Gilt Groupe has major plans for overseas expansion, and its first big test will be Singles’ Day in China.
The New York-based flash-sale site already ships to 120 countries, but it has been hampered in the past by a lack of localized content, inappropriate seasonal merchandise, insufficient inventory and an inability to accept local currency.
Michelle Peluso, who became chief executive officer of Gilt in December 2012, has worked on overhauling the site and operations for local optimization, including local marketing efforts, appropriate seasonal merchandise for a country’s local climate and, where appropriate, language translations of select content. The latter refers to homepage screens, checkout pages, policies, currency conversions and descriptions for select products.
“This is such a time of learning. I just came back from a trip to China. What we learn from China will be a proxy for our international expansion,” Peluso said.
According to Peluso, the company chose to focus its “innovation efforts on how to accelerate growth internationally in China, because the market is so complex.” The thinking is that if Gilt can succeed in such a complex market, then the next international market should be easier to navigate.
Peluso may be thinking of the United Arab Emirates, Dubai and Russia as the next big markets for expansion. But it could be some time before Gilt makes any move because the company first has to get Asia right — and there’s a lot of moving parts in China alone.
Michael Zakkour, a principal at Tompkins International Consulting, said companies looking at China should think about 22 distinct market clusters, instead of the traditional tier-level city approach. “Because the middle class is growing so large so rapidly and urbanization is taking place everywhere in China, the smarter approach is to look at the country in terms of market clusters. You can then define the clusters by commonalities of wealth, [dialect], climate culture and food preferences.”
That means there’s a lot of learning to be done and that, despite the multitude of changes and initiatives Peluso has implemented, the big Singles Day push is still a baby step for the seven-year-old firm. For the event, Gilt is working with Alibaba’s Taobao Mall to give consumers the opportunity to sign up for access to gilt.com.
Peluso said Gilt used to send the same e-mail around the world at a set time. But that approach didn’t take into account the different time zones; inventory control, so everyone would have a chance to buy the offering; or whether a winter coat would appeal to a shopper in Australia who might be looking for a swimsuit.
“We are learning from data all the time. Before, some consumers would go to bed and, when they woke up, find out that certain sizes were already sold out. This year, we send out different e-mails to different countries around the world at different times and with different merchandise,” Peluso said.
In addition to the localized changes, Gilt is working with Alibaba’s Alipay to allow Chinese consumers to pay with local currency; the flash-sale site will provide free shipping directly to shoppers in China. For its other overseas operations, the company works with BorderFree to handle fulfillment of orders.
Separately, the company has been working on how to improve customer retention. As a whole, international customers are used to higher shipping costs and an inability to do returns. “We’ve been spending the year thinking through how do we take down those pieces of friction. To lower shipping costs, some vendors are shipping directly to the consumer, and that makes a difference,” Peluso noted. Gilt also is starting to think about how to best develop its mobile app because, “overseas, they rely more on texting.”
Gilt is adapting for overseas markets what it has learned from its U.S. operations. Personalized e-mails, coupled with data analytics, have enabled Gilt to fine-tune the merchandise buys for the Chinese market. It knows that Hong Kong women are more likely to buy apparel, especially the designer and contemporary markets, in addition to fine jewelry. Mainland Chinese women buy more shoes, handbags and vintage merchandise, while high-end luxury purchases are focused on “classic” items.
About 25 percent of current sales are from international markets. The major overseas markets are Canada, China, Korea, Australia and Japan, which is operated via a joint venture with SoftBank.
Following Singles’ Day, the big focus will be on the U.S. market and then Boxing Day in the U.K. For holiday in the U.S., Gilt will feature a “Gift Finder” on its mobile app. Black Friday sales will launch on the desktop on Thanksgiving Day and continue through the weekend, although a mobile-only preview will be available starting on Wednesday. The shipping cutoff has been extended to Dec. 20, compared with Dec. 18 last year. For the first time, Gilt will be offering on Dec. 22 and 23 same-day, free delivery in Manhattan on special items from its luxury gift shop. While post-holiday sales will roll out on the desktop on Christmas Day, the sale launches first on mobile the day before.
For Boxing Day on Dec. 26, the company is planning special sales, including items that showcase U.S. design talent, just for the British market.