A few years ago, Gilt City seemed to have all the trappings of the modern ecommerce enterprise. The local shopping service paired snappy copy and at times full-blown editorial with high-end deals, appealing to the rising professional classes in New York, San Francisco and host of other cities. But the project’s momentum came to a grinding halt in January 2012, when Gilt Groupe closed Gilt City’s offices in a number of cities and parted ways with two of its top executives.
Fast forward 28 months, and the company is back on track. The luxury ecommerce site is reportedly on its way to an IPO, and Gilt City is under new management and growing again. After the layoffs in 2012, the company brought Steven Schneider, a former management consultant who spent the previous two years in other roles with the company, to run day-to-day operations.
Schneider, who now serves as president and general manager at Gilt City, will speak at Street Fight Summit West in San Francisco on June 3rd. Street Fight caught up with Schneider to talk about the evolution of local commerce, the business of curation, and the changing relationship between ecommerce and brick-and-mortar marketplaces for retailers.
Two years ago, Gilt laid off a number of employees and pulled back on its Gilt City operations. What went wrong, and how has the company changed its approach to local commerce in the meantime?
If you go back in time, especially for a company of our size, two plus years ago is a really long time ago. We have more people working for us today than the day that we had to make those cuts. What the business needed, and what we’ve done in the meantime, is to choose the right places to invest.
I have nothing bad to say about the previous [management] but in recent years we’ve really focused on driving differentiation in the things that we put up for our members. We did a lot of other stuff before but it was very early stages and just iterating and figuring out what works there and what doesn’t. It’s about scaling an investment, figuring out the right mix and size of the sales force to have in any given city, so so that we present the right economic tradeoffs and the right set of supply to our members.
What were some of those learnings?
The biggest takeaway for us was that great brands matter a lot. When you’re dealing with an audience that has come to expect curation — and a lot of people use that word for a lot of different things nowadays — it’s critical that we spend the time hand selecting the brands that we love to ensure our members will love them as well. You can do all the analysis day in and day out that you want. But unless you find those great brands, you won’t be able to maximize the value for the business overall.
The second learning was that we needed to identify the points where differentiation mattered. To me, it was about creating unique access experiences, which were only available on Gilt City. The ability to figure out which piece of supply fit for an audience is an incredibly great differentiating tool for us overall.
The core of Gilt’s business is in ecommerce. Can you talk a little about how the way in which Gilt City drives the core business, and how a retailer might think about those two (online and offline) opportunities?
One of the great parts about Gilt City is that we can help these large, vertically-integrated fashion companies drive traffic to both their stores and online properties. The combination of having those two core capabilities certainly allows us to deepen our relationships with our brand partners, giving us a competitive advantage over others. It becomes a supplemental case study in how we can not only help them sell through product and curate these wonderful fashion sales but also to serve this other real need for them as well.
Now, from an operations standpoint, the two business are substantially different. The key difference being that in the local business we outsource nearly all of the fulfillment since it happens in store. That definitely creates risk for us, which is why the picking of vendors upfront and doing the work to ensure they’re the type of partner that our audience can trust is so important. It’s risky when you’re not actually delivering the end experience to the consumer but we solve that through curation and though having only the best brand partners to work with.
You continue to put emphasis on curation. Is that level of curation — where you’re hand selecting a few partners — scalable when you’re dealing with a small business as well as large brands?
I think we’ve proven that we can, and it’s just making sure that we’ve got the right back-end process to vet the vendors appropriately and the right team to be able to make those calls. The success that we’ve seen in the business over the last couple of years definitely gives me great confidence that we are able to do that.
The next piece is both building out the business in the core cities that we’re in, as well as finding other great markets to go replicate that in. We do put some category restrictions on ourselves to ensure that our members get only the best things. When you do that, you artificially constrain the quantity of things that you can show anybody at any given time.
In 2011, Gilt City launched Unlisted, a full-blown editorial product to accompany the local commerce site. The project was shut down soon after, but it positioned the service at the forefront of a push to merge content and commerce. Would you say content plays a smaller role in the company’s strategy today than it did a few years ago?
Compared to what you’re describing before and the message at that point, I would say it’s just different. It gets back to what I mentioned earlier, which is how do you make sure that you’re investing in the right places for growth that will get you the right engagement with your customers? We have allowed them to engage in the ways that they want to engage with us without separately creating a massive amount of content like a more traditional editorial organization.
Steven Jacobs is Street Fight’s deputy editor.