Gilt Groupe Founders Gab About the Future of Commerce

Authors of new book discuss what's ahead for Gilt and online shopping

When Gilt Groupe co-founders Alexis Maybank and Alexandra Wilkis Wilson opened the virtual doors to their online flash sale site in 2007, they were thrilled to sell $9,565 in high-fashion fare on their first day. Now, the members-only site—which has since grown to include travel, food, home furnishings and local services—can generate far more than that in a matter of minutes. 

In their new book, By Invitation Only: How We Built Gilt and Changed the Way Millions Shop, which hits shelves today, the co-founders trace the story of their company's success and how, along with co-founders Kevin Ryan, Mike Bryzek and Phong Nguyen, they reinvented luxury shopping—online and off.  In a chat with Adweek, Maybank and Wilkis Wilson talk about their site's rapid rise and the road ahead.

Adweek: When you look back, when did you first feel like your vision of Gilt Groupe had materialized?
Alexandra Wilkis Wilson: There are two critical moments that stand out in my mind. Our first sale was a Zac Posen sale [on] Nov. 13, 2007, and we had no idea what to expect. We were five co-founders standing shoulder-to-shoulder in a very modest office space, and we had no idea if our customers were going to actually log on and shop. We were armed and prepared for a lot of customer service questions. But we were delighted to find that our customer was self-directed, she was vying for herself, she was not calling or emailing. She just trusted her instinct, loved the product, loved the prices. And she was shopping. That was very exciting. Another moment for us was several months later when Gilt Groupe was mentioned on the TV show The View and our membership more than doubled in a matter of hours.

AW: It was interesting to read that, initially, you didn’t see Gilt’s appeal as a marketing channel. You said that it first struck you during a conversation with a designer. Why do you think that didn’t occur to you first?
Alexis Maybank: We initially conceived of the idea as [an experience like] shopping at sample sales—a really exciting way to get an insider price and designer goods and you’re there for a certain amount of time. We just loved that. Even though that in itself was a new form of retail and a new way to market goods (mostly in Manhattan), we didn’t experience it that way. We really thought it would be more of a [vehicle for] our partners to move the inventory in a unique way online. It was through a call from Ron Berk (the CEO and husband of designer Judith Ripka) that we had somewhat of an "a-ha!" moment. [We realized] that this is actually a unique way to market to consumers online, especially for brands having trouble reaching consumers that aren't going to the store quite as often or that might perceive fashion and luxury brands as maybe not for them. It was really a unique way for many of our brands to connect with consumers online.

AW: You say Gilt also flipped consumer psychology on its head. How so?
AM: The big and exciting change in our model was the feeling that you had to move and act really quickly on making a purchase because it was fleeting. The retail model really was changed in the Gilt formula, which was act now, move quickly. We don’t have everything for everyone. We don’t have goods that are always here and available, and that was the typical norm within e-commerce—everything for everyone and lots and lots of selection. That psychological change was a big one, but effectively it made for a really exciting shopping experience.

AW: Part of your opportunityand challengewas that luxury brands were slow to innovate on the Web. How do you think they're doing now?
AM: It has changed so dramatically in so many ways. When we were getting started, Alexandra was the primary person focused on convincing brands to sell with us. It wasn’t just [saying] here’s Gilt and what it could do and getting a brand over the hurdle to sell with us at discount prices. [It was often explaining] here’s what e-commerce is all about and here’s what e-commerce can do for your business today. If you fast-forward, it seems like every single one of our brand partners is now online. They now have a head of social marketing; they now are actively involved with Twitter and Facebook. It’s evolved so dramatically that not all, but many, are embracing e-commerce as a major sales channel and some have even gotten savvy enough to realize that it is their flagship store. It is the place where they should be doing the majority of their business and reaching customers online on that customer's terms.

AW: With all the different Gilt verticals and varying price points, the site is now accessible to so many people—but for early adopters, it could feel like it's lost its sense of exclusivity. How do you preserve that insider-y feel as the site expands?
AM: We have all the same brands we’ve had since the initial year, but we've expanded outside of women’s and men's designers and fashion to many different areas that our customers are asking for. And we've also expanded dramatically in price point too because we’ve heard from our customer that [they] dress highs and lows—[they] mix great American Apparel leggings with an Alexander McQueen blazer and that’s just how the modern woman or American consumer thinks about their closet. Five years into our history as a company, we have a lot of information on our customers that they’ve [given] us explicitly or indirectly, through activities like clicking, purchasing, visiting sales and browsing. That allows us to make it still feel like a small and targeted experience. When we email out what it is that Gilt is offering on sale, virtually it seems like no two emails are the same. We send out over 3,000 versions of that one single email, tailored to what we know about you as a customer—how you like to shop, what brands you love and where you want to travel. That’s critically important to making the experience feel very customized and personalized as we scale. The experience will increasingly be targeted to you so it always feels like a small boutique online that really knows [you] as consumer.

AW: What do you think about the so-called "pink ghetto" debates in tech revolving around the high number of women-founded fashion and retail startups, but dearth of women in tech in general?
AM: I think many of the businesses women are starting in fashion and retail or targeting mothers just happen to get more press and marketing, so I think the phenomenon is getting overemphasized. I know tremendously successful women starting businesses, especially here in Manhattan. I almost think it’s leading the way for Silicon Valley. They're doing it in areas of data and extraction [for example], and they just don’t tend to get the attention that they deserve and have had tremendous success in the past.

But I do believe that whether you're a man or a woman, you’ve got to go to what you know and what you love. If that’s fashion, fantastic. If that’s data and data analytics, fantastic. If it's social networking, fantastic.

AW: In the past year, we’ve seen tech companies go public with big valuations and then stumble. Has that affected your thoughts on Gilt's future?
AM: We’ve announced publicly that we’ll discuss internally the possibility of maybe a public offering, but no sooner than 2013.  So it’s something, just as a fast-growing business, that we have to think about, but we have no specific plans to go public at all, and we’re not organizing for it right now.

AW: What are the key e-commerce trends that you think marketers should be paying attention to?
AM: In the last quarter of 2011, sales of mobile devices outnumbered PC shipments. The adoption curve for them is outpacing any other new medium that's been introduced. As an example, Gilt is a top 10 retailer [nationally] through mobile online. On any given day, we see verging on 30 percent of our business come in through mobile devices. I think that is going to continue to become the norm by which information is shared, transactions occur and business transpires. If it's not at the top of your list as a marketer, it should be.
AWW: Personalization is incredibly important for our business, and I'm sure for many others it's going to continue to become more and more important. When our customers log into our site either through our desktop or mobile site, they're going to feel that the site has been personalized just for them, that the sales most visible to them are the ones more interesting to that consumer based on purchasing history and reading behavior.