Move over Gilt, Hautlook etc. Here Comes vente-privee

Gilt, HauteLook, Fab are just copycats of a decade-old site from France

It’s not widely known here that most of the highly-discounted fashion sites in the US, like Gilt,  HauteLook, Beyond The Rack, Rue La La,  Fab.com and others are really copies of a site that began in France almost a decade ago,  called vente-privee.

A fascinating company with nearly a billion dollars in revenue,  vente-privee began the process of daily sales of luxury products that were generally remnant inventory from high fashion designers discounted by about 70%.  its sales were generally posted at 8 in the morning, and enormously popular in France.  

The business soared because it offers a totally different experience than a direct sale from the brand itself.  The prices is considerably cheaper, yet doesn’t threaten the relationship between the brands and their best customers, who look for the latest and hottest fashions.  Vente-privee makes the brand accessible to a more mass audience because that audience is willing to concede certain things in order to own products from the brand at a more affordable price.

Vente-privee’s founder Jacques-Antoine Granjon had, until now, avoided the American market, making the case to me in an interview in 2010 that it was different and now more competitive.  But he found a way in.  He found a partner, American Express (NYSE: AXP).  By partnering with American Express he avoids the huge costs of having to build his brand here..they will do it for him.  And because of his relationships with the European designers, he might be able to bring more exclusive products to this market, which otherwise has become very crowded with copycats.

This international move is another example of the power of the internet to remove barriers to doing business everywhere.  Vente-privee is now able to bring its size and pricing power into the US Market without huge upfront costs because American Express, like so many US companies looking for pathways to grow, is expanding it’s presence into e-commerce.  This is a perfect opportunity to test the e-commerce marketplace with a successful partner.  

By working with an established business from another country, American Express is able to extract value from the relationship in the form of a learning process in exchange for something it can trade with little incremental expense, branding and exposure to the US Market.  It’s a smart move for both companies.

The impact on the US competitors is yet to be seen.  It could make life more difficult, but it could also serve to expand the market for everyone by making this kind of shopping more acceptable.