Gilt: A VIP Club for Shoppers of Flash Sale
Gilt is an online retailer that sells designer clothes and other luxury goods at deep discounted prices up to 70% off. It is a fast growing company founded by two HBS Alumnae right after recession.
Gilt Groupe
Gilt is an online retailer that sells designer clothes and other luxury goods at deep discounted prices up to 70% off. It is a fast growing company founded by two HBS Alumnae right after recession. It has also expanded to luxury hotel booking under the name Gilt Jetsetter, luxury life style experience under the name Gilt City, and etc.
Time is everything.
Gilt is build based on a flash sale model. Sales start at exactly 12PM from Monday to Saturday with a preview option beforehand to solicit interests. With limited quantity and deep discounted price, many shoppers were compelled to make quick decision on their purchases. The company smartly set the start time at 12PM, lunch break time, to attract its target customers—high income women, especially working women who want luxury goods with a discounted price. The items on sales are refreshed daily to keep the excitement going. The website has consumers waiting in front of their screens everyday for the best “steal”.
It is all about desire.
On the website, a product is shown as reserved once the last piece is put into a shopper’s shopping cart. And once the last piece is sold, the item will be marked as sold with the information of the product still available on the webpage. The regret of missing out on that 70% off Channel bag solicits desire from consumers to purchase. Consumers are more likely to buy another bag they spotted on the website without too much second thought. Gilt is essentially a sample sale website. Thus most of its goods come with only limited quantity or selected few sizes. Creators of Gilt smartly incorporate the nature of sample sales with limited time and competition between consumers to drive up sales. 50% of Gilt’s revenue is generated within the first hour of sale.
Connection rules.
Gilt serves as a bridge between fashion retailers and targeted consumers. Fashion retailers need to find customers who are interested in buying discontinued, off-season products or samples but have limited resources to open up outlet stores at every single corner on the street. Consumers want to get access to discounted luxury goods but either have no time to go to an outlet or does not live near one. Gilt’s online platform offered shoppers an easy and convenient way to shop at sample sales and offered retailers access to a much broader customer base. The company has also recently launched global e-commerce shipping to 90 different countries, covering even more base.
It is a club.
The website uses simple black and gold design to resemble the feeling of a New York VIP club. Indeed, Gilt uses a member-based model. At the beginning, the membership was by invitation only. In order to shop, consumers must get an invitation and register as members on the website. Members also get rewards and discount by referring friends to the website. The social factor draws more people onto the website to shop. Members advance to VIP level with more spending. VIP members get early excess to products, some additional sales, and other benefits. The exclusiveness and the community-feeling has maintained the luxury image of many brands on the website.
To the Future
During its early days, Gilt enjoyed a big reservoir of post-recession excess inventory from luxury brands. Now as the luxury brands decrease their inventory and many other flash sale websites fight over it, Gilt has come up with new ways to survive the game. The company would often enter into a hold-agreement with retailers like Saks Fifth Avenue. Saks would agree on selling Gilt products at the beginning of the year to drive up’s Saks’ order volume from factories, and Gilt would have to hold off until the end of the season to sell the products. The company has also began to carry more brands and expand its business functions beyond clothing. The company’s large member base and the discounted luxury image will help Gilt differentiate from competitors.
http://nymag.com/fashion/10/spring/63807/
http://smartceo.com/how-gilt-groupe-doubled-down-on-its-core-offerings-and-cornered-the-u-s-flash-sale-market/
As a Gilt customer and someone who loves finding a great bargain, I found this post really interesting. I didn’t realize that Gilt started out as an invitation-only model, and agree that the site has managed to maintain a “luxury” feel through careful curating of its offerings.
I am curious how many customers are repeat purchasers over time, and how the average amount of time spent on the site has changed as the company matures. I worry a bit about people getting desensitized to the flash sale model (similar to how customers have left Groupon in droves), but am excited to see where the founders take Gilt in the future.
Definitely interesting how many of these discount / flash sale companies have emerged from the crisis not too long ago. Gilt has definitely done a good job of branding and attracting customers who regularly scour the website for the latest deals. Their strengths lie in being able to generate demand for excess inventory. As Gilt expands to other industries such as Gilt Jetsetter and Gilt City as you mention above, how will it leverage its assets and apply its operating model to these new opportunities. As their supply is reliant on weaker global economic conditions playing in their favour, what other steps have they taken in order to sustain their competitive advantage in the current environment?
Hi Audrey – really great post. It has been very interesting watching the evolution of the “flash sale” industry. While I don’t engage with the consumer goods oriented offerings, I am a fan of the travel sites, and especially Jetsetter. I am wondering how Gilt can utilize its consumer relationships and awareness to drive traffic and purchases through Jetsetter. Do you have any idea why Gilt chose to brand its travel offering through a completely separate brand, as opposed to using something like “Gilt Travel”?