Gilt by Association

Today in Ad Age, the magazine honours some 20 brands, some new, some established that have done well despite the recession. These are brands that are innovative in their thinking and marketing approach.

One of the brands that caught my attention was Gilt Groupe. It’s a member only website that offers sample sales on luxury women’s, men’s, & children’s clothing brands and now home furnishings. It was established in late 2007 by two long time girlfriends Alexis Maybank (who was at eBay during the early days) and Alexander Wilkis Wilson.

The sample sale is a cherished ritual of the urban fashionista. Luxury brands hold these events, usually by invitation only, to unload inventory at discounts of 50% to 70%. In Paris they call it the vente privée. In New York the semiannual Barneys Warehouse Sale has them lined up around the block. Sales are always final, so shoppers strip down to their knickers between the racks to make sure a $3,000 dress is a good fit at $600.

The brand promise of the Gilt Groupe is to find the very best brands, for unbeatable prices and remove the stress of NY sample sale shopping. “No lines... No getting strip searched... No crazy women grabbing shoes out of your hands... No sneaking out of work and faking a doctor's appointment. No being forced to pay with cash and running frantically to ATMs across the garment center... No nastiness... No damaged or shopworn merchandise”.

And what a great brand name - I love the play on words. They have grown the brand primarily through word-of-mouth, offering a $25 credit offered to members who bring in a friend that ends up making a purchase. When Alexandra and Alexis first launched the brand, invitations to join Gilt Groupe were sent to every single person the two had ever met. They were aiming to create a viral business model, but it depended on getting an initial critical mass of loyal style mavens to become members of Gilt. Smart thinking – they would be key in spreading the word to their network of fashionistas on tight budgets.

Their target and group of friends -- fashionable, highly educated and tech savvy -- were the perfect demographic for Gilt Groupe, so it took almost no convincing to get them to link to the website and join as members. Membership is free but still gives the brand cache and a sense of exclusivity. Right now, for instance, you are wait-listed and only a couple of new members are accepted each day.

While there are a number of sample sales or luxury brand outlets on the internet, what really makes this site stand out is the sophisticated nature of the site and its blog on “what’s hot” written by the principals that reads like a copy of Vogue magazine with high quality photography.

Gilt counts 1.5 million members in the U.S. as well as 250,000 members in Japan. The retailer is on track to ring up $400 million in sales for fiscal 2010. Not bad for an e- retailer that’s less than two years old.

The success of Gilt is its innovative thinking, highly targeted concept and quality execution that delivers on its brand promise.