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Gilt Without the Guilt: Gilt Groupe and the Business of Online Flash Sales

someone shopping online

Looking expensive can be – well, expensive. A lot of women fancy wearing a pair of Louboutin pumps, designer dresses, and limited edition handbags. But the hefty price tags attached to high-end brands have made luxury items accessible only to celebrities and ultra-rich individuals.  Thanks to Gilt Groupe, a luxurious look is now achievable at half the price.

The launch of Gilt Groupe online shopping was a bold move. Capitalizing on the intersection of technology and fashion, the founders of Gilt Groupe thought of bringing coveted brands, items, and experiences to online shoppers at insider prices. Gilt Groupe’s groundbreaking online flash sale concept made designer labels such as Armani, Balenciaga, Chanel, and Manolo Blahnik were made more reachable. Gilt Groupe online shopping ushered in a new business model and gave luxury brands an avenue to reach a broader market segment while keeping its luxury status.

Turning Flash Sales into a Global Startup Venture

In 2007, five entrepreneurs – Alexandra Wilkis Wilson, Alexis Maybank, Dwight Merriman, Jason Binn, Kevin Ryan, and Michael Bryzek launched an online store for luxury goods. Inspired by the sample sale events or flash sales held by designer brands in New York, co-founders Alexandra Wilkis Wilson and Alexis Maybank thought it would be a great idea if they can bring the concept to a broader consumer group.  On the other hand, serial entrepreneur, Kevin Ryan came across Vente-Privee, a successful online fashion retailer in France.

Later joined by technology experts, Dwight Merriman, Jason Binn, and Michael Bryzek – the team launched Gilt Groupe online shopping to become the next startup buzz. For its Series A Funding in November of 2007, Gilt Groupe was able to raise $5M. By 2015, Gilt Groupe has been the recipient of a total of seven funding rounds raising a total of $286 million.

The Flash-sale Model: Shop Now before It’s Gone

The initial concept of Gilt Group was a members-only, online platform luxury brand sales for limited items and within a limited time only. Partnering with leading luxury brands – Gilt Groupe consigns a few inventory items offered at a very steep discount as high as 75%. The strategy was working well – online shoppers eager to lay their hands on the best deals wait at the virtual gates of Gilt Group. At noon – the time of publication of new deals, shoppers race to add items into their cart.

Soon, the shop-now-before-it’s-gone model of Gilt Group was picked up by competitors. HauteLook, Zulily and Rue La La are some of the names that joined Gilt Groupe in the online flash-sale space. Along with increasing its customer base, it has also expanded its offerings. Gilt Groupe launched other online flash sale sites such as Gilt Home, Gilt City, Gilt Children, Gilt MAN, and Jetsetter.

Why Brands Trust Gilt Group?

Gilt Groupe is a host to hundreds of luxury brands. From Alberta Ferretti to Zac Posen, Gilt Groupe has earned the trust of the biggest names within the fashion circle. With three billion online members, brands have recognized Gilt Group as the leading online platform to best showcase their brands.

Undoubtedly, the online retail store lives up to these expectations. Each designer item is styled, photographed, and touched up before it hits the store’s website. The company employs an army of models, stylists, photographer, and editors working meticulously. With an editorial treatment for each item, inventory moves from Gilt Groupe’s warehouse to their customer’s closet in no time.

After the Hyper-growth, What’s Next for Gilt Groupe?

As a pioneer in the space, Gilt Groupe caught the attention of major players in the startup scene. Revenue was climbing at an unprecedented rate – from $28 million in 2008 to $425 million in 2010. By 2011, in less than five years since its launch, a $1 billion valuation and an IPO is in the pipeline. However, the profitability moving to IPO status seems elusive. In 2016, Hudson’s Bay acquired Gilt Groupe for $250 million.

During its hyper-growth years, Gilt Groupe has lost its focus and ventured into other business areas, too fast, too soon. Most recently, rival company Rue La La has acquired Gilt Groupe to the tune of $100 million. Under a new name – Rue Gilt Group, Rue La La and Gilt Groupe will operate the sites independently. With a predicted $1 billion sales and a combined 20 million members, the prospect seems brighter.

Like other businesses, Gilt Groupe is at the mercy of shifting business landscapes. One miscalculated step can tip over even the most promising startup. Gilt Groupe has gone through the various stages of growth, downsizing, and recovery. As the online retail space matures, Gilt Groupe has boundless opportunities to grow.

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