Gilt Groupe was founded by Alexis Maybank and Alexandra Wilkis Wilson. Maybank was an executive at the Internet auction site, eBay, and Wilkis Wilson held similarly high-placed positions at major fashion houses, including Bulgari and Louis Vuitton. The pair came up with the revolutionary idea of expanding sample sales, traditionally restricted to a few New York retailers, to the online world.
Perennially popular, sample sales were highly successful events where luxury fashion retailers sold their samples to the public at deeply discounted prices. Prior to 2007, women and men interested in sample sales had to line up at the stores ahead of time and then rush to get to their desired items as quickly as possible.
Gilt Groupe moved the sample sale online, offering it in a “flash sale” mode, meaning that the price is only available for a matter of hours or even minutes. Every day at noon, Gilt Groupe announces its daily sale, and loyal subscribers flock to the website to make purchases.
What makes Gilt Groupe so successful, however, is its focus on exclusivity. The company has managed to develop a highly loyal following of upper income young women (its target demographic) by closing its doors to the general public. In order to make purchases on a Gilt Groupe sale, one needs a membership and those are only available via invitation by an existing member.
In this way, Gilt Groupe built a community around its flash sales. Scores of members eagerly await the daily sale announcement at noon and rush to make purchases off the website, often at discounts of 80 or 90 percent. Top items now sell out in seconds, and the popularity of the service has led up-and-coming designers and even some established names to design lines specifically for Gilt Groupe.