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Belle & Clive Jumps Into Luxury Retailing in a Flash

Online clothing retailer Bluefly has mastered the art of the Manhattan launch party. Mix one part product-adorned models with names like "Chanel Iman," one part A-list clientele with purchasing power, and one part bottomless cocktail, and Belle & Clive has officially entered the marketplace.

Belle & Clive
Belle & Clive
Belle & Clive

The flash sale fashion marketplace, that is.

Belle & Clive, whose call to click is "Adorn," is being launched Tuesday by parent retail veteran Bluefly, who is claiming that its long-established relationships with "the most coveted designer brands" will give competitors like Gilt Groupea run for its money.

To prove it, Belle & Clive is going upscale on day one, with a product list from the likes of Chanel, Louis Vuitton, Miu Miu and Bottega Venetta.

But why now? Launching into the online flash sale or daily deal scene is to launch smack into the middle of an extremely crowded, unproven space.

Gilt Groupe has not turned a profit in five years of operation. Daily deal site Groupon is projecting a fourth-quarter loss, and Angie's List incurred a $27.2 million loss last year. This was significantly larger than its $11.9 million loss in 2009.

Bluefly CEO Melissa Payner says her launch is deliberate and well timed. She's watched and waited as others made cardinal mistakes with deep discounts, and severed important relationships in the process.

"It's not about being a low-priced leader. Prices are really important to customers, but they can't be unbelievable," said Payner. "It's not sustainable because it's all about establishing a relationship with the brands. We know how brands need to be treated, which is why we have over 350 designers."

In a slowly improving economy, deep discounts are not the only mistake vendors make. Over-hyping incentives to buy can prove disappointing, and easily turn away cutomers.

"I have only bought one thing from Gilt Groupe and I had a credit from referring a friend. Their prices are not really 'deals,' and the shipping is too expensive," said online shopper Elena Nikolova.

Belle & Clive is also a membership model, giving customers incentives to invite friends. They don't however, intend to counter the flash sale customers' most common complaint: that the best merchandise is often already sold out.

"That's the idea of a flash sale. We want to get an urgent reaction. Get there quick, or it will be sold out. They'll come back for the brands," adds Payner.

Bluefly, having incurred losses since 2007, is now trending towards profitability. Revenue increased over $7 million to reach a total of $88.5 million in 2010. Right now the company is a penny stock.

The launch of Belle & Clive, however, may increase investor attention and change the course for parent company Bluefly.

"It's an easy space to get into, but it's a very difficult space to really scale unless it's your core business," Gilt Groupe Chairman Susan Lyne said of the flash sale market.

Bluefly's core business is betting on it.

Questions? Comments? Email us at consumernation@cnbc.com.

Retail