Gilt Finally Pivots Away From Flash Sales

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It’s been 10 years since Gilt launched, pioneering the flash-sale craze that consumed online shopping for years.

Entrepreneurs Dwight Merriman and Kevin Ryan modeled their company after French fashion site Vente-Privee, and Gilt’s business model — selling a fixed number of heavily discounted designer merchandise for a select period of time — was lucrative, earning as much as $425 million in 2010, its third year.

Shoppers loved buying luxury brands on sale at the height of the recession, and Gilt spawned plenty of copycats, including Rue La La, Haute Look, MyHabit, and JackThreads in the fashion space, and Fab.com and One Kings Lane in the design arena. It was also credited as the inspiration for discount sites Groupon and Living Social, and at its peak, Gilt was valued at a whopping $1.1 billion, with plenty of chatter around a potential IPO.

But that was 10 years ago. Amazon is now a leading shopping destination known for its aggressive price-matching. And while you still can’t get Christian Louboutin pumps or a Chanel bag on Amazon, the digital secondhand shopping space has also exploded, with major players like The Real Real, Vestiaire Collective, Poshmark, and ThredUp enjoying exponential growth (and even opening stores). For shoppers who prefer new items, the off-price sector has also blown up, with stores like T.J. Maxx and Nordstrom Rack defying retail’s current troubles with record foot traffic (the brands have launched sites of their own). Customers grew tired of the flash-sale model, and Gilt’s adversaries, once a serious threat, have turned sluggish, sold for peanuts, or just disappeared.

Gilt managed to hold on thanks in part to Hudson’s Bay Company’s acquisition of the company last January for $250 million. Today, Gilt is rolling out the website relaunch it’s been quietly working on for 18 months. No longer solely focused on the flash-sale model, it will offer both full-price and discounted merchandise packaged together on a much easier-to-navigate site. Whereas shoppers were previously confined to shopping via flash-sale categories, they can now search by designer. And while leftover inventory from previous seasons will still be available, so will current seasonal items. Essentially, it’s joining the luxury shopping site lineup.

Photo: Gilt

Photo: Gilt

“The landscape is rapidly changing and it was so important that we listen to our customers and evolve to exceed expectations,” Jonathan Greller, the president of Gilt and Saks Off 5th, tells Racked. “Customers wanted to shop their way. With flash sales, we were taking it down after the sale ended. Now it doesn’t have to come off the site.”

Greller stresses that Gilt isn’t abandoning the flash-sale model entirely, but making a dramatic pivot, going from something like 40 a day to six. Instead, the site will be filled with curated items based on what customers previously showed interest in (as opposed to just promoting items that launch at noon), as well as shoppable editorials.

“The site used to be very overwhelming, and it wasn’t easy to tell what was a lookbook or a flash sale,” says Greller. “Now, customers will be able to spot editorials and enjoy an innovative shopping destination.”

To further level the playing field, Gilt will start rolling out free shipping on orders that are $99 or more, and is working toward a 24-hour return process. In November, Gilt will merge its merchandise with Saks Off 5th (it’s already allowed returns to go to Saks Off 5th stores since the HBC acquisition).

When asked why Gilt wouldn’t just fold its e-commerce operations into Saks Off 5th, which already has a shopping website, Greller says the site still has a loyal following of some 9 million active members, 70 percent of which are under the age of 45. Folding the two together would confuse shoppers, Greller adds, and wouldn’t allow Gilt to introduce full-price items to the site if it was only associated with an off-price model by merging with Saks Off 5th.

Besides, HBC still sees a future for Gilt — specifically through the new website, which will allow shoppers to simultaneously shop for product alongside events and experiences on its sister channel, Gilt City.

“Our biggest differentiator is that we are a full lifestyle brand, where you’ll go on Gilt and buy yoga pants, and at the same time buy a gym membership for those yoga pants,” he says. “Or you can buy a dress, and then buy tickets to an exhibit you’ll wear that dress to based off our suggestion.”

Of course, the Gilt/HBC relationship goes both ways. With HBC as its parent, Greller says there will be a whole slew of new designers that will be introduced to the site, both full- and off-price. Gilt says the new brands include names “not just any e-commerce site can get,” but declined to share exactly which brands.

“Gilt is a true luxury player, and we do go after that segment,” says Greller. “Hudson Bay has many great luxury brands, and that stability makes it much easier to do business today.”