If Amazon Buys Vente-Privee, What Happens To Gilt Groupe?
Posted: December 7th, 2009 | Author: Lauren Sherman | Filed under: fashion, online retail, shopping | Tags: Amazon, Gilt Groupe, Vente-Privee | 8 Comments »
Last week, Tech Crunch reported that Amazon was in talks to buy French sample sale site Vente-Privee for an estimated $3 billion. VP is the original inspiration for U.S. phenomenon Gilt Groupe, which brought in an estimated $150 million in sales for 2009. (Of course, there are several other sites that followed Gilt, including Rue La La, which was acquired by GSI Commerce in October 2009 for an estimated $350 million.)
While Gilt is undoubtedly the most successful and high-profile of the sample sale sites currently operating in the U.S.–it even sponsored runway shows for top designers Rodarte and Alexander Wang at New York Fashion Week this past September–Vente-Privee is a bigger animal, and its presence in the U.S. would undoubtedly cut into Gilt’s market share. Unlike Gilt’s other competitors, this France-based company has similar access to top fashion houses like Balenciaga and Alexander McQueen. Sites like Haute Look and Rue La La stick to mid-market, more accessible labels. Plus, Amazon’s customer service and logistical operations are beyond sophisticated. Even retail behemoths like Wal-Mart can’t touch Amazon online.
Vente-Privee’s 2008 sales reached $807 million, a 46% increase from 2007. It currently operates in France, Germany, Spain, Italy and the United Kingdom.
Regardless of whether or not Amazon buys VP, there’s little doubt the sample site that started it all will eventually going to open up shop in the U.S. How can Gilt Groupe continue to flourish when this happens?
1. Join them. The Business Insider suggests that Amazon should consider buying Gilt, too.
2. Continue to diversify. Although I am not at all impressed with Gilt’s travel deal Web site Jetsetter–the deals are mediocre; anyone who is savvy enough to belong to Jetsetter is savvy enough to find a similar booking on Kayak.com–I think it’s a good move to venture into other consumer markets. If Gilt figures out how to offer true value on Jetsetter, it might be able to make it work. Gilt Man, I believe, is its most impressive spin-off yet.
3. Wine and dine those designers to get exclusives. Since the beginning, Gilt’s differentiator has been its direct relationships with the designers. Founders Alexandra Wilkis Wilson and Alexis Maybank both run in elite New York circles, which means that these are people they party with on regular basis. What’s more, Wilkis Wilson spent years as a buyer for companies like Louis Vuitton, so both the business and social connections are strong. Gilt needs to continue capitalize on that and make exclusive deals with these brands before Vente-Privee swoops in.
Lets not forget that Answer 1:
1. Join them. The Business Insider suggests that Amazon should consider buying Gilt, too.
The Business Insider is part of the same group of companies that Gilt is AlleyCorp. So in normal Blodget style, he’s hoping to influence the market.
@John o Groats Good point–I should have included that. Two things:
1. Just because Blodget is associated with Gilt doesn’t mean he’s not right about this.
2. Gilt’s success does not affect The Business Insider’s success–they’re completely different companies. They just happen to share a co-founder in Kevin Ryan.
I didn’t say he wasn’t correct, and yes an idiot can see they are completely different.
Well, thanks for reading!
I am a customer and big fan of private sales sites but wonder how they will evolve over time. Clearly there already is a distinct group of A sites (Gilt, RueLaLa, Idelli, OneKingsRoad, maybe HauteLook) all of whom have venture backing. The 20 or so other shops seem to be limited on products and attention from customers/media.
But the competition is heating up even more in 2010 with the possibility of VP coming to the states, Daily Candy launching Swirl (since they have over one million newsletter subscribers they don’t have to pay the $10-$25 bounties the other sites pay to acquire new subscribers), ebay with their limited time discounts (Max Mara and DVF were recent brands featured on their homepage and in emails) and now brands such as ToryBurch running their own private sales along with luxury retailers like Saks testing limited time sales. One very popular ecommerce platform, Magento, even has a private sales module built into their system.
With manufactures reducing inventory to be more in-line with retailer’s orders there will be major competition for their overstock. In fact, some vendors have told me that they are now making product for Gilt and the others along the same line as what some do for their outlet stores. Additional costs can quickly add up such as photography which is critical for selling on-line but can be expensive for one-time only products where you can’t reuse the imagery over a longer sales cycle.
It will be telling to learn how the cost structures are structured for Gilt, etc.
All this not withstanding the excitement of seeing what’s new each day does create an addictive habit vs. typical online shopping which tends to be more focused on satisfying a specific need rather than the more impulse oriented window shopping we gals love to do.
Eileen,
Thanks for such an insightful comment. I do think Gilt will avoid the overstock pitfall because manufacturers are cutting product especially for the company. (Hopefully at a higher quality level, though, than what goes to traditional outlet stores.)
You also make an incredibly good point about the amount of money these brands are spending on producing images for the Web. However, I think the big difference between what Gilt is and what a lot of traditional retailers do online is that Gilt has an editorial slant. I think that’s where all retail is heading. That’s why Tory Burch hired a big editor from InStyle to head up her Web site. It’s worth it for these online retailers to produce original content–and high-quality photography. It gives customers yet another reason to return.
Agreed that the photos on Gilt add to the experience and with competition on traditional ecommerce sites that show multi-views of products it’s even more important. My thought is that even with an in -house studio when you shoot a product and display that image just for a limited time you don’t have the ability to amortize the costs.
btw, I’m a big fan of your blog and enjoy the business focus which is rare with the exception of WWD
Eileen–Thanks so much for contributing such great stuff to the conversation! You make a good point re: the costs behind the photography, although I do think since Gilt’s photography is in-house, that minimizes additional costs. Please feel free to email me on lauren@tfbeat.com if there are any topics you’d like to see covered here. All the best, Lauren