You know those emails you get every morning telling you what Gilt Groupe will be selling today? They’re from this guy. John Auerbach is an i-banker turned fashion man who is responsible for the success of the men’s business at what is arguably the most successful member’s only shopping website. With intricate knowledge of the financial market and a sophisticated understanding of menswear, Auerbach hopped on board with Gilt Groupe in 2007 and devoted himself to the cause of legitimizing the men’s sales, and for that, we are infinitely grateful. We were honored to speak with him.
Prepidemic Magazine: As Men’s Director at Gilt, what are your duties?
John Auerbach: Basically, running all things men’s merchandising at Gilt. And what we like to provide to our members is a very curated look in men’s clothing and accessories. So I work with a team of buyers scouring the country and the world for known and unknown brands that fit into our matrix. And then we bring them to our members. It’s working with the team, and making sure the right offers are on the site at any given time.
PM: What’s your background in fashion?
JA: My background is in investment banking, for a number of years but focusing on retail. I had always had a strong interest in fashion – a lot of my friends were in fashion or interested in fashion – so I joined Gilt before we launched in October 2007 and I actually joined and worked in the capacity of finance for several months and from the beginning I wanted to start a men’s business. Gilt started as women’s in November of ’07, so 3 months in, I started the process for the men’s business. We launched in April of ’08 and started with John Varvatos.
PM: Any hurdles to starting the men’s business?
JA: We were certainly helped by the fact that we had a successful women’s business. The biggest hurdle is educating brands on how we sell and the advantages to selling online in this very quick member’s only format. It was really brand education. And on our side we want to make sure we bring a highly edited, highly curated look at men’s fashion. We don’t want to have too many looks for sale, we don’t want to have too many sales, we just want to have the coolest stuff so that you know anything you buy from Gilt Groupe will be great.
PM: How do you guys pull off the prices you do?
JA: As you know, a lot of what we carry is toward the tail end of the season and so there is additional discount to be had there. We do try to offer the lowest price possible on anything we sell, and beyond that, a lot of what we sell is just not available in many stores and online at all in many cases.
We’ve done a Thom Browne sale a couple times. A lot of that stuff is just not available online. We’ll list several other designers that you’ll see in the next couple weeks that don’t have much of an online presence. We want to keep it interesting and make sure we offer a compelling price.
In a lot of cases, it’s because we’re at the tail end of the season, and just because it’s the tail end of the season doesn’t mean you can’t wear the merchandise now. It’s still totally buy now wear now. It’s just the fashion cycle moves very fast. It’s 110 degrees in Vegas today, I’m looking for shorts and a tee shirt: you can’t find that in a store, but you can find it on Gilt Groupe.
PM: What’s so good about the invite only business model?
JA: I’m always looking from both the customer and vendor perspective. From the vendor perspective, it’s discreet. So this model has allowed us to work with a lot of vendors that don’t really discount at all, like Vilebrequin bathing suits, or brands that are skittish about being online, which many are. In that sense it’s great because the brands give us access to their stuff and our customers are able to see, learn about, and buy brands that they would never find on sale at their local store. That’s the primary advantage of the invitation only model.
PM: To what extent does invite only business model eliminate advertising costs?
JA: Certainly from a financial perspective, its great to have a viral model. We don’t do any advertising and it’s just members inviting other members. That’s a great way to grow a business, but again, that’s just one side of it. Because it’s private, it makes a lot of very exclusive brands feel more comfortable working with us.
PM: Was Gilt the original company behind the invite only model?
JA: There was a brand called Vente Privee in France. They were the initiator of this concept, and they’ve been around for several years. Gilt was the first of its kind in the US and is kind of the only site that has a dedicated men’s business.
A lot of others dabble in men’s, but there’s nobody out there that has an entire team focusing on this and right now we’re doing eight to ten men’s sales a week, and within two to three weeks, we’ll be doing fifteen to twenty dedicated men’s sales per week. So we have a really strong men’s offering. We’re out there everyday, trying to pull together the best assortment of men’s product we can.
PM: Is there a specific type of look that Gilt is going for?
JA: At first we were a little more specific. Now we’re broadening it a little bit. We want to be the resource for guys, whether you wear a suit to work, whether you wear jeans and a woven to work, or whether you’re completely casual. We also want to look after the guy on the weekend, if that’s doing something sporty with Y-3. So we really want to be the go-to resource for the fashionable guy for all parts of his life.
Our customer is a younger guy, late 20’s early 30’s, has a pretty high disposable income, is well-educated, and really looks to us for what’s cool, because maybe they don’t have time to go to the store and shop for sales.
I think we have a broad appeal. You’ll start seeing on the site in the next few weeks some additional things. We did some pens last week that did incredibly well, and we’re doing the Porsche Adidas Collection this week.
PM: How do you decide what you would like to buy in a collection?
JA: We’re looking for something that has a point of view, that’s different, that really does something. It doesn’t have to all be the same look, but as long as it has a strong, relevant point of view, that we think our customers would be interested in.
We get a lot of feedback from customers who give us a lot of hints as to what they like, which we take into consideration. We also think, maybe nobody has heard of this brand, but hey, it has a cool point of view. So we want to bring it to our customers.
It might be limited distribution. It might be kind of an Oak or Odin or Opening Ceremony item that you wouldn’t have access to unless you live in New York. So brands like that, we want to introduce to our customers at large. And within each collection, we’re looking at the best pieces available to us that really do represent the collection.
And hopefully you can see that we do try to capture the collection. You know, we’re coming at the end of the season, so we don’t necessarily have access to everything. But whenever we put a brand up, we don’t just take what someone has. We try to pull together a capsule collection of the strongest pieces to give our customers the best representation of that brand.
PM: Could you take us through the process of getting a designer to be sold at Gilt?
JA: It can be either us reaching out to designers or designers reaching out to us, but recently it’s been a lot more people reaching out to us because either they’re on the site or they’re friends are on the site. So if they reach out to us, it’s a matter of being diligent with the collection. Making sure it’s something we’re interested in, seeing it, touching it, feeling it, trying it on, making sure it’s appropriate for the site.
On the other hand we reach out to designers all the time. We have a team here at Gilt and somebody always knows or has worked with somebody at whatever designer we’re interested in. We have a pretty tight brand matrix, so anyone we don’t already have, we reach out to them, and if they’re not already a member, we walk them through the process, walk them through the site. We want to make sure that they’re comfortable with us.
And the reason you see brands over and over is because we establish partnerships with them. Its not meant to be one sale and that’s all you get, it’s about partnering up and working with designers. That’s why you’ll see designers pop up again every couple months.
Once we’re comfortable with the partnership, it’s a matter of working through the inventory, looking at what they have and what we’re interested in, then a couple weeks later it’s up on the site.
PM: What’s the future hold for men’s at Gilt?
JA: We’ve been so happy and so excited that the response has been as positive as it has. We get incredibly positive emails from guys who love it and women who love it for their guys. It’s just kind of more of the same but expanding while we maintain luxury and limited availability. We will broaden the scope a bit. Like with the Adidas Porsche Collection. Maybe doing a little more in the high end sporting goods. Doing a little more high end lifestyle like cigar accessories, pens, stuff like that. We’re constantly looking at opportunities.
I’m sure you’ll see things on the site over the next few years that you never imagined and never thought were possible – whether it’s a Vespa. There’s endless possibility. We want to surprise and delight our members.
PM: Prediction of $500 million in revenue next year. Why are you guys so confident?
JA: We’re just looking at the results to date, and the very small sliver of the universe that we’re currently working with. I think we all think there’s incredible opportunity here, and like I said, if you look at the feedback from some of our most voracious members, they all want more. They want more brands, they want more products.
There will always be this initial screening process of, “this needs to be the best, it needs to be cool, it needs a point of view.” But I think there’s a lot of room within that to offer products to our customers for morning, noon, and night, weekday and weekends.
PM: You guys just completed another round of growth capital investments for $43 million, was that a big deal?
JA: It was very fulfilling, very exciting, but also expected. We’re thrilled to have General Atlantic as a partner. But Gilt just keeps growing and growing and we’re very excited.