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Gilt City Exits Beta With Limits Around Local Expansion

Online luxury discount shopper Gilt Groupe has fully launched its local project Gilt City in six markets yesterday. Don’t expect a big expansion beyond that anytime soon. While the social shopping space has gotten very crowded since Gilt was founded three years ago, with big challenges coming from site networks like Groupon and RueLaLa, ThisNext and others, Gilt wants to maintain its exclusive status, which it considers its key differentiator.

In a conversation with Nate Richardson, Gilt City’s president (and full disclosure, the former CEO of paidContent parent ContentNext), said that the six cities that were chosen as launch pads for the new local deals site were specifically chosen because each had enough high quality restaurants and shops to warrant placement in its exclusive universe. The six cities are New York, Boston, Chicago, Miami, San Francisco and Los Angeles. Over the next few months, the company will evaluate requests to move into two or three other cities. In contrast, Groupon has placement in about 40 markets.

“Our strategy in setting up a site is to make sure we serve the whole membership base in a given location,” Richardson said. “We’ve gotten requests to look at another few cities and we could look at a selection of offerings on a periodic basis. But we won’t do one-off deals in a city or location where we haven’t committed to a permanent presence. We’re not going to do deals for deals sake.”

Another area Gilt City will continue to foster its strategy on being exclusive is when it comes to the availability of its sales. Where Groupon sales can go on for an unspecified period, each week Gilt City will offer at least three or more sales in every market at varying times depending on the location. The sales remain online for seven days, or until the limited supply runs out (whichever occurs first). Still, Gilt doesn’t want to disappoint its members, so Gilt City has created a “wait list,” where those shoppers who missed out on a deal can get in first on the next deal one one of its sales partners offers.

Apart from expanding its services, the next thing Gilt City will be looking at is media deals. The company is in talks with a few content companies and expects to announce some news there soon. A number of publishers, including local newspapers have been trying to add e-commerce as a way to offset declining ad sales, so the timing is right. “The media worlds of content and commerce are increasingly mixed,” Richardson said. “There are still some editorial walls that can’t be broken down. But there are more and more ways that sales and content can support each other. It’s something we’re always looking at.”