The two firms will become independent publicly traded companies in 2015. The move follows pressure from investor Carl Icahn to spin off the payments ...
The acquisition will enable the upscale Gilt City to expand into new markets.
Gilt City, the upscale deal operation owned by Gilt Groupe Inc., today bought the assets of BuyWithMe, another online deal and discount provider.
Gilt did not say how much it paid for BuyWithMe.
A primary driver of the acquisition was BuyWithMe's e-mail list, which has millions of names on it, as well as BuyWithMe's best-performing staff members, says Nathan Richardson, Gilt City president. So far, 18 BuyWithMe staff members have joined Gilt. Others may soon follow suit.
Even though there were 10 markets that Gilt City and BuyWithMe both operated in, only about 10% of Gilt's customers also subscribed to BuyWithMe. In part, that's because Gilt City skews high-end with an average price point around $80. BuyWithMe's average price point was around $40.
"Those different price points led us to have different types of consumers looking at our offerings," he says. Even though BuyWithMe shoppers may be oriented to lower-priced offerings, Richardson says that they are an attractive customer segment because when Gilt City offers an array of offers at different price points.
As it adds to customer base, Gilt City plans to use its own personalization technology to target different offers at different customers based on their previous purchases. "If I know that Caitlyn is more inclined to buy a $40 meal than me who is inclined to buy a $120 meal that comes with wine flights, it probably makes sense to surface deals around $40 to Caitlyn and more expensive offers to me," says Richardson. "We think we can harness our technology to make it smarter."
The acquisition also paves the way for Gilt to enter Houston, Philadelphia and San Diego, where BuyWithMe has operated. Gilt City is also evaluating whether to expand into a few additional cities in the near-future, he says.
During a transition period BuyWithMe will run sales previously scheduled in markets that Gilt City serves. After those offers run out, the site’s members will receive offers sourced through Gilt City and Gilt Groupe.
The acquisition represents the latest move by Gilt Groupe, No. 49 in the Internet Retailer Top 500 Guide, to solidify its position in the upscale daily deal space. Recently both Groupon and LivingSocial launched sites focused on fine dining offers and aimed at high-end consumers.
Unlike Groupon and LivingSocial, however, Gilt Groupe has taken a vertical, niche-focused strategy of targeting high-end shoppers, says Greg Sterling, founder of Sterling Market Intelligence. "Offering something more specialized is probably how sites in this space will survive," he says.