Only five years since its founding, Gilt Groupe has a strong claim on the hour of noon. At 12 p.m. EST, Gilt’s online-only sales offer discounted designer merchandise to an invite-only crowd that now numbers in the millions. What began with fashion, accessories, watches, and jewelry has grown to include travel, food, full-price menswear, and more. Co-founders Alexis Maybank (left) and Alexandra Wilkis Wilson are still at the helm, and this week, they publish By Invitation Only: How We Built Gilt and Changed the Way Millions Shop. The two spoke with Style.com about the company then, the company now, and where “the store in your pocket” is headed to next.
Give me the capsule history of Gilt Groupe. How did this all come about?
Alexis Maybank: Alexandra and I actually met in college, but it was really about five years later, in graduate school, where we spent the most time together. Two years after business school is when we started working on the concept of Gilt Groupe. Gilt Groupe came about as a work of five founders; it was a series of ideas, or “aha” moments if you will, that brought us to the idea that became Gilt Groupe. So for one, one of our co-founders, Kevin Ryan, spent a lot of time in France with his wife, who is French, and noticed a similar model starting to take off over there and thought this could do well in the U.S. Alexandra and I had always popped out of our offices in midtown to jump into friends-and-family invite sample sales—Zac Posen or Fendi or whatever it might be. And we loved that, and rain or shine seemed to make it to them. We took that passion and excitement for the sample sale, the little-known event that was hard to get access to but had a frenzy appeal once you got there, and thought that this could be something fantastic to take to a broader audience online.
The high fashion world is typically quite closed and hard to infiltrate, and has been, at least in the past, resistant to the idea of online. Did you have to convert people at the outset to get people involved?
Alexandra Wilkis Wilson: Of course! When we launched November 2007, many of the brands that we were working hard to convince to sell with us, many of them didn’t even sell online for full price, forget about at a discount.
AM: The process of convincing brands was [Alexandra's] full focus; today we work with over 6,000 brands, and the majority she convinced to come on. But at that time back in 2007, if you remember, there were very few places online to shop for luxury goods. It was not just convincing them that going with Gilt and doing it in the environment they’re offering and making them comfortable with the nontraditional aspect of the site, showing the beautiful kind of editorial aesthetic that we were bringing to sell their product on models, with makeup, with a full look and design, was really appealing to them. But Alexandra really was first kind of educating on selling on the Internet and e-commerce and what it could do before we even started talking about Gilt Groupe. It was almost like a two-stage process with every brand we spoke to.
On Park & Bond, which sells menswear, you’re experimenting with a full-price model. Is that something you’re considering expanding to other categories?
AM: Well, we already do the selling at multiple price points on women’s. Park & Bond was our most separate experimentation with it, so you’ll continue to see it throughout the site where we’re using that editorial format, selling products off price, at its original retail, [or] maybe products that have never been offered anywhere else, like the Brian Atwood sale we had recently.
AWW: Not only did we launch the handbags but we’re the exclusive retailer for the whole season.
Is that a kind of launch you hope to continue in the future?
AWW: Absolutely! We’re really open to it. I wouldn’t be surprised if you saw more designers, and I think there are many fashion designers who have talked about experimenting in other completely different categories, like the home category. That could be a possible synergy that I wouldn’t be surprised to see in the future.
You’ve mentioned an increase in global presence. Is that something that is growing and that you are actively working to grow?
AWW: We launched in Japan with Gilt Japan back in March 2009, and that’s been growing and growing very strong since then. We were the first flash sale player in Japan. And then this past fall, we launched international shipping, and we’re now shipping to over 100 countries around the world. So that has been very exciting to watch, and to see how the different markets are responding. For example, markets that are clearly shopping a lot on our site are Canada, Australia, United Kingdom, Hong Kong, Russia, and Singapore.
You sell fine jewelry and watches as well as designer goods, which are high-priced items. Are there logistical difficulties in transacting purchases of that scale online?
AWW: Fine jewelry was actually an important category for Gilt Groupe since our very early days. The third sale we ever did was with Judith Ripka. But at this point, fast-forward four and a half years, we have sold pretty incredible price points. We sold a $205,000 villa in the Bahamas on Jetsetter. We sold on Gilt City a Virgin America plane for 145 passengers for $60,000 to fly round-trip anywhere Virgin America flies in the country. We have done some pretty crazy, pretty high price point items, and we have a fantastic customer support team, so when the price points do get so high, in terms of credit card transaction logistics, our customer support team steps right in.
I have to ask—did you meet the guy who bought the plane trip?
AM: It was a woman!
AWW: I think they’re actually taking the flight this weekend. It was from San Francisco to Miami.
The site has not been immune to criticism. I have heard from some designers concerns that the Gilt discount model undercuts their full-price business. How would you respond?
AWW: Well, the reality is the markdown cadence has really always been there when you look at categories like ready-to-wear, accessories, and shoes. Just the format was different. Department stores and specialty stores have always gone through markdown cadences. There have been outlet stores for so many years—the traditional off-price bricks-and-mortar companies, like Loehmann’s, Century 21, etc. I don’t think we’ve really changed the way seasonality plays so much in typical retail, it’s just how customers are accessing it by shopping on Gilt. Alexis uses the phrase “You have a store in your pocket.” It’s just so easy to shop on our site when we’re so far ahead with our mobile apps. They’re really easy to use and we’re finding tremendous traffic and usage through them.
AM: Honestly, that was a question that has always been raised from the beginning, but once brand partners start working with us there is a realization—and often they start coming to us with this initially—that many of our partners have a group shopping in their stores that are in their fifties or sixties. That’s fine, but every brand is looking to reach a younger consumer and they realize that often those younger consumers are spending a lot less time in stores. So, there is a big part in working with Gilt, and shopping on Gilt, that just helps pair new customers with new brands that they might not have bought before, and that’s the really powerful, exciting element to both the customer and to our brands that we feature that really opens their eye to selling online and the power and benefit of that. It gets in front of a whole new group of customers, or perhaps gets customers to think about your brand in a whole new way, [who would've thought] “That’s not for me, that’s for my mother, that’s for a different person.” That’s a really strong element to the whole Gilt experience.
I’ve also heard it said that you’re preparing for an IPO. Is that something you can comment on?
AM: We’ve stated already to the press that we’ll contemplate and consider a public offering this year looking forward to 2013. It’s not anything that we’re doing now or organizing for. There’s a lot of benefit to staying private. Because of the amount of testing you can do, you can think and respond to customers and try new categories or setups that are longer term in thought and strategy. So we’ll think about it this year, but it’s a process that’s very time-consuming and can take an entire organization and [make] them focus on something else for three or four months, so you’ll just have to weigh the costs. Those are all things we’re undertaking this year.
Disclosure: I have in the past worked on projects for various Gilt properties, though never directly for or with Maybank or Wilkis Wilson.