Alexis Maybank and Alexandra Wilkis Wilson are co-founders of Gilt Groupe, a members-only, e-commerce site that offers up to 60 percent off luxury brands such as Marc Jacobs and Valentino in “flash” sales that last just 36 hours. This unique invitation-only business model has attracted 5 million members in just 4 years, with a valuation of $1 billion.
Gilt Groupe took both the fashion and e-commerce industries by storm with such a simple idea. Where did the idea come from?
Alexis Maybank: We were inspired by the popularity of New York’s designer sample sales, but we wanted to make this popular local pastime available online to customers throughout the US. Gilt Groupe was designed to offer highly coveted fashion labels at insider prices to a passionate group of consumers. Today, we’ve evolved to become a website selling diverse luxury lifestyle products to consumers around the world.
Five million members and a $1 billion valuation in just 4 years is hardly the norm for a start-up. How were you able to achieve this?
Alexandra Wilkis Wilson: The most critical factor contributing to our success was the founding team. In addition, we enlisted the industry’s leading and most coveted brands to sell on our site, and for the first time, sought to curate the best of a season or collection and not feature everything. We also tapped cutting-edge viral and social marketing techniques to scale the customer base quickly, and used leading creative design on the site to cultivate a leading luxury brand online.
Common advice is to be cautious when going into business with friends, but it’s worked for you. What would you tell someone thinking of going into business with friends?
AM: In a start up, it is absolutely critical to be able to trust and rely on your co-founders and your team. It is also important to communicate. Lay out any potential issues or concerns on the table and talk about them in detail. In our case, we were friends from business school, so we had seen each other’s work ethic and drive in action, and we were familiar with each other’s basic business acumen. Most important, we each had seen the other at her best and worst and knew we would not encounter any surprises as we hit the inevitable highs and lows any start up faces as it grows. Our confidence and trust in each other was absolute.
Gilt Groupe’s success was largely built during the recession. With the economy being slow to recover and down-sizing still a reality, what advice do you have for those who are starting their own business in this economy?
AWW: There is no better time than now to pursue an idea you are deeply passionate about, and there are many sources of financing available now to would-be entrepreneurs. First, the idea should be easy for you to explain in one sentence. Second, does this concept exist in any shape or form already? Take a look at the marketplace. Who else is out there? Has someone already tried this and failed—and if so, why? Have times changed? Sometimes an idea can be too ahead of its time and advanced for the market. These days the best way to make sure the time is right for your idea is to get it out there and see what people think. Getting customer feedback from the start will help you build a better product, one that will maximize your investment.
Gilt Groupe has expanded beyond fashion with sister sites such as Jetsetter.com for travel and GiltCity.com for local deals and finds. How did you decide when and how it was time to grow?
AM: We have always been close to our customers. We both spend a lot of time with our members, listening to their perspective and ideas and responding to their feedback, as well as investing in regular customer research. Our members communicated clearly that they were not only interested in fashion and decorative items, but they lived or aspired to live a luxury lifestyle that included travel, local experiences, food, and wine. We incorporated this feedback into our business and our offerings.
Sometimes growing too quickly can be detrimental. How can this be avoided?
AWW: There are two areas where you see companies suffer when growing too rapidly. The first is not anticipating the right type of people they will need to lead various teams. Hire fast enough, but do not over-hire, and invest in recruiting the right talent so you do not have to rehire later, which is a time-consuming and sometimes costly mistake.
Second, if you grow too rapidly and are not investing enough in making sure your business infrastructure is strong, you may find yourself grinding to a halt when the site crashes, the orders outpace what you can ship out in an acceptable time, or your accounting systems fail and lead to errors. Try to anticipate what could break next, and get rigorous as a team in shifting focus fast enough to address these problems.
A number of companies have copied your business model. What’s next for Gilt?
AM: We are investing heavily in personalization, and by that I mean taking the 150 sales on our site each week and making sure that as a member you see the ones that best fit your tastes as you enter the site. It's key that when you visit, you feel Gilt knows you. We want you to have the most exciting, targeted shopping experience online so that you can still visit, discover, and purchase in just minutes even as we offer more and more sales. We are also focused on mobile, relevancy, and shopping internationally. Lots going on at Gilt!
Molly Gregor is the features editor of the New York Enterprise Report.