Gilt works because it’s creating a new model, one that is only possible online, believes Gilt chief executive officer Susan Lyne. That’s a useful lesson for any company, not only those in private sales, she said.
The company in the past has projected it will do sales of $500 million in 2010. Meanwhile, it has more than 2 million members, has sold 700 brands to date and employs more than 350 people.
The company puts up new stores each day, which could not happen in the brick-and-mortar world. Because quantities are limited, stock sells out fast.
“That urgency and sense of competition has been a big factor in our success,” said Lyne. “It’s part shopping, but also part gaming, part entertainment.”
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While not all retailers can get into online private sales, they can all benefit from newness and think about appointment and event shopping, she said.
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In a typical week, Gilt processes 46,000 orders and speaks directly to 9,000 customers.
Forty-eight percent of sales occur within the first hour of any sale. The fastest time any sale sold out was one hour and 12 minutes. About 100,000 people visit Gilt from noon to 1 p.m. each weekday.
The store started with women’s ready-to-wear and quickly branched into men’s, children’s, home and travel, and it recently added art. Gilt Noir targets the top 10 percent of Gilt customers with ultraexclusive merchandise. Gilt might go into more mass-oriented sales, but not under the Gilt name, she said.
“Clearly there are multiple opportunities,” she said. “We’re looking at this as a lifestyle brand, not just a fashion brand.”
Gilt offers brands a discreet and fast way to get rid of excess inventory. But the company will also work in partnership with brands to help grow their businesses, and brands increasingly regard the company as a marketing channel, said Lyne. For example, Gilt can commit in advance of a season to absorb any excess at the end, so the brand can meet its order minimums.
Viral marketing is key because it helped grow the company quickly while keeping marketing budgets low. One customer recommended the company to 400 new members. Gilt has stopped actively recruiting new members and is instead focusing on key types, such as shelter junkies, jewelry mavens and men, and growing sales with those target groups.
The company’s iPhone app is now responsible for 7 percent of sales on weekends and 5 percent on weekdays.
“I have been in numerous businesses that either looked at the Internet as a sideline or a threat,” said Lyne. “Increasingly, there is a generational shift. If you want to succeed in five years or 10 years from now, you will need a digital presence.”