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More Buy-In For Buying Clubs: Brands4Friends Invests In SecretSales

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Yet another deal among European online buying clubs in the space of a few short months. This time, it’s one club taking a stake in another, rather than a VC investment.

Brands4friends.de, an online shopping club in Germany, has taken a “significant” investment in Secret Sales, a buying club in the UK. Terms of the deal were not disclosed but TechCrunch is reporting it to be in the “multi-million” pound region.

The investment will help Secret Sales with its “aggressive” growth strategy in the UK, Nish Kukadia, the co-founder and CEO of Secret Sales, said in the release (PDF in German), while the deal also gives brands4friends a foothold in the UK online shopping market.

Brands4friends.de made €80 million in sales in 2009, a three-fold increase on the year before, and it ranks as the biggest online shopping club in Germany and Austria, the two markets where it already operates. It became profitable within two years of its launch in 2007 and has 2.5 million members and currently stocks products from around 400 fashion brands.

The rapid growth of brands4friends.de demonstrates how the market for buying clubs is still relatively nascent. It is picking up 10,000 users a day, with about half of those coming on viral recommendations. It’s also telling that the average age of the users is 32: that older bracket means that there may be more money spent by the average user.

Secret Sales was also founded in 2007 and sells products from about 450 fashion, lifestyle, household and leisure brands. No word how many active users there are, or details on the company’s turnover, but this afternoon when we logged on there were about 11,600 members connected.

There have been a number of other deals in online sales clubs recently although mainly in the form of VC investment: In January, Mycitydeal picked up €4 million from eVenture Capital Parnters, Rocket Internet and Holtzbrinck Ventures (which also coincidentally backs brands4friends); the Russian site KupiVIP.ru raised $20 million, and last May Spain’s Privalia got €8 million.

France’s Vente Privee is by far the biggest of these all with revenues of around €650 million annually. Tech Crunch says that Amazon (NSDQ: AMZN) has been courting it, eager to move into the buying clubs market.

Feb 18, 2010 12:11 PM ET

Brands4Friends logo Photo: www.brands4friends.de


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