March 26, 2014, 11:01 AM

How Gilt aims to stay relevant in the minds (and wallets) of the young and affluent

The largest flash-sale retailer in North America is focused on new initiatives outside of its core business of limited-time sales of heavily discounted luxury items, CEO Michelle Peluso tells Internet Retailer. It’s looking into more full-priced sales of exclusive product lines, and offering fulfillment and creative services such as product photo shoots for other retailers.

Lead Photo

Michelle Peluso

Gilt Groupe Inc. is branching out from its core business of daily sales of heavily discounted designer items, as it seeks new ways to take advantage of its highly engaged, young and affluent customer base, CEO Michelle Peluso tells Internet Retailer.

A case in point is a sale the retailer ran last October for the 20th anniversary of high-end shoemaker Stuart Weitzman’s launch of its popular 5050 boot. The women’s boot, leather in the front and stretch material in the back, pulls up over the knee and runs around $600-$700.

To mark the occasion, Gilt Groupe worked with the Stuart Weitzman brand to sell colors and styles of the boot that were exclusive to Gilt.com. In a departure from the norm for Gilt, the retailer didn’t discount the items at all, and even offered $10,000 custom bejeweled versions of the boot. Gilt, No. 54 in Internet Retailer’s Top 500 Guide, built its business on selling items at 60% off retail.

Gilt got the word out about the Stuart Weitzman event through social networks and e-mail, and invited its most loyal customers to the site early to shop the sale the evening before it went live to all eight million Gilt members.

The flash-sale retailer sold more than $1 million worth of Stuart Weitzman 5050 boots during the 20-day sale, though most of that revenue came on the first day, Peluso says. “We even sold two of the $10,000 pairs, and one of those came from an iPad shopper,” she says. “We know we have this very affluent audience and sometimes price is no object. We are working to take advantage of our audience and work with our brand partners in new ways.”

Around half of Gilt members are in the 25 to 34 age range, she says, and 36% are male. 30% of its customers have an annual income between $60,000 and $100,000, and 27% make more than $100,000 per year, according to web traffic measurement firm Compete Inc.

Gilt is exploring full-price sales of exclusive items with other suppliers it has worked with. It is also considering offering more operational and creative services to other retailers, she adds, such as fulfillment arrangements or product photo shoots.

This past fall, for example, Gilt began providing fulfillment services for outdoor gear flash-sale retailer TheClymb.com from its 303,000-sq. ft. facility in Shepherdsville, KY, near Louisville. Neither Gilt nor TheClymb have disclosed the financial terms of the arrangement, but both say it’s mutually beneficial, as TheClymb is able reduce shipping times and Gilt can make use of its excess fulfillment capacity. 

Gilt says it may consider similar arrangements with other retailers in the future.

In 2014, personalization of what customers see on Gilt.com, especially  international customers, is another big priority for Gilt, Peluso says. Consumers from abroad are currently shopping on the U.S. site, whose selection can be out of sync with styles and conditions in other parts of the world.

When it’s winter in the U.S., for example, shoppers will see sales on leather boots or outerwear. But that doesn’t resonate well with consumers in Australia, where it’s summer. Those shoppers might want to see sales on bathing suits or summer dresses.

“International customers are still coming to the site, and shopping with us,” Peluso says. “But we need to do a better job of personalizing their experience.”

Gilt, which has around 1,100 employees, is expanding its staff to facilitate some of these goals, she adds. A check of the retailer’s career’s page shows 87 open positions.

Gilt does not disclose its online sales publicly. But Internet Retailer estimates it brought in $600 million in 2013, up 9.1% from $550 million in 2012, and booked an average annual growth rate of 37.1% since 2009, when Gilt says it did $170 million in sales.

Peluso would not comment on published reports that the retailer may be considering going public.

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