Picture a football stadium just minutes before the doors open, throngs of people pushing at the gates, anticipation running high. At 12 p.m., the doors open and the crowds surge past and into the stadium.
That’s precisely how Gilt Groupe founder and CEO Kevin Ryan would describe the shopping experience at Gilt Groupe, the innovative e-commerce site that pairs high-end luxury goods with deeply discounted prices.
“We have several million people who have signed up already to be Gilt members,” Ryan said. “At 12 p.m. every day, there [are] 100,000 to 150,000 people who wait for the clock to turn to 12 p.m. EST so they can start shopping on our site. You can think of that as the biggest football stadiums you’ve ever seen and they’re all waiting to enter at one time, far more people than would enter a Saks or other store.”
Ryan, a Silicon Alley mogul, counts DoubleClick and AlleyCorp among his successes. AlleyCorp is the umbrella company of four Internet companies – Business Insider, Gilt Groupe, ShopWiki and 10gen/MongoDB. He was co-founder and chairman of Panther Express and an early investor and board member of HotJobs – sold to Yahoo for $450 million in 2002. He is one of the few, if only, CEOs who has built five billion-dollar companies from the ground up.
He even recruited Wall Street superstar Henry Blodget to take the reins as editor-in-chief and CEO of Business Insider.
“I approached Henry because I thought he would be an innovative, interesting and just talented choice,” Ryan said. “Besides his history what some may have forgotten is that he is unbelievably smart and a great writer and had a great vision for building the website. In four years we have gone from two guys writing to a blog to [surpassing] most of the well-known business sites that have been running for 30, 50, even 70 years.”
It seems Ryan has the Midas touch.
“It’s all down to two things,” he said of Gilt Groupe, which he founded in 2007. “It’s your brand and it is execution. We have a fundamentally different brand than Amazon or other players out there. Then it’s a question of execution. We spend a lot of time behind the scenes making sure our warehousing, technology and customer support is all great. We’re also getting the best buyers. Our sophisticated customers know when they are seeing items that are really desirable and selective.”
But Gilt Groupe isn’t about just fashion. In the past year and a half, Ryan has worked to expand Gilt Groupe’s empire far beyond that initial aspect, transforming it into a true luxury lifestyle brand.
“Fashion is a big part of what we do,” he said. “But now we’re selling travel, restaurants and food. It’s really expanded into a lifestyle company.”
Gilt Groupe has 3.5 million members, 600-plus employees and just received $138 million in funding, bringing its value to an impressive $1 billion. There are seven different verticals and plans in the works to launch a gourmet food category and a men’s full price business. Gilt is also slated to go public in the next 1-3 years.
“I think Gilt has the opportunity to be a 5 or 10 billion dollar company in revenues,” Ryan said. “The market for the items we’re selling is in the hundreds of billions of dollars so all you have to believe is that 2-3 percent of those purchases that are currently occurring offline are going to switch to online over time. We’re watching that trend happen every single year.”
But the million-dollar question is this: how did Ryan get luxury retailers to sell their luxe wares online? The key, he said, are the partnerships with these brands.
“Probably the most important thing that people don’t understand about Gilt is why the venders are working with us,” he said. “When I go to a vender, I say look, everyone has some leftover merchandise by the end of the season and you have to do something with that. You could sell it at an outlet mall, which sometimes is not a good experience and does not reflect well on the brand. What if I showed that beautifully photographed with fantastic models to millions of people who will get to try the brand for the first time?”
Ryan said approximately 35 percent of Gilt’s customers have never heard of the brands on the site – Gilt then becomes a window into the world of luxury shopping.
“The person discovers it, buys it possibly at a discount, loves the product, what do they do next season? They order it online,” he said. “Maybe they go directly to the website of our vender or the go to the department store or they buy it next time they are in New York or LA.”
Today, the site has birthed additional offshoots like Gilt MAN, Jetsetter, Gilt City and has gone global with Gilt Japan.
“We opened in Japan because there was no one else doing the flash sales model so we were able to be first in that market and we’re the leader in that market,” he said.
Not even higher shipping costs are deterring Gilt’s overseas customers.
“We get requests every single day from people in South Korea and France to be able to buy products on Gilt,” Ryan said.
The world of interior design is next for the powerhouse brand.
“We already do $50-60 million in home products,” Ryan said. “We just bought a company called Decorati, the leading company for interior designers and manufacturers to host their items on a website.” Art and bridal are two other areas that Ryan hopes to incorporate in the Gilt brand. And just what is the secret to this Internet entrepreneur’s success?
“There’s always some luck and some skill, hiring the right people hitting the right time,” he said. “What’s great is that the Internet just continues to grow and continues to offer exciting opportunities.”