Fashion Site Gilt Looks Beyond Discounted “Flash Sales” and Embraces the Upscale Men’s Market
The founders of fashion e-tailer Gilt Groupe, Alexandra Wilkis Wilson and Alexis Maybank, are quite aware that they have competitors popping up on the Web all the time. (Last week, Xconomy New York identified seven other fashion-related Web startups in New York City alone.) But the inventors of the fast-growing Gilt believe they can stay a step ahead of all those rivals. “What we’re good at is constant innovation,” says Wilkis Wilson. “We’re never happy with the status quo.”
Towards that end, Gilt is feverishly working towards a late-summer launch of a yet-to-be named extension of Gilt Man, its division that offers discounted clothing and gear, as well as online content, for men. The new site will sell full-priced men’s clothing— a huge departure for the New York-based company, which since its launch in 2007, has focused primarily on “flash sales,” limited-time events during which discounted fashions and home décor are offered to members only.
That niche has been plenty to make Gilt one of the hottest startups in NYC. Maybank says the company’s 2010 revenues came in at $240 million and are projected to roughly double this year. The company has raised $80 million in several financing rounds from an A-list group of investors that includes Matrix Partners and General Atlantic. Business Insider, which was also started by Gilt’s founder, Kevin Ryan, reported in February citing unnamed sources that Gilt would be raising another $80 to $100 million at a valuation of about $1 billion.
And the financial community in New York is salivating over the prospect of Gilt going public. No one over at Gilt’s smart-looking Park Avenue offices seems to be in much of a hurry to join the Wall Street crowd, though. Gilt board member Nick Beim, who is a partner with Matrix, says he thinks an initial public offering would be do-able, but that the company’s investors “are not in a rush to seek an exit. We see Gilt as a rare opportunity to build a great Internet company with a global reach.”
Maybank and Wilkis Wilson also declined to talk about the company’s funding. During a recent meeting at Gilt, they preferred to steer the conversation towards all the new initiatives the company is launching to build on its cachet. Topping that list is the upcoming full-priced men’s site.
Maybank says the company’s growing presence in the men’s market came from demand. She and Wilkis Wilson, who are both graduates of Harvard Business School, were originally inspired to start Gilt because of their own obsession with the sample sales they frequented in NYC. But they were surprised by how many men were attracted to Gilt. “Men were constantly writing us and asking ‘when are you going to sell something for us?’” Maybank says. So the company started holding flash sales for men in 2008. Today, nearly 25% of Gilt’s members are male.
The men’s sales were so popular that Gilt’s management team decided to branch into a full-priced offering. Everything on the new site will be hand selected, Maybank says. The focus will be on offering fashion, but not extremely overpriced “high fashion,” she explains. “Because we have an addicted male customer, we think he will cross over, and not be averse to paying full price,” she says.
Heading up the effort is John Auerbach, a longtime Gilt employee who helped launch Gilt Man after working in investment banking as a retail specialist. As a full-priced site, Gilt’s new offering will be competing against the online sites of Jos A. Bank, Barneys, and just about every big department store. But Auerbach isn’t worried. “In reality, most online outlets treat men’s retail as a commodity or an afterthought,” he says. “We plan to offer a highly curated selection of the world’s best brands, built on authoritative and engaging content.”
Gilt’s new men’s site is shaping up to be more like GQ than a typical e-commerce site. The site will offer fashion advice and provide a community where men can go to find out how to achieve that certain look. Gilt has already built the foundation of that idea with GiltMANual, a site that launched last September. It includes a blog with nuggets of fashion tips, such as this recent entry: “Doubling down on denim is a risky move, leaving you open to aspersions of the ‘Tennessee tuxedo’ variety.” Auerbach says the full-priced site will put a premium on editorial content targeted at fashion-conscious men. “We’re looking to build on GiltMANual,” Auerbach says.
But even Gilt’s celebrated founders recognize they cannot count on any one new initiative to guarantee the company’s continued success. So they keep adding features that they hope will not only keep their rabid fans coming back, but also attract a new crowd of members to the site. Gilt recently held its third bridal flash sale, for example. And on April 16, the company had a special sale just to raise money for victims of the Japan quake. There’s also Gilt’s travel site, Jetsetter, as well as Gilt City—a collection of seven city-based sites that offer sales from local merchants.
And in January, Gilt started a monthly feature that spotlights celebrity stylists. The stylist of the month sifts through all the merchandise on Gilt’s site and “curates a vision of fashion,” says Wilkis Wilson. The site recently featured picks from Ilaria Urbinati, co-owner of the boutique Confederacy in Los Angeles and a stylist for Hollywood stars such as Giovanni Ribisi.
Beim says that Gilt’s growth—and the proliferation of competing fashion sites—isn’t reminiscent of the e-tailing boom of the late 1990s. “Many e-tailers back then were figuring out their business model as they went along. Customer acquisition was difficult and they didn’t have the proper infrastructure,” he says. Gilt, by contrast, acquires most of its customers via viral marketing. “We don’t have to dedicate much of our resources towards marketing,” which helps keep profit margins high, he says.
Beim adds that much of Gilt’s expansion has arisen from trial and error. He recalls that Maybank once decided on a whim to try to sell memberships to a yoga club on Gilt. “They sold like hotcakes,” he says. In response, the company launched Gilt City, so it could offer local merchants around the country a platform to sell their products and services.
Meantime, Maybank and Wilkis Wilson have become cult figures, especially to up-and-coming online fashion entrepreneurs. Vivian Weng, a recent graduate of Harvard Business School, consulted Wilkis Wilson about her own recent startup, FashionStake, which features young, up-and-coming designers. Wilkis Wilson became an investor in the new site. “She’s been a great advisor,” Weng says.
Gilt’s success in flash sales has spawned copycats, most notably the New York Times, which in March launched a site called TimesLimited. Subscribers who sign up receive e-mailed offers of deeply discounted merchandise, dining, events, and travel. Even the department stores are experimenting with flash sales, Maybank points out.
But Maybank and Wilkis Wilson don’t spend a lot of time obsessing about the competition, choosing instead to focus on what they need to do to stay a step ahead. “We have to stay in touch with our customers and understand what they want,” Maybank says. “We have to be nimble.”