The Amazon of Luxury
Hass, Nancy, Newsweek
Byline: Nancy Hass
She helped addict American women to online flash sales. next up: winning over Wall Street. how Susan Lyne is dressing up gilt groupe to go public.
Susan Lyne thought she knew what it was to have fans. She's had decades of being buttonholed in airports and at parties by people telling her how much they love her work; she was, after all, one of the ABC executives who helped give birth to Desperate Housewives, and Martha Stewart tapped her to run her design empire when she went to prison for insider trading.
But nothing prepared Lyne for what would happen when in 2008 she took the reins at the Gilt Groupe, the e-commerce company that many on Wall Street are expecting to be 2013's most hotly anticipated initial public offering. "People tag me by the sleeve and tell me it's changed their lives," she says. "They tell me their stories of how at 12:01 p.m. every day life just stops for them. It's like a religion, that deep. I've never seen anything like this."
What happens at 12:01 p.m. Eastern Time daily is this: thousands of people, mostly women, in offices (and cars and cafes and at their kitchen tables) across the country sign in to gilt.com, where for a few tense, adrenaline-pumping moments they vie for a selection of discounted designer merchandise, just a piece or two in each size, from a Marni blouse to a pair of Casadei stilettos. Within 60 seconds, much of it is snatched up in the "flash sale," leaving those who "win" exhilarated, the losers bereft--and everyone plotting the next day's strategy.
"It's magical," says Dawn Olmstead, a Hollywood producer who first heard of Gilt from someone at Endeavor, the talent agency that represents her, in 2007--just months after the site launched (back then, to become a member, you had to be recommended by a fashion insider; the requirement was dropped years ago). These days Olmstead logs on from her phone app; on the West Coast, the sales start at 9:01 a.m., while she is driving the kids to school. Sometimes she pulls over. It reminds her of when she lived in New York and shopped at sample sales, the insider-only seasonal events (that inspired the creation of Gilt) where fashionistas line up to pick through leftover designer goodies.
"When you win, it's fantastic, and even when you lose, the site is your guidepost. You see what went fast, and you know that's what's hot. It's better than Vogue. It's better than anything." She may even read By Invitation Only: How We Built Gilt and Changed the Way Millions Shop, an inspirational business tome released this month by Alexandra Wilkis Wilson and Alexis Maybank, two Harvard Business School pals whom Kevin Ryan, the founding partner and CEO, recruited early on to create the look and feel of the site and be the demographically perfect public faces.
Lyne, a wry, elegant 61-year-old blonde, shakes her head with a bit of disbelief as she picks through a fruit plate at breakfast in a Manhattan hotel restaurant. "When you have that kind of engagement with your customers, when they think they can't live without you, you can go anywhere."
And Gilt is going there fast. From its start with five founders at two long tables in a sublet office, it now has nearly 900 employees and a sleek loft on lower Park Avenue, as well as a market value of more than $1 billion. That makes it the second-most-valuable e-commerce company with its own inventory in the world, after the much-larger Amazon. It has more than 5 million members, ships more than 10,000 packages a day, and has expanded with "verticals" including Gilt Kids, Gilt Home, Park & Bond (for men), the travel site Jetsetter, Gilt Taste for gourmet foods, and Gilt City, a competitor to Groupon. You can get more than a cute new pair of Missoni beach sandals on Gilt these days; there are $175 cuts of sushi-grade yellowtail, four private training sessions with Gwyneth Paltrow's trainer, and trips to Balinese eco-resorts. …