Sell more than a product, sell an experience. “We spent weeks discussing in minute detail how to provide our customer with the best possible package opening experience. Should their purchase be wrapped in black or gold tissue paper? Should it include a personal, handwritten note of thanks? That summer we devised detailed packing instructions for our new warehouse that included information on how to fold various types of apparel; how to use rulers to make the folds neat; which items should be inserted first in the box; where the gold sticker should be affixed to the tissue paper and what customers should see upon first opening the box.” Another take-away here is to create an experience where there might not otherwise be one. Opening a box traditionally is not an experience, but Gilt Groupe pushed against that.
Create rarity and exclusivity. “Luxury brands would be hesitant to be associated with sales on the internet. But we hoped the fact that our site was members only and accessible only by password would help convince them. We’d sell direct to our members and nothing sold on Gilt would ever turn up in a Google search. And each sale would last only 36 hours.” Creating exclusivity creates buzz, similar to the time when Facebook could only be joined if you were attending university or when Gmail came out and was invite only.
Going high end and exclusive helps build your brand. “Making FirstLook not just high-end but member only would help it market itself. It would cultivate an air of mystery and imbue it with the allure of exclusivity. Designer brands would also lend a positive halo effect to the fledgling site.”
There will be haters. “You will never get brands like Valentino and Hugo Boss to agree to work with you.” He was adamant that they’d never want to sell through a third party, especially at discounted prices and especially online, when they already had their own successful, profitable outlet stores for liquidation purposes.” Likewise, there will be those that see the genius of what you’re doing. One designer executive “immediately saw Gilt as an opportunity to gain access to thousands of young fashion-conscious, educated, time-starved shoppers with disposable incomes. In other words, he liked the idea that people like us and our friends would become exposed to his brand. Our target demographic affluent but largely strapped to a desk, was increasingly hard to reach for brands whose in-store customer tended to skew older.” Furthermore, “Many of these established brands had no other way to reach Gilt’s specific shoppers so cheaply and efficiently.”
On customer service: “Not a single shopper contacted us via Meebo chat or phone, and we got a whopping one e-mail. The Gilt customer immediately revealed herself to be savvy, self-directed, and efficient, with no need (or perhaps time) for hand-holding. We got the immediate sense that she didn’t want us or anyone else to get in the way of her purchase. “Let me be,” roared this customer with her silence.”
Listen to the customer, iterate, then go to market again. “Besides, before we speculated any more about what our customers wanted, it made sense to ask them: to host a few sales and gauge the response. Would anyone buy anything? What would people buy? It’s critical not to overinvest before getting a fledgling idea, product, or service out into the public market. After all, many businesses end up having to pivot in completely new direction after launching. Minimizing investment and maximizing consumer feedback in a start-up’s early days helps save critical time, cash, and resources. We didn’t want to do too much work or allocate too much money to building the site before we had proof that customers really wanted to shop this way. We believed so much in our strategy of launch first, tweak later, that Mike and Phong didn’t even build out the code for our returns process before the launch.”
Don’t be afraid to do things differently. “The members-only format, in which users were forced to register before accessing a site, was at the time considered e-commerce suicide. The prevailing view was that shoppers wouldn’t actually take time to register when they couldn’t first see what merchandise was behind the registration screen. But here’s where our word-of-mouth marketing came in: If she received a personal invite from a stylish friend or heard about how that friend just scored an amazing designer bag at 60 percent off, surely one hundred registration screens wouldn’t deter her from joining.”
Luxury brand building is a tricky thing. “If you let your reputation slip, it evaporates very quickly. So we were always very protective of it.” Susan didn’t want the inevitable excess merchandise to end up at a store like Loehmann’s, where it would hang alongside far lesser labels or worse, end up on the floor in a heap.”
Seed stage VC’s invest almost exclusively in the team. “Look, we know we raised money on this idea, but we really think we want to go in a different direction, “the partner said, “That’s fine; we never liked the first idea that much anyway.” The firm had invested in Kevin himself, trusting that he would eventually arrive at a viable business idea. Because there’s so little due diligence that can be done on most new start-ups, it’s natural that VCs concentrate most on the team involved.”
Marketing is not about spending money to acquire users. You’ve got to be more creative than that. “Alexis had also seen firsthand the power of a great viral marketing campaign at eBay. She and members of her team had traipsed all over the West Coast, trying to get the word out about the business by reaching the right circles of collectors, people who were passionate about buying or selling one thing in particular. They found these people on news groups and Listservs (precursors to blogs) and at all the stamp collecting and Star Trek conferences, not to mention the aforementioned South Dakota motorcycle rallies. Their grassroots efforts targeted large groups of like-minded people with similar obsession and effectively attracted these dedicated hobbyist to the site; once they discovered the wonders of eBay, the collectors were naturally incentivized to spread the word to friends with similar hobbies and interests. Again, people who are passionate talk about where they’re passionate about and are natural viral marketers.”
College students are a fantastic viral market. “College and grad students live in one of the most innately viral environments in existence. Alexis gathered e-mail addresses for the presidents of every women’s, fashion, business, retail, technology, and entrepreneurial student group at the undergraduate and graduate level through each school’s Web site. Later we followed up with personal e-mails.”
Send marketing emails from your personal account, because you are the brand. “Vente-privee’s e-mails were sent by a fictitious character names Cecile de Rostand. How fortuitous that Gilt had two very real women at the helm. Three of us knew that increasing A&A’s visibility would help us personalize and build trust in the brand. Gilt wouldn’t be remote or aloof, a faceless corporate behemoth like most online retailers. Instead, it would have a friendly human face, despite being a brand most customers interact with only via their computers. From the beginning, we personally answered as many e-mails from members as we possibly could. In January 2008, we began sending the daily e-mails alerting our members to sales from an account bearing our names. We thought this would help us speak directly to our customers — to create a sense of personal connection that is too often lost online. Whenever and wherever we traveled, we invited loyal shoppers to join us for coffee or a meal. Over time, we become friends with hundreds of our customers.”
Gilt did not outsource engineering. “Many people ask us, and Mike and Phong, if they should out-source their engineering needs. To them we say: Is engineering core to your business? The code will be written much better by someone on staff — who’s going to need to maintain it — than by someone who knows they’re going to work on it for two months and then that’s it, they don’t have to see it anymore.” Additionally, “the best engineers are never looking for jobs, “says Mike. “Most have never interviewed in their lives.” Sometimes, it helps to lure them to the office by inviting them to give a talk or to just come meet some of the Gilt engineers. We’ve noticed that free food is also extremely effective in motivation engineers.”
Kill unsuccessful products fast. “Debuting in summer 2009, the Fuse tab had a younger edgier feel than Gilt; it’s colors were icy blue instead of stately gold; the models younger. It sold clothing accessories, with a larger selection of denim and T’s. But while members liked the brands, they were not fans of Fuse. We’d added unnecessary clicks to their fast, easy, convenient shopping experience. After receiving consistent negative feedback for pretty much the first time in our existence, we eliminated Fuse in less than a year.”
sammy@blossomstreetventures.com