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Gilt Groupe’s Founder Shares her Secrets

Thursday, Nov 18, 2010, 3:27 PM / New York, United States



On the TribaSpace blog, we’ve always explored how luxury brands can best make use of the online marketplace and the digital sphere to a profitable advantage, and the one example we’ve always come back to is Gilt Groupe. So, when we heard that Alexandra Wilkis Wilson, co-founder and acting Chief Merchandising Officer, was conducting a lecture on high-growth startups at Fordham University, we couldn’t pass up the opportunity to hear the story behind one of the fastest-growing resale platforms in the world and learn a few insider tips.

Gilt Groupe, for those who aren’t yet users, is an invitation-only website that offers luxury items at an extremely discounted price. Every day at 12 P.M. Eastern Standard Time, Gilt opens the day’s sale, which then remains live for 36 hours. Inventory is known to sell out at record speeds (the fastest sale on Gilt Groupe to date took only 33 seconds) and in record volume (once, during a Christian Louboutin sale, 50,000 women ended up on the waiting list for one pair of shoes).

When Gilt launched in 2007, the site had a user base of 13,000. The company has since grown to over 3.6 million users and 500 employees. The site was first conceived and co-founded by Alexandra Wilkis Wilson and Alexis Maybank, friends from Harvard Business School. Wilson’s professional background was in finance, having worked for Merrill Lynch, and luxury brands like Louis Vuitton and Bulgari, while Maybank’s was in the then burgeoning field of e-commerce—she was employee number 40 at eBay.

The combination of Wilson and Maybank’s different but compatible skills (something which Wilson attributes to the great success of their partnership) meant that to start their own business was always in the cards for the duo. As Wilson was a New York City native and involved in fashion, she was always a heavy frequenter of the sample sale circuit. Knowing this of her, friends and parents of friends would always ask her to pick up clothes for them, and so the idea to bring the concept of a sample sale online was born.

One of Maybank and Wilson’s greatest challenges from the beginning was that they didn’t want to have the feel of a discount site, but rather, the aesthetic of luxury e-commerce. It was also difficult, given their mutual lack of artistry, to judge portfolios of potential creative directors. Ultimately, they brought Leah Park on board, who had been the Senior Art Director at Bergdorf Goodman’s magazine. Leah had only one stipulation—she insisted that Gilt shoot its re-sale items on models. Gilt now boasts the biggest photo studio space in New York City, which is located in their warehouse in Brooklyn’s navy yards.

At the time of Gilt Groupe’s launch, a lot of the brands Gilt now sells were not available online in any capacity. Most, Wilson revealed in her talk at Fordham University, admitted they knew nothing about e-commerce. The first brand to come aboard was Zac Posen, a self-proclaimed “business of pioneers” who wanted to be the first involved. It was a wise choice, as Gilt now carries over 1,000 luxury brands. Wilson modestly admits that it would be lovely to acquire the still-reluctant Prada and Miu Miu.

So why do powerhouse luxury brands want to sell on Gilt? Firstly, it gives them an opportunity to sell unsold merchandise from the past season on a generally trusted platform (most of what Gilt buys in is on consignment). Secondly, it gives them a way to learn their customer. Most luxury brands are solely wholesalers, and so, given that their inventory is shipped to department stores, they are unaware of whom their customer actually is. Gilt offers data on customer demographics. Thirdly, Gilt listens to the brand’s specifications, so that the website acts as an extension of the luxury brand’s e-commerce presence as they want to be perceived (for example, if Dolce & Gabanna wants to shoot on a middle-eastern model, Gilt will accommodate that request, no questions asked). In fact, Gilt Groupe was actually a saving grace to some brands during the retail recession. Wilson confirmed that they “kept the lights on” at at least 10 major brands.

Thus, Gilt, through impeccable customer service and desirable inventory, has secured itself as a resource that people talk about. Word of mouth, Wilson says, has been the most influential aspect of Gilt’s growth. Sure, they do work in SEO and extensive market research (and, all their technology is built in-house—which is quite unusual for a product of their size), but the very nature of Gilt is viral. Social media, which Gilt uses as a means of customer service (Wilson will usually tend to customer grievances personally on Twitter), has also been a great boon.

But most importantly, Gilt knows its user base. Shoppers are mostly 25 to 35 years old, with salaries in the six-figures.—“selfish shoppers,” Wilson calls them. The commonality of this demographic is that they have no dispensable time. 400,000 of Gilt’s 3.6 million users are based in the New York metropolitan area, and so Gilt, knowing how busy a lifestyle that is, has made shopping a convenience, even a pleasure. With its new project, Gilt City, Gilt offers this convenience with everyday errands like teeth whitening and dry cleaning—and Jetsetter, does the same for travel. There’s Gilt Noir, too, whose purpose is to reward Gilt’s top shoppers — a kind of loyalty program.

Every day, Gilt gets better at customization and personalisation. Different users, for instance, will see different versions of Gilt Groupe, tailored by algorithm to what they’ve purchased in the past and how much they’ve spent. Consequently, Wilson finds that people, when asked, will say “I got this dress on Gilt,” as though Gilt itself is a brand worth bragging about. This is certainly not true of most discount re-salers, but Gilt—because it knows its customer, it knows the gap in the market that it fills, and it knows the problem it helps to solve—has become, in and of itself, a luxury brand of sorts.

Samantha Garfield | TribaSpace

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