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What’s a Dress Worth?

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A sampling of items that sold at Gilt Groupe last week.  

In its self-presentation, Gilt engages in a fair amount of spell-casting—it’s as invested in projecting a high-end image as any of the designers that it sells. But at its heart, its business is simple, and very of-this-moment: It capitalizes on reduced expectations of value. A couple of weeks ago, during her performance at the Grammy Awards, the singer Carrie Underwood wore a gold strapless gown by the designer Reem Acra. The very next day, supposedly by coincidence, it was on sale at Gilt, marked down by almost $4,000, to $1,498. For Gilt, it was a publicity coup, picked up by The Wall Street Journal; for Acra, the moment must have tasted slightly bitter. (Acra’s publicist declined to comment.) “I think this is one of the ongoing issues of the American merchant,” says Paco Underhill, a marketing consultant and the author of Why We Buy: The Science of Shopping. “The customer looks out at the offering and says, ‘I don’t know what this is really worth.’ ”

An hour before noon on December 16, a Wednesday at the height of the crucial Christmas-shopping season, Gilt Groupe’s warehouse in the Brooklyn Navy Yard was abuzz with activity. Clothing arrives in bulk, and it’s supposed to be out the door in about two weeks. “Whereas a department store might be able to move a certain amount of product in a season,” said Amanda Graber, a Gilt public-relations manager, “we can do it in 36 hours.”

Graber and Kate Furst, the company’s director of sales operations, took me on a tour, every so often stopping to pick up an item—like a wool Burberry coat, retail price $2,995, Gilt price $1,198—and uttering an approving ooooh! We walked past a string of brightly lit studios, where photographers were staging modeling shoots. At a far wall, amid a tangle of disgorged clothing, employees sat inspecting stacks of incoming samples: James Jeans, a ribbed sweater by Alexander Wang. As the noon hour passed, phones began to chirp inside Gilt’s glassed-in customer-service center. Many online shoppers want fashion advice, and Gilt’s representatives often act as gentle guides. “Have you ever purchased anything from John Varvatos?” Todd Metzker, a stubbly part-time actor, asked an uncertain male caller who was looking at shoes.

One floor down, warehouse workers, shouting in Spanish, were wheeling cardboard boxes down long rows of shelves. Along conveyor belts, women folded Trovata hoodies, wrapped them in black tissue paper, and placed them into boxes, as machines dispensed shipping labels, dispatching purchases to Chicago, Los Angeles, Washington, D.C., and the Upper East Side. Into each box, the women slipped a little card with gold cursive lettering. “Thank you for your purchase,” it read, and was signed “Alexis + Alexandra—the founders.”

Alexis Maybank and Alexandra Wilkis Wilson are the public face of Gilt Groupe and the exemplars of its taste. A pair of stylish blondes, they represent the company on television and at events like Fashion Week, where Gilt has sponsored up-and-coming designers, and they keep a daily blog on the site, highlighting their favorite finds. Every successful company has a creation myth, and Gilt Groupe’s goes like this: Maybank and Wilson became friends at Harvard, where they lived in Lowell House as undergrads and later returned to earn their M.B.A.’s. Maybank learned about e-commerce as an executive at eBay, while Wilson went into fashion, working for companies like Louis Vuitton. Eventually, they united their experience and started Gilt, in an inspired burst of Carrie Bradshaw entrepreneurialism.

The full story is a little less glamorous, and it begins with Kevin Ryan. Ryan was the CEO of the online ad company DoubleClick until 2005, when it was sold for more than $1 billion, and he’s now an investor who presides over a stable of start-ups. In Ryan’s telling, the eureka moment occurred one day when he happened to see a long line of women standing outside a storefront on 18th Street, waiting to get into a Marc Jacobs sample sale. “All I could think was, if there are 200 people who are willing to stand in this line, that means in the United States there are probably hundreds of thousands,” Ryan says. “But they don’t live in New York, they’re busy right now, they just can’t do that. And I can bring this sample sale to them.”

Ryan was aware that a French company called Vente Privée was raking in money by selling fashion overstock, and he thought its business model could work just as well in America. He hired two computer engineers to start building a website, and then found Maybank through an executive-search firm, hiring her first as the company’s chief operating officer and later promoting her to CEO. Maybank brought in Wilson a few months later to act as Gilt’s emissary to the fashion world.


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