GSI Commerce founder Michael Rubin has launched Kynetic, a firm focusing on building consumer businesses that will include Rue La La.

This story first appeared in the September 12, 2011 issue of WWD. Subscribe Today.

Rubin recently sold GSI to eBay Inc. for $2.4 billion. He bought back the online sports licensed retail business, which was renamed Fanatics, as well as shopping site ShopRunner and flash sale site Rue La La, with eBay retaining a 30 percent stake in flash sale site Rue La La. Rubin first bought Rue La La in 2009 when he still owned GSI. All three businesses are now under the Kynetic umbrella.

According to Rubin, Kynetic is eyeing opportunities to grow each business, including acquisitions by each individual operation rather than at the corporate level.

In particular, Rubin foresees consolidation among the flash sale sites, with Rue La La as the acquirer. With the private sale space doing about $1 billion in sales this year, Rubin said, “What you typically see in any market where there is tremendous excitement is increased competition….I see consolidation among the companies, and we are a consolidator.”

Fanatics is 100 percent online, and the expected volume in 2012 is $600 million to $700 million in sales. ShopRunner is a members-only service that aggregates shopping benefits from top retailers and brands aimed at competing against Amazon Prime. Not quite a year old, ShopRunner now has 50 merchants signed on, up from the initial 15 when it launched, and has recently signed on another 30 to 40 merchants for the site. For Rue La La, Rubin forecasts revenues of between $400 million and $500 million in 2012.

As a newly private company, Rue La La has become “maniacally” focused on long-term growth now that it is free from Wall Street’s demands for short-term profitability, noted Ben Fischman, chief executive officer of the flash sale site.

“The recent transaction really just positions us for more growth at a very exciting pace…not the least of which is the additional $75 million put on the balance sheet,” Fischman said, referring to the new financial structure via the ownership stakes of Kynetic and eBay. “My guess is that we are the largest flash sale site from a membership perspective in the U.S., with just under five million members. Our best customers visit over four times a week.”

“This is a multibillion [dollar] opportunity. We have the appropriate financing, balance sheet and [brand] partnerships to realize that in the future,” Fischman said.

Fischman also said mobile sales are up almost 90 percent, tracking at $50 million this year.

In the most recent growth move, Little Rue, a kids’ business, was launched last week, reflecting the strategy to meet many of the needs of members. Women’s and men’s apparel and accessories remain the core offerings, although there are also travel, wine, food and gourmet and home deals. Fischman expects Little Rue to quickly establish a $100 million run rate.

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