In the past three years, a wave of U.S. companies have followed the lead of France’s Vente Privee in the business of private sales.
Because it’s a great business.
The leader, Gilt Groupe founded two years ago, should do more than $150 million of revenue this year. Gilt recently closed a round of financing at a $400 million valuation. (Disclosure: Our co-founders, Kevin Ryan and Dwight Merriman, also co-founded Gilt).
Another competitor, Rue La La, was just bought by GSI Commerce for $350 million. (A reader intelligently notes that the sale included another business, SmartBargains, so presumably this was not all due to Rue La La). Rue La La has 1.2 million members to Gilt’s 1.6 million. Kevin and Dwight’s eyes are presumably as big as pie plates.
Brad Stone, NYT: The idea of holding private sales of premium merchandise on the Web suddenly seems to be in vogue.
GSI Commerce, which manages the Web sites for major retailers like Toys “R” Us and Zales, announced on Tuesday that it was buying Retail Convergence, operator of the Web site Rue La La, in a deal valued at as much as $350 million.
Sites like Rue La La, and its major American rival, Gilt.com, take the exclusivity of designer sample sales onto the Web. Only current members can invite new participants. Every day there may be new items to buy. For example, a Rue La La member might log on to find 50 per cent off items like Prada bags or Marc Jacobs shoes in a two-day sale.