Posted on Monday, Mar 9th 2015
Over the last year, several flash sales sites have seen their growth plans foiled as the flash sales fad has cooled down. Even ultra fast growing such as Zulily have taken the heat and seen their stock prices fall. Here is another Billion Dollar Unicorn club member Gilt Groupe that has been trying to go public for a while now. But things don’t seem to be looking up.
Gilt Groupe’s Offerings
New York-based Gilt Groupe was founded in 2007 when Kevin Ryan recognized a market opportunity to start an online flash sales site in the United States to introduce consumers to a new e-commerce experience. He got together with his founding team and soon Gilt was born. Gilt’s focus has been to create the fastest, most exciting shopping experience online that covers the product delivery and customer service. Gilt is focused on being a flash sales site for designer products and luxury brands. The members-only shopping site allows consumers to shop for curated styles, goods, and services at prices that are as much as 70% off the retail price. Gilt offers products for women, men, kids, and home along with exclusive local services and experiences. Analysts estimate Gilt to have a member base of nearly 7 million.
Gilt continually updates their product offering. Earlier this year, they tied up with luxury travel website Luxury Link. Through the partnership, Gilt will be able to offer their members access to curated vacation experiences with exclusive perks at discounted prices. Luxury Link’s travel offerings include experiences at top hotels in over 80 countries worldwide.
Gilt also offers their sales in interesting formats. Last summer, they held a sale that was related to the Netflix series Orange Is the New Black. Gilt created a collection of work-appropriate fashions for a prison job fair, which was featured in one episode of the series. Last year, they also offered a sale on designer boys’ clothes and accessories that featured outfits selected by 6-year-old Instagram “style icon” Alonso Mateo and his stylist/mother Luisa Fernanda Espinosa.
Gilt Groupe’s Financials
Gilt is able to offer products at low prices by selling unsold inventory that they purchase from designers and wholesalers at a steep discount. Gilt passes on this discount to their members and keeps a share for themselves as revenues. Gilt does not disclose their operating and financial metrics.
Analysts expect Gilt to have reported sales of nearly $600 million in 2013 with nearly 40% revenues coming from mobile devices. Revenues in 2011 were estimated at $450 million. Gilt is also estimated to have been EBITDA positive in 2011.
They have been venture funded so far with $286 million from investors including GSV Capital, DFJ Growth, Pinnacle Ventures, TriplePoint Capital, Eastward Capital Partners, Matrix Partners, and General Atlantic. Their last round of funding was held earlier last month when they raised $50 million in a round led by General Atlantic at an undisclosed valuation. Back in 2011, Gilt was valued at $1 billion when they raised $138 million in a funding round. The recent funding suggests that Gilt may have delayed their IPO plans. Gilt was earlier expected to list last year and was rumored to have selected Goldman Sachs to help with the listing. Gilt claims that they are looking for a more consistent growth and profitability along with better market conditions before they go public. Clearly, the market is currently not convinced by flash sales companies and their metrics.
Over the past years, several flash sales sites have either been acquired or pivoted away from their core business model. eBay acquired Rue La La through their $2.4 billion acquisition of GSI Commerce. Last year, Groupon bought Ideeli for $43 million. Several flash sales sites were born when the designers were looking to offload inventory in face of global recession. But as the market picks up, it is becoming more difficult for flash sales sites to acquire products at lower costs and make higher margins. Gilt is going through a similar story.
More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns. Unicorns will also be discussed with some special guests during our 1M/1M Roundtable programs over the next few weeks. To be a part of the conversation, please register here. The term Unicorn was coined in a TechCrunch article by Aileen Lee of Cowboy Ventures.
This segment is a part in the series : Billion Dollar Unicorns
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