a treat! Dive into our extensive repository of business model examples, where we’ve dissected and analyzed thousands of business strategies from top tech companies and innovative startups. Don’t miss out!

+100 Business Book Summaries

We've distilled the wisdom of influential business books for you.

Zero to One by Peter Thiel.
The Infinite Game by Simon Sinek.
Blue Ocean Strategy by W. Chan.