I’ve written on the online private sales phenomenon before, and think that just like any innovative industry sector it represents lots of potential, but also challenges for the players in it. After reaching the point of saturation in the last year, the inevitable Darwinian process will take place. How many out of hundreds of sites moving discounted designer inventory will survive in the long term? Most definitely those who won’t make mistakes like Hautelook did this week. According to the breaking news announcement on SheFinds.com:

“…luxury watch and accessories brand Cartier filed suit against Hautelook for over $2 million. After secretly purchasing 5 Cartier watches from the site, Cartier claims that the products are “secondhand”, “damaged”, and possibly “unauthentic”. (Hautelook denies the claims.) Cartier also alleges that the items arrived in the wrong packaging “and/or are accompanied by defaced/damaged Certificates of Authenticity.”

Unfortunately I tend to believe the damage will be larger than just Hautelook brand, as it will force online shoppers for the first time to question the authenticity of these perfectly packaged and glamorously designed exclusive shopping clubs, marketed as the best kept secret only you and your friends should know about. It just proves how smart positioning and branding can easily mislead people, especially in the virtual world.

Online we are missing some of the authenticity proofs we have in brick and mortar stores – obviously if you are looking for authentic luxury items you won’t shop on Canal street, but rather on 5th or Madison. The store itself and its location automatically serve as a seal of approval for many brands and their authenticity. It’s much easier to replicate that experience online, when copying the slick design from Saks.com site can cost you under $1,000, if outsourced to off shore countries.

The problem is because of the hype of this new and exciting category of private sales, and the amazing job sites like Gilt have done to position the entire category as top notch premium experience, shoppers rarely questioned these sites as they would do others, who try to sell the same merchandise without the members-only label.

Unfortunately I believe from now on we’ll see more concerned and cautious shoppers across the entire category, who would think twice before buying into the “exclusive” members-only experience. This could position even stronger sites like Gilt, who have proven track record, direct collaborations with designers and partnership with Vogue, but smaller less established sites will definitely have to fight much harder to prove their place on the “virtual 5th avenue”.

As always, would love to hear your thoughts via comments or tweets @yuliz