Flash sales sites shot to attention after a spate of acquisitions announced over the past few months. Earlier this year, Nordstrom bought HauteLook for $270 million. Last year end, e-tailing giant Amazon also ventured into the market when it bought the members-only site BuyVIP for $96.5 million. The global market in luxury flash sales is led by the French company Vente Privée, which is projected to record sales of over $1.5 billion this year. Within the U.S. though, the market is led by New York–based Gilt Groupe, which has managed to stay independent thus far.
Gilt Groupe’s Financials
Gilt Groupe is a members-only e-tailer of top designer labels of clothing, accessories, home décor products, and hotel and travel packages. The company offers flash sales of its products and services at discounts of as high as 60%. Gilt was co-founded by DoubleClick CEO Kevin Ryan; eBay executive Alexis Maybank; and a Bulgari and Louis Vuitton marketing executive, Alexandra Wilson, as an online portal for New York–based, by invitation only sample sales. Today, the company has 3.5 million subscribers, of whom more than 1 million access monthly the limited-time offers for luxury brands.
Gilt Groupe reported revenues of $270 million for their fiscal year ended June 2010 but has not yet reported a profit. In the current year, they are expected to report revenues of $500 million and will become the leader in flash sales in the U.S. The company has managed to raise $236 million through several rounds of funding from investors, which include Matrix Partners, General Atlantic, Triple Point Capital, Softbank, Goldman Sachs, New Enterprise Associates, Draper Fisher Jurvetson, Pinnacle Ventures, and Eastward Capital Partners. Last month, they completed their latest round of funding of $138 million; this round valued the company at over $1 billion. The company wants to list itself in the future, but it is not yet sure of the timeline.
Gilt Groupe’s Expansion
To increase their reach, Gilt Groupe has moved beyond apparel. Last year, they added Jetsetter, an invitation-only travel sales site that offers travel deals for more than 200 properties spread across 20 countries. They also launched a Groupon-like location-based deal site called Gilt City. At present, Gilt City is available in New York, Boston, Los Angeles, San Francisco, Miami, and Chicago. According to market reports, Jetsetters and Gilt City account for 20% of Gilt Groupe’s revenues.
Last month, the company launched Gilt Taste, a site dedicated to food connisseurs that offers access to artisan products and ingredients and original recipes from food experts and chefs. Gilt is also working on an iPad app for “motion-activated recipes” that would let users wave their hands to go through the recipe while cooking instead of having to touch the device to flip through pages or steps.
Gilt Groupe’s International Expansion
Gilt is also expanding internationally and recently set up international headquarters in Ireland. The Ireland operations will house 100 to 200 jobs in the years to come. They are also expanding in Asia and have entered into a joint venture with Softbank to invest in Gilt’s existing Japanese operations. Gilt’s Groupe’s Japan site currently has more than 600,000 members and through the venture will be able to make more inroads in the country.
Gilt Groupe has carved a niche for itself in the U.S. online retail space. But competition is intensifying. Global market leader Vente Privée has announced plans to enter the U.S. market through a tie-up with American Express. Also, last month Amazon launched MyHabit, a discount site for luxury brands. For now, Gilt is trying to beat the competition by offering additional categories of products and services and expanding internationally.