The model is only viable as long as companies feel that the discounts aren’t harming the brand.

“At first we weren’t into being a part of this and marketing our brand on anybody’s Web site,” said Joseph Cabasso, vice president of Mario Badescu, which has been a partner with HauteLook and the Gilt Groupe. “Our first sale on Gilt was last July and we did phenomenally,” he said. “Since we never discount, I knew that offering our customers 20 percent off would make them happy. So, I thought we’d try it once.”

via Skin Deep – Prospect of Deals Is the Attraction for Members-Only Sites – NYTimes.com.