categories

HOT TOPICS

Subscribe to our Feed

The 1M/1M Deal Radar 2010: Beyond The Rack, Montreal, Canada

Posted on Monday, Mar 15th 2010

It’s all the fun (and great clothes) of a sample sale without the crowds or the need to live in a big city. Montreal-based Beyond the Rack is private sale shopping club serving members throughout the United States, Canada, and other countries around the world. The company sells designer fashions, hosiery, underwear, swimwear, jewelry, cosmetic and beauty products, and accessories from recognized brands at prices up to 70% off retail.

Beyond the rack was founded by CEO Yona Shtern and his business partner, Robert Gold. Shtern has more than twenty years of experience of consumer marketing, e-commerce, and fashion as VP of marketing for Saks Fifth Avenue and Microcell and CMO of Ice.com, and Gold has had an equally long career in fashion and wholesale buying, experience that made entry into the shopping club space a natural move. The pair became aware of the shopping club model while on a business trip to Europe in mid-2008.

Merchandise is made available to members in the context of two-day, first-come-first-served events. Between five and eight new events are launched each day for a total of 35 to 56 a week. Merchandise scheduled to be sold from March 11-14 included Antique River jeans, Lauren G. Adams bangles, and Tom Ford sunglasses. Other brands represented are Fendi, Gucci, Marc Jacobs, Dolce & Gabbana, Coach, Police, and Rudsak. The company has sold products from over 500 brands.

There are a lot of good deals online, but Beyond the Rack aims to go beyond this by democratizing the sample sale market space: it’s no longer an urban privilege. The invitation-only club creates a sense of exclusivity and desire to join, and limited-time events create an air of excitement and urgency to purchase. The current economic climate provides additional incentive to save. The sense of urgency that the company creates combined with the scarcity of the individual products it sells is a potent mix.

The primary target market is women ages 25-49, with a secondary target of men in the same age range. Beyond the Rack is targeting aspirational college-educated women with a household income of more than $60,000 who are savvy online shoppers, interested in fashion and beauty, but don’t have much time to shop. People can join by receiving an invitation from a friend or signing up for the wait list at the company’s site.

A handful of U.S. clubs, notably Gilt Groupe, Hautelook, Rue La La, and ideeli were already in place. With the exception of Gilt Groupe, which targets a slightly higher-end, predominantly urban demographic, the other clubs were and are competing for the mainstream female online fashion shopper who wants brand-name apparel at a discount. New clubs are appearing on a regular basis. Beyond the Rack plans to  innovate by leveraging its inherent customer segmentation and database marketing expertise to deliver a more personalized, interest-driven shopping experience.

Beyond the Rack has more than 750,000 members and continues to grow. The company says that site traffic is currently in the range of one million page views per day based on 200,000 daily visits. According to compete.com, Beyond the Rack is the leader of the North American shopping club in terms of traffic.

For the past twelve months, both membership and revenue for Beyond the Rack are up 35% month-over-month. The monthly revenue run rate exceeds $2 million. The company says that EBITDA before marketing expense is approaching break-even.

Beyond the Rack has raised a total of $4.5 million: $1 million in February 2009, $1.5 million in July 2009, and US$2 million in January 2010, all from European Internet entrepreneurs Oleg Tscheltzoff and Oliver Jung; venture fund Montreal Start Up represented by John Stokes; and Machkor Holdings Ltd., represented by David Chamandy. The team is currently in discussions with U.S. venture capitalists about a fourth round of equity raising; the target closing date is within the next few months. The company would use the proceeds to fund continued exponential growth, and for general corporate purposes.

The plan is to increase the membership base to more than 2 million by the end of they year and expand the number of product events per day, by expanding the buying and merchandising team and vendor base. In terms of profitable growth, the company wants to achieve break-even before marketing expense as a very near short-term objective and break-even EBITDA within 12 months.

Beyond the Rack hopes to position itself for an IPO within two years, be a consolidator in the industry, or be consolidated by one of the larger players in the space.

Recommend Readings
Building A Vertical Ad Network Powerhouse: Glam Media CEO Samir Arora
Deal Radar 2008: Glam Media’s Fashion Forays
Deal Radar 2008: TheFind

This segment is a part in the series : The 1M/1M Deal Radar 2010

Hacker News
() Comments

Featured Videos

Comments

I bought a purse on the site, which warned that items could on occasion take up to 6 weeks to ship. Two months later I still have no purse and am running out of faith that I ever will receive the item that I bought for my friend's birthday, which has since been and gone. They also gave up on emailing me updates on my purchase about a month ago, does this mean I have spent money on something that I will not receive?

I continue to browse what the site has to offer but refuse to buy anything else until my package arrives. I do not want to give people money for no reason at all, especially in this economic climate (that is why I was searching for bargains in the first place.)

Ljg24 Tuesday, August 10, 2010 at 6:21 PM PT

Cannot believe you continue to browse and are considering another purchase. My order was 7/9/10 and finally on 7/24 they say they received my order and are inspecting it. 2 days later another email they are waiting for my order to be delivered to them. Have requested a refund and still waiting. Have disputed the charge with my credit card company as I have absolutely no faith in this company and will never try again. Only takes one burn for me. Worst online order experience ever. Their emails are just outright lies to string you along.

Terri Wednesday, August 18, 2010 at 9:49 AM PT

Gee I wish I had read these blog before I ordered a pr. sneaker I got the 1st message that they
received my order . then i got a message it would be processed in 2wk then today I got a message they did not have my size would I take another size I said yes now I am waiting
to see if I get these . One thing for sure I will not order anything from them again.

Delores Wednesday, September 22, 2010 at 12:42 PM PT

I purchased a portable television that took a month to arrive. The television does not work properly. It was advertised for $109. While I was waiting for it to arrive, I observed that other stores marketed the same television at an even lower price. I had a 14 day window to return the product. I spoke with support with the television company. They were no help. BTR told me that since it was the 21st day, there was nothing that they could do. So much for customer satisfaction. I will cancel my subscription.

Paa Wednesday, October 20, 2010 at 2:06 PM PT

I ordered two remote control helicopters on Sept 21st. I received one last week and still have not received the 2nd one due to color not being available and I had to choose another one. I got an e-mail that is being shipped from Canada only to find out it is actually being shipped via FedEx. When I asked not to just leave the package at my door but to get a signature I was told that if it was under $200.00 they would not do it. I then asked to have the package left at the FedEx office and I will pick it up there I was told that FedEx will deliver it to my local post office and I need to call them to pick it there. I also ordered a pair of sandals on Sept 25th which I never received so I just cancelled that order. It's a good thing the helicopters are for Christmas presents so hopefully I'll get them by then! I will be cancelling my subscription to this and apologizing to the people I invited to join. I did not realize it would take this long. This is ridiculous and not worth the trouble and being charged $10.00 for delivery!

PFM Monday, November 1, 2010 at 7:07 AM PT

Beyond the Rack takes over five weeks to even notify you that they shipped your product which takes another week. HauteLook, Ideeli, Gilt, etc you have your items with two weeks. Also Ideeli will respond to your inquiry with two hours, Beyond the Rack takes over four days. If Beyond the Rack wants to stay in business I suggest they learn from the leaders otherwise, they will not survive. I rate them zero out of ten. THEY SUCK!!!!!!!!!

shellcatt Thursday, January 13, 2011 at 7:40 PM PT

While I agree that BTR events do tend to take a while to arrive (yes, more than a month sometimes), I have yet to have an order not complete.

All of my orders have been shipped in custom BTR packaging and have arrived in perfect condition. I have completed three orders between 10/7/10 – 10/16/10. I have a fourth order on it’s way.

Speaking for their customer service, on the one hand, responses to the web form are either 3-4 days (of which they warn you), or nonexistent. This should be addressed.

On the other hand, for my fourth order, I needed to redirect the shipment (FedEx) because I moved between the time I placed the order and the time it shipped. This isn’t their fault, yet when I called today, a lady named Porsche called FedEx to check on the ability to perform a delivery intercept. FedEx said this wouldn’t be possible because the addresses are in two different states, despite being only about 10 miles apart (VA > MD). Porsche told me that when the package is refused (and returned to BTR), she will have it reshipped (at BTR’s expense) to my new address. This is above and beyond service.

In conclusion, my experience of BTR is this:

They consistently have brands and items that I am interested in more so than similar clubs of which I am also a member, including Gilt, Ideeli, Rue la la, and Shop it to Me, (I just signed up with HauteLook, so I can’t speak for them yet). Consequently, I have ordered more from them than the others.

They are slow at getting products to consumers. Slower than any of the others I have used. Considering that some of the brands they sell don’t wind up on all of the other shopping clubs (this happens often among the clubs I’ve listed), I don’t mind the wait too much. It’s not like anything sold at these clubs is a “need” anyway. Still, it would be nice if the process was a little faster.

Their electronic contact form yields slow to no response. This is going to work against them. I’m sure they are aware of the situation. Hopefully they are working on it.

My one experience with a live person was great. She was very pleasant and helpful. She didn’t make me feel that I was putting her out to make the call to FedEx. This experience alone will help them retain me as a customer.

According to industry reports, they have experienced more growth than many of their competitors and I believe that this is one of the main contributors to the negative experiences of other commenters here. Although, while it may be a reason, it should not persist as an excuse.

For those that have never received an order, I would call them.

Brian K. Friday, January 21, 2011 at 11:54 AM PT

Beyond the Rack is the WORST COMPANY I have ever done business with!!!! If you go to their "Facebook others" page and complain you will get a response. I am not sure if they will follow through with my refund. Al l know is they have had my money long enough and there are so many others who are fed-up also :(

julia Friday, January 21, 2011 at 12:44 PM PT

Wowwww, un believable..I thought I was the only one..I ordered 2 pair of boots on 12-16-10 and it is now 1/26/11 and I have still not received them..I have called a few times and no one can give me a straight answer as to where my shoes are. Im being told it shows its on back order or its in pending status and you should receive them shortly..Well guess what I was told that last week and shortly hasnt happend yet

Tiffany Tuesday, January 25, 2011 at 8:14 AM PT

They are impossible !! i have ordered from them and they took forever !! and now i cant get credit on things i sent back ..what is up with that ?? NEVER AGAIN !! THIS COMPANY IS OUT TO GET YOU..

BOB BRADY Monday, January 31, 2011 at 10:05 AM PT

I now have an order that has been over 4 wks and still nothing. I really wish that i would have looked at the responses before purchasing, now i do feel like I got burned. This sucks because it was a surprise for my mom and I don't have more money to get her anything else.

ali Tuesday, March 1, 2011 at 4:03 PM PT

Yes, I agree that you can certainly wait FOREVER to receive your order from "Beyond The Rack" but, I am also wondering, has anyone ever purchased a high end designer item from them only to later find out the hard way that said item, let's say a "designer handbag" was a counterfeit item??? Just wondering, does Beyond The Rack sell fake designer items that they portray as authentic? ANY FEEDBACK???
DUPED in Cleveland??

Duped in Cleve.? Thursday, May 5, 2011 at 7:46 AM PT

YES, I too have been duped. I have received fake designer jeans (Taverniti, uido and Mary and Domino brand), several pairs ( I know they are fake because I have the authentic brand name jeans in my closet for comparison; the same styles) and some shoes. At first I thought I could have been mistaken however my girlfriend and I did a little experiment. She ordered a pair of designer shoes from Beyond the Rack, I ordered the same pair from another online retailer. We received the items and compared them and the quality was drastically different. Mine were nice soft supple leather, hers were terrible quality, although they were labeled leather , the shoes were more like man made hard PU. The metal accents were different as well, my pair were definitely solid steel and the metal accents on hers were a cheap flimsy tin. The only thing that was remotely comparable was the box they came in; even the tissue paper the shoes from Beyond the Rack came in was cheaper scratchy paper.

The jeans; OMG what a nightmare. Beyond the Rack refused to admit to anything of course. They tried get me to send the fake jeans back but I wouldn't. I wanted to keep them for evidence hoping that I would find a few other people over the internet who have had similar experiences.

The consumer is being ripped off here so please if you have had similar experiences post your story here and or leave your email address and I will contact you. There are thousands of complaints against Beyond the Rack yet they are still in business and making a profit. Something needs to be done about this company ripping off consumers.

Dear duped in Cleveland, what did you buy? What brand? I would like to hear the full story!

Guest Monday, May 30, 2011 at 9:50 AM PT