Let’s call it Groupon for the “Upper Crust.” Except that becoming a member of gilt.com protects you from those tacky coupons for 50% off a meal at the local pancake house. Instead, you log on to the site to find what high-end designer fashion and home furnishing items Gilt has “curated” at a special price for its 3-million-plus members.
Since gilt.com is part of a private company (The Gilt Groupe – add the “e” for “elite”), we don’t know its sales nor its profitability. "Annual sales are estimated at $500 million” is a constant line in the press. We do know that whatever revenue Gilt earns is largely eaten up by the salaries of its powerhouse management team.
Just look at the “Groupe’s” team page. Seventeen of the sexiest names in e-commerce. Multiply each one by a nice $250,000 pay package, and you’re out of head room for office space, data center costs, and curators’ travel expenses.
A sure sign of a “profitability squeeze play” is rapid launch of business extensions. And Gilt has it all. A recent addition is a traditional menswear e-tail business, Park & Bond. Oddly, the apparel and accessories here are priced for kings. Maybe Gilt knows something about the economy that the rest of us don’t.
A second interesting observation (guilty charge #2 if you are keeping score at home) could only be made if you follow the local press in the Hamptons. You see, Gilt attempted to rent out a swanky home there and turn it into a “pop up” store – another move away from its core business proposition.
Except that neighbors got wind of this blatant and willful violation of zoning code and put an end to it. Yet, there is still an invitation to the Gilt “Hamptons House” on its site (dated July 27th, prior to the shutdown). Go to the given link (giltcity.com/hamptonshouse) and see this:
“The page you have accessed does not exist.”
However, something else DOES exist – a strong threat to Gilt, driving all of this to-ing and fro-ing on its business model. The so-called “pioneer of online flash sales,” Vente Privee, announced in May its intentions to launch in the U.S. before end of year (under a new name of course).
Vente Privee’s U.S. partner? American Express.