NEWS
NEWS
NEWS
Gilt Groupe Raises a Fashionable $80-100M Amidst Rumors of Waif Thin Business Model
Flash-sale company Gilt Groupe is raising $80-$100 million from private-market investors in a deal which may increase the company’s valuation to as much as $1 billion. The company’s revenue is expected to double this fiscal year to around $500 million, but there are some rumors suggesting an excess of unsold inventory is a factor behind the recent funding. The company rejected these rumors, but they would correspond to similar difficulties Gilt Groupe’s competitors encountered in this rapidly growing space.
“As is to be expected after such torrid growth, the flash-sale industry is also now experiencing growing pains: Growth rates are slowing, managing inventory and fulfillment is challenging, and none of the companies are consistently profitable yet.”
These growing pains were compared to Amazon’s situation when the dot com bubble burst roughly 10 years ago, and are shared by a segment even more significant than the private-sale market: social media. Groupon, and others including Facebook, Twitter and Zynga all got very steep valuations, and are sizing themselves up to gain the biggest possible share of whatever monetization methods emerging from specialized channels. One example of that is represented by display ads, which are strongly driven by social media as a comScore report released this morning highlights.
“Social networking publishers were responsible for 34% of online display ads viewed in the US during December 2010, according to a new white paper from comScore. “The 2010 US Digital Year in Review” also indicates that this figure was up 48% from 23% a year earlier.”
Social media and web services will push the next wave of consumerism, but they are currently standing at a brink in this space, and in context of an alleged second internet bubble growing around social media data markets.
Gilt Groupe, specifically the Gilt Groupe owned and operated Gilt City, is also a part of this ever-accelerating shift, which also takes place in the fashion industry on the CloudANGLE. We discussed that the cloud is transforming the fashion industry from numerous aspects, beyond the private-sale space as well.
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