Private equity firm Apollo Global Management will take Rackspace private in the all-cash deal.
Invitation-only site for Generation Z generates revenue from e-commerce and advertising.
Liberty Interactive’s Lockerz.com, an invitation-only site that generates revenue from both e-commerce and advertising, signed 17 million members in the 12 months following its launch in June 2009, according to Lockerz CEO Kathy Savitt.
The web site—targeting so-called Generation Z, men and women between the ages of 13 and 30 years—began e-commerce operations earlier this year. It offers social networking, games, music and videos.
“Our goal is to be the home page for Generation Z,” Savitt said during Liberty Interactive’s recent annual investor’s conference. “We believe they will be the most disruptive generation of consumers in history because of their territorial nature, the way they use the Internet and the way their brand loyalty has more to do with how they discover things rather than just something they’ve done forever and ever.”
Lockerz sells trendy items such as designer gear, electronics, accessories, and sports equipment and plans to offer digital products such as music, videos, art and decals.
“We actually will have a department store that is perfectly targeted to a 20-year-old,” Savitt said. “Every 13-year-old wants to be 20, every 30 year old still thinks she’s 20. We essentially have everything from soup to nuts that you would want to buy.”
While in the process of building its specialty retail business, Lockerz also is generating revenue from what Savitt calls its “uberloyalty” system known as Pointz. Lockerz members earn rewards points by watching videos and viewing ads on the site. Recent videos, developed by Lockerz, had titles such as “Who knows your darkest secret?” and “Do you like a band more if they’re underground or popular.” Members also can redeem the Pointz for prizes, free shipping, entries into Lockerz sweepstakes and other rewards.
“The more videos you watch, the more you engage with our ads, you can actually drive down your prices” for items on the site, Savitt said. Lockerz earns revenue for each ad viewed on its site.
“Because while our commerce business—once we get that cooking—will certainly be like a specialty retail commerce margin business, the advertising hedge is where we really think we’ll be able to build the company to more of a significant margin play,” Savitt said.
Liberty Interactive is a subsidiary of Liberty Media Corp, No. 11 in the Internet Retailer Top 500 Guide. Liberty Interactive e-commerce sites also include QVC.com, ProFlowers.com, BackCountry.com, BodyBuilding.com and RedEnvelope.com.