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Kevin P Ryan

Following its UK launch in November, the founder of US private Sales site Gilt is boldly confident his business will flourish against its European competitors.

With numerous players battling for sales and market share in the super-competitive and crowded European private Sales market, new US entrant Gilt has its work cut out. But founder and chief executive Kevin P Ryan is rather confident, he tells Drapers over a drink at the Savoy in London.

“I think you’ll find none of the brands BrandAlley sells we are likely to sell, and Cocosa is quite small. [Mohamed Al] Fayed bought it six months ago and I haven’t seen much impact,” says the fearless American.

In October last year, competitor BrandAlley, which is part-owned by News International, posted a 70% rise in sales for the first nine months of 2011. It gained 75,000 new customers and sales soared to £23m over the period. And Cocosa, which was acquired by former Harrods boss Al Fayed last July, shook up the sector recently by dropping its membership barrier.

“People tend to lump flash Sale sites together but you wouldn’t compare Walmart to Barneys,” Ryan continues. “Even those that are more similar than that, such as Bloomingdale’s and Barneys, they don’t always compete head to head as much as you might think.”

In Ryan’s opinion it’s the daily deals sites such as Groupon and LivingSocial that compete more head-on and, as a result, Gilt Groupe is looking at making acquisitions in this market. In October, for example, it bought US daily deals site The website had more than a million people on its mailing list and 190 employees; Gilt kept on just 20 of its staff.

“That’s an example of consolidation that’s occurring,” says Ryan. “In one city, if we have five sales people and they have a further three sales people, we don’t need more sales people but we always need more mailing lists. We’ve looked at buying some of the players [in the UK] as not that many are doing well.

It’s so much easier to launch a daily deals site. There will be tremendous consolidation in that space. Two years from now I think there’ll be 75% fewer players worldwide.”

European inspiration

Despite Ryan’s foray into Europe – Gilt launched in the UK last November as part of a global expansion into more than 90 countries – he was actually inspired by the European private Sales model when he launched Gilt in the US in 2007.

“I wondered why this format was enormously successful in Europe and no one was doing it in the US. I thought either something structural in the US market meant it wouldn’t work or simply no one was doing it,” he says, realising it was indeed the latter.

With no previous fashion experience – his background is in digital, having set up business news website Business Insider, database support sites 10gen and MongoDB and been influential in the growth of online advertising firm DoubleClick, which he sold for $1.1bn (£710.4m) in 2005 – Ryan began to build a team that could put his plan into action. He quickly recruited former eBay executive Alexis Maybank and Louis Vuitton and Bulgari merchandising executive Alexandra Wilkis Wilson.

Ryan says launching this model was no easy feat in the US in 2007, when no similar models existed, and with only the team’s reputations to go on. “We had to beg for brands at first. The first brand was Zac Posen and [the designer] was someone that Alexis knew.

“The key was to get really good brands on board to set the tone. The site has always looked good and that was part of the model. We’d say to brands: ‘What’s better for your brand, being picked off the floor in a corner of a store or being beautifully photographed and arranged on the site?’ Plus it always sells out; if you go to a mall and the product is still there two weeks later it’s bad for a brand.”

The site counts Missoni, Vera Wang, Carolina Herrera and Proenza Schouler among its womenswear clients in addition to Valentino, Alexander McQueen and Thom Browne for menswear.

After only four years, Gilt has racked up annual sales of $500m (£322.6m), a far cry from its early days when a single email was sent out to the founders’ contacts and it had an invitation-only policy through a friend (membership is now free). At that time, there was one Sale a week. “We started with eight employees four years ago; we now have 950,” says Ryan. “We experienced rapid growth and in the first year our revenue was $25m (£16.1m).”

The Gilt site houses womenswear, menswear, kidswear and homewares as well as services such as travel and experience packages, similar to that of a daily deals website. Womenswear accounts for a third of the site’s revenue. After beginning with branded product, Gilt introduced its own full-price menswear site in August 2011, selling brands including APC, Viktor & Rolf and Calvin Klein.

So who is the Gilt customer? “Our typical customer is 34 years old, living in New York or another big city and earning above average income, probably $100,000 [£64,500],” says Ryan. “She’s quite well off but can’t easily afford Chanel dresses every day and appreciates great brands.” The site’s top-tier customers have each spent $100,000 to $500,000 (£64,600 to £323,000) across a two-year period.

Gilt-edged opportunity

Now Gilt has gone international, sales growth will be dependent on new categories and acquisition, says Ryan, but he stresses the enormous potential in the private Sales market. “Vente-privée does a billion dollars just in France, and it is not even in all the categories we are,” says Ryan. “The US market is five times larger. Vente-privée has been around 11 or 12 years and we’re probably getting close to half its size after a couple of years, and we’re growing very quickly.”

Ryan’s confidence could be interpreted as arrogance by some but his drive and enthusiasm for making this business bigger and better is obvious, contagious even. After 20 minutes in his company, if Drapers was a gambler, it wouldn’t bet against him. “In five to 10 years from now someone will be doing $5bn (£3.2bn) to $10bn (£6.4bn) in this market and I think it will be us, but that’s why people play the game, so we will see,” he says. Indeed we will. 


2011 Launches Gilt in the UK

2009 Named Entrepreneur of the Year by Ernst & Young

2008 Founder, 10gen

2007 Launches Gilt Groupe

2007 Founder, Business Insider

2005 Sells DoubleClick for $1.1bn (£710.4m)

1998 DoubleClick floats on US stock exchange

1996 Joins DoubleClick as president; later becomes chief executive

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