When Susan Lyne joined Gilt Groupe in September 2008, the online retailer boasted a staff of 55 employees. Today, Gilt employs 300, and Lyne plans to hire 100 more by year's end.
Gilt's formula is simple: feature the excess inventory of premium brands, like Armani and Zac Posen, at steep discounts during limited sales. Every weekday, Gilt introduces a new round of designers at 12 p.m. Eastern time. The strict time frame and limited inventory is intended to recreate the excitement of a brick-and-mortar sample sale online.
So far, the business model seems to be working--after posting $50 million in sales for 2008, Gilt is on track to clear $150 million this year--Lynne says that figure will triple in 2010. While the site has emphasized high-end women's apparel, Gilt is in the process of launching a men's, home and travel site in the coming months.
The former CEO of
Forbes: Why create a discount site online?
Susan Lyne: The idea here was to recreate the sample sale, because there are very few people who can experience that. If you don't live in Manhattan, you don't really know what a sample sale is. [In its essence], you know what brands are being sold, but you don't know what's going to be there until you go into that store that day. The urgency because it's limited inventory--all those things add up to a much more exciting shopping experience.
Over the past year, there have been other competitors that have cropped up online, but what seems really interesting about your site is the attention to detail that comes to displaying your product. Was that a very deliberate decision?
Yes, and I did not make that decision; I got really talented people here that do that every day. Thousands of products have to be photographed in a way that is both very high quality and not very high cost. It's an extraordinary thing that they are able to do it every day. One of the things we hear over and over again, [is that] we're considered a luxury goods site, and a lot of the reason behind that is the look and feel of it, it's because the overall design is extremely high quality.
Gilt has experienced a surge in growth since it's inception in 2007. What part of that is unique to your model?
Some of that comes from the invite-a-friend mechanism. Our customers are actually our best marketers. When someone gets excited about something they bought, they send invitations out to their friends. They might send them to 10 friends, or 20 friends and so it multiplies. We currently have about 1.5 million members.
What will the men's site, launching next month, be like?
We have very passionate male customers right now, but one of the things that became clear was that they didn't want to walk through the perfume department to buy their goods; they wanted their own site. And there's a much bigger opportunity for us in men's if we can do six dedicated sales for that customer base every day. We will not only do apparel on that men's site, but we'll do a certain amount of sporting goods, gears and gadgets, anything that will entice that male customer. All the goods that we sell have to be coveted, something that you really, really want.
Do you think the recession primed Gilt for growth?
It probably did help us on some levels because people who were concerned about going out to a department store and walking out with a Prada bag or were just uncomfortable with spending that much money were able to satisfy that desire to shop.
Is there any concern that once the recovery gets underway that these high-end retailers might not have that excess inventory that you need for Gilt?
You know, they always have excess inventory, so I don't think we're going to get to a situation where any brand knows exactly how much they should manufacture, and there are many outlets for discount goods. This has been going on forever, whether it's Filene's Basement or outlet stores--it's a big business. What we're trying to do is to carve out the top part of that and to do it in such a way that is brand reinforcing rather than an experience where it looks like a discount sale.
Is there a concern in the retail industry that consumers are changing their habits, that the luxury department store model, the Saks/Bergdorfs model, doesn't really work anymore?
I think time will tell, but I think there is definitely a shift taking place. Some of it is generational; it's clear that younger consumers are very comfortable buying online, and there are certain things about buying online that are really positive. If you look at our site, we photograph every item of clothing on a model, so you get to see how it looks on somebody's body. Buying online is incredibly convenient; our sales begin at noon every day, so people can stop working for five or 10 minutes, and they can go into the sales, and it's a very quick process. You're never more than two clicks away from a product detail page, two clicks to buy. In fact, the fastest person who has ever gotten through from log-in to check-out is nine seconds.
