Flash sales pioneer Vente-Privee targets U.S.
PARIS (Reuters) - Vente-Privee, the French start-up that pioneered the now much-imitated model of on-line flash sales, plans to launch its U.S. website by mid-November in partnership with American Express and aims to reach $500 million in sales in the ultra-competitive market in the next five years.
Founder and Chief Executive Jacques-Antoine Granjon told Reuters the joint venture with the credit card group would give Vente-Privee access to an affluent client base of 40 million card holders, giving it instant credibility and brand recognition despite not being a household name outside Europe.
But success in the U.S. is far from certain. Vente-Privee is arriving years after imitators of its flash-sales model such as Gilt Groupe and Rue La La, and also faces e-commerce giants such as Amazon, which recently launched a daily deal service hawking local merchants and restaurants.
Unlike in France where sales are limited legally to twice-yearly set periods, U.S. consumers are used to getting deep price cuts on merchandise in factory outlet stores and discount chains such as T.J. Maxx and Marshalls.
"The U.S. market is a difficult one where discounting is already very common, so we will have our work cut out for us," said Granjon, whose wavy long hair and habitual uniform of jeans and chunky silver skull-shaped rings belie his status as one of France's most respected entrepreneurs.
"But we have big ambitions, and if we have the right offering and excellent brands, things will take off quickly."
To conquer the U.S., Granjon said Vente-Privee would stick closely to its formula of selling luxury goods to price-conscious fashionistas in two- to six-day sales, while helping major brands like Armani and Diesel liquidate unsold stock.
The approach has put the decade-old company on track to hit more than 1 billion euros in sales this year and turned it into one of Europe's biggest homegrown on-line retailers with a presence in six countries, including France, Germany, Spain, the UK and, from next week, the Netherlands.
Vente-Privee, which has been profitable since 2004, has also been the subject of frequent speculation about an initial public offering or a takeover by a U.S. giant like Amazon.
Granjon dismissed both scenarios, saying the company could afford to expand abroad without outside funds given its 150 million euros in cash and healthy 7 percent profit margins.
"I've never raised money and I don't need to now," he said.
Granjon and the other founders own 80 percent of the group, which was valued at about 1 billion euros ($1.38) when U.S. private equity fund Summit Partners took a 20 percent stake in 2007 and could be worth three times that, according to analysts.
But the e-retailer has so far struggled to replicate its success beyond France, where it earns more than three-quarters of sales, and has seen its model cloned by rivals like Spain's Privalia, Germany's Brands4Friends and the UK's Brand Alley.
Vente-Privee hopes to buck that trend in the United States by teaming up with American Express.
After more than a year of negotiations, the two agreed in March to invest $15-20 million each in the joint venture. Soon after, they hired former Google executive Mike Steib to run the business and are on track to hire some 200 staffers for the New York headquarters by Christmas.
The company has a batch of 30 flash sales ready for the upcoming launch of the U.S. site, Granjon said.
Especially in the first few months, Granjon said Vente-Privee would showcase fashion from top brands to win the loyalty of new consumers. The company must also convince U.S. companies to sell unsold inventory on the site at a time when competition for such stock is intensifying.
Granjon said the company planned to draw on the strong ties it already has with European brands such as Spanish shoemaker Camper and Italian designer clothes company Diesel, as well as signing up major U.S. retailers like the Gap.
Asked what brands he was targeting, he referred to downtown Manhattan's Soho district: "Think of the square of streets down there between Houston and Canal and West Broadway and Lafayette. I want all the brands that are there."
In a separate interview, Vente-Privee's Steib said the site would offer 60-65 percent discounts on average and estimated such private sales in the U.S. would be a $1.5 billion market this year and grow to $5-6 billion in the next five years.