Whats the deal with private sale sites?

Off late this segment seems to be getting a lot of attention. See http://www.techcrunch.com/2010/01/28/private-sales-site-beyond-the-rack-raises-2-million/. Anybody has any insight on how this works? What are the drivers for the high end brands to give such deep discounts? Do they buy inventory and hold or does the brand do the order fulfillment etc?