How do you scale “Members Only” Gilt free excess?

It’s hard enough for the average worker to concentrate on their job responsibilities with easy access to Facebook, Youtube/Hulu and the grand old dame of all workplace distractions, instant messenger . However,  a burgeoning Internet addiction has seized  over 750,000 people as they religiously log on to Gilt Groupe at 12:oo pm EST sharp on a daily basis, to take advantage of  50-70% discounts on high end fashion labels such as Marc Jacobs, Stella McCartney, John Varvatos, etc.

Karl

Even creepy Karl knows to run, not walk to a Gilt Groupe sale!

Founded by two Harvard MBAs, Alexis Maybank and Alexandra Wilkis Wilson, with seed investment from Doubleclick founder Kevin Ryan and an additional $5mm infusion of capital from Matrix Partners; the Gilt Groupe has become a symbol of how yuppies can still keep up with latest trends amidst turbulent economic times.The Gilt Groupe first launched in 2007 and immediately focused on maintaining an air of exclusivity given that one technically had to be “invited” to become a member. The site solely targeted women at first however, has added a men’s section as word of mouth buzz grew and the public’s appetite for bargains grew in inverse proportion to the Dow.

Mayband and Wilson or “A&A” to their employees have leveraged their respective experiences at ebay, Louis Vitton and Bulgari to impressively launch an Internet start up that is generating actual cash flow and reportedly had gross revenue of $20+ MM in 2007. The Gilt Groupe currently holds 25 sales per week and has recently turned to display advertising on contextually relevant fashion/lifestyle sites in an attempt to drive increased membership and awareness of the service.

This recent aggression does raise the question if  promoting to the masses will severely compromise the Gilt Groupe’s core competencies and value proposition. How can this emerging site  force balance expansion and credibility and “jump the shark” so to speak and  avoid becoming e-commerce’s version of NBC’s “Heroes” ? If the masses all become members of the Gilt Groupe or it becomes too accessible, will it no longer be “cool”? Additionally, will the company be able to supply enough product to meet demand or will only the most diligent be able to reap the rewards of bargain basement couture?

Prospective Gilt Groupe Members in 2010?

Prospective Gilt Groupe Members in 2010?

A&A maintain that the inventory is readily available as designer desperately yearn other cost-effective channels to distirbute their products. Additionally, it appears that the Gilt Groupe is adhering to the Web 2.0 mantra of developing “community”.Similar to any smart brand they have  “listened” to their customers and recently offered greater value on shipping rates and exchange policies in addition to enabling the sites with RSS feeds to keep track of upcoming sales.

Word of Mouth has made Gilt Groupe a hit with men as well!

Word of Mouth has made Gilt Groupe a hit with men as well!

Lastly, members of the Gilt Groupe have been continuously incentivized to have members of their social  graph  register and buy as $25 “credit” is bestowed for bringing aboard another paying members. They even have a slick dashboard set up so members can monitor their personal marketing activity, seeing which emails were opened, who registered and what was purchased. The bet here is that Gilt continues these practices and implements voting and sharing tools in the next couple months to take take even further advantage of their rising popularity. In the interim, email me here if you would like to be invited to the Gilt Groupe because daddy needs some new shoes and a sweatshirt too 🙂

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