Kevin Ryan on Gilt City vs Gilt Groupe

Bambi Francisco Roizen · August 22, 2011 · Short URL:

CEO and founder of Gilt says national will likely remain larger than local

On my last trip to Long Island, I almost attended the latest soiree at Gilt City's Hampton House, which launched this past July. I couldn't attend because I was held up in traffic (as many New Yorkers experience). I totally mised out on the dinner put on by Scott Conant (of Scarpetta). But these weekened parties go on for another month and are a great way to be introduced to high-end restaurants, chefs, wineries, boutique, and salons in the area.

It's exactly what Gilt City is all about - helping us discover great-quality-and-richly-priced products and services that we can splurge on (at a discount, of course).

If you're not familiar with Gilt City, it's Gilt Groupe's strategy to tap into the local daily deal phenomenon established by Groupon and LivingSocial. Today, Gilt City is in 10 cities, and could be in 15 within the next 18 months, according to Kevin Ryan, CEO and founder of Gilt Groupe, in this second part of our five-part interview series.

We've seen how quickly those sites can generate revenue. Today, Gilt City accounts for 10% of Gilt Groupe's overall revenue. Will Gilt's local strategy ultimately dominate Gilt Groupe's overall busines? I asked.

"For us, the national busines will always be bigger," said Kevin. The reason is that Gilt's initial focus has always been on national retailing, a business that has not seen any slow down in growth, particularly after this year's move to move into full-priced items, he explained.  "I wouldn’t be surprised if 50% of revenue will come from full priced," Kevin added, as it's a much larger market.

Surprisingly, Gilt's local strategy isn't more expensive than Gilt's national strategy. While Gilt City may have to hire a massive salesforce to hit the street, Gilt's national strategy requires the company to have big warehouses and robots handling the inventory. Today, Gilt has six warehouses in Nebraska that are the size of football fields.

Watch more of my interview with Kevin to learn more about Gilt's business and the difference between Gilt's local and national strategies. Kevin also talks about Gilt Groupe's average customer, which is mainly female, spending roughly $1000. Top customers spend $100,000 a year, Kevin adds. As for how much Gilt pays to acquire a customer, Kevin said that 60% of Gilt's members come from referrals. Those referrals cost Gilt $25 apiece as Gilt pays its members $25 for every invitee that spends money with Gilt.

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Bambi Francisco Roizen

Founder and CEO of Vator, a media and research firm for entrepreneurs and investors; Managing Director of Vator Health Fund; Co-Founder of Invent Health; Author and award-winning journalist.

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