The American flash sale market has a big, new foreign entrant.
French flash sale pioneer Vente-Privée.com has formed a 50-50 venture with American Express to create an as-yet-unnamed U.S. flash sale site to be launched late this year or in early 2012, its founder, Jacques-Antoine Granjon, said Thursday.
The partners will invest around $35 million in cash and an estimated $5 million in human capital and technology transfers in the venture, which is expected to generate turnover of $500 million within three or four years.
The news confirms a front-page story in WWD Tuesday.
Granjon made the announcement by video conference from New York City, flanked by Dan Schulman, president of Enterprise Growth Group at American Express. His responsibilities include strategies to expand alternative mobile and online payment services and form partnerships aimed at building revenue streams beyond the traditional card and travel businesses.
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The two then hosted a meet-and-greet gathering in Manhattan, with local press in attendance, where they talked some more about the structure of the new venture. Schulman highlighted to WWD the combination of the business-to-business-to-consumer format (the venture serves as the intermediary between branded firms and consumers) and American Express’ data mining capability.
“The customer is the [different brands] and for the consumer, we’ll [take the data mining component to] create events for them to come,” Schulman said.
The venture will combine Vente-Privée’s database with American Express’ affluent and luxury cardholder base. Initially it’ll experiment with different incentives to see which ones catch on with consumers visiting the site.
Essentially, the new venture is a start-up, but without the need to raise capital since it’s self-funded by the two partners. According to Schulman, there’ll be some experimentation with the site early on as they learn what both the branded firms and consumers want before making the necessary tweaks. Eventually, the data mining capability will take over as forecasting tools help create events that get consumers coming back for more.
Granjon said it was essential to have a strong partner to tackle the U.S. market in an increasingly crowded field. Amazon.com earlier this month launched its members-only Web site called Myhabit, and other firms, such as Gilt Groupe, Rue La La and ideeli, have sprung up in the wake of Vente-Privée.com, which launched in 2001. Nordstrom bought flash sale site HauteLook earlier this year.
“We will never lose sight of the fact that Europe is our main market and that entry into the U.S. market will be done with Americans, by Americans, for Americans, so this is a second phase in the life of Vente-Privée that is starting,” Granjon said.
Vente-Privée.com logged sales of 969 million euros including taxes, or $1.28 billion, in 2010, up 15 percent year-on-year. Dollar rates are calculated at average exchange rates for the period concerned.
Vente-Privée partners with more than 1,200 brands in a variety of sectors: ready-to-wear, fashion accessories, homeware, toys, sports equipment, electronics, fine food, wine, theater tickets and holidays. Some brands available on the Vente-Privée site include Givenchy, Armani Casa, Dolce & Gabbana, Nike, Adidas and Swatch. The French site was the first, followed by launches in Germany, Spain, Italy, the U.K., Belgium and Austria. The Web site will open its sale doors in the Netherlands later this year. In addition, the firm launched Vente-Privée Rosedeal in France last year, which allows visitors to purchase vouchers, also on a time-limited basis, for use in an associated retailer’s network.
Granjon said at the Manhattan event that a name for the joint venture is likely to be decided by the “end of June.” During the presentation, he also pointed out some differences with his competitors.
“There are 500 copycats [in the U.S.]. They are all raising money.…They quickly want to make volumes and get lots of members. They don’t make a profit,” he said.
In comparison, Granjon said his company has been profitable since 2004, has zero debt and has not needed to raise money from venture capitalists.
According to Schulman, “The site is open to anyone regardless of payment methodology.”
He noted the private sales category is a $2 billion market today, with the potential to be a $6 billion marketplace over the next several years, based on analysts’ projections.
For American Express, it was the idea of how to leverage its cardholder base in the tens of millions, and take information it has from servicing both cardholders and merchants, that led them eventually to Vente-Privée.
The plan is to get the site up and running in time for the holiday season, although they’d rather get the site and launch details done correctly, even if it means waiting until the beginning of 2012, the American Express executive said.
“We’ll start with apparel and accessories,” Schulman said, noting that there were ample opportunities to add product lines later on.