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Private label sales: What you need to look out for

CREATED Apr 14, 2014

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Shopper Lora Tusinski says she's saved hundreds of dollars on designer items on flash sale sites. When a 'Barrow and Grove' sweater caught her eye, she ordered it right away from gilt.com. What Lora didn't know... 'Barrow and Grove' is actually a private label owned by Gilt.

"When I bought the item, no, I didn't have any idea."

Lora's sweater is one of hundreds of products popular flash sale and discount websites are now creating.

A review of federal records reveals: Rue La La, One Kings Lane, Zulily, Ideeli and Gilt all applied for, or registered trademarks for, items that range from clothing, to jewelry, to home goods.

Melissa Davis is with Shopstyle. She explains, "It's a big trend that we're seeing, and I think we will continue to see retailers sell more exclusive products."

So, why are some online sale and discount sites now selling exclusive private label merchandise? Experts say: Businesses make more money selling their own products. Now that the economy is improving people are paying more for luxury goods, so there's less inventory for discount and sale sites.

Online retail expert Lauren Freedman adds, "In tighter inventory times it gives them a chance to maybe sell a range of goods that's a little bit broader, and I think there's an opportunity to that potentially some of that product could be great product."

Gilt, which filed the most trademarks in a review of the flash sale and discount sites, says: "With six years of sales history, we know exactly what our members are looking for and our private label merchandise serves our more intent-based shoppers."

Those in the 'e-tail' biz say these sites closely watch what shoppers buy. Says Davis, "From consumer trends they've known throughout the years what people are looking for, and what they're missing."

Not all sites make it clear they're the makers behind some of the products they sell, and that original price you see next to the discount is what retailers value the item at, even if it might not have ever been sold at full price.

So should discount websites be more upfront? Freedman notes, "I don't think its necessary, but it certainly can't hurt and it makes it more transparent to the consumer and, you know any time you make something more transparent I think its positive for the shopper."

To make sure your online shopping experience is positive, experts say when ordering a new brand: -Research similar items for sale to make sure the one you want is competitively priced

-Check out online reviews

-Know the site's return policy, since some will only issue you a credit

Lora says now that she knows about this new private label trend, she's willing to give other items a try.

"It's just another designer out there, somebody put their hard work into making this."

Retail insiders point out that many department stores have been selling their own private labels for years, and sometimes those aren't advertised as store brands.