Here's where our money is...Only one of the two businesses, to borrow from Jim Collins’ book title, is Built to Last. Our money’s on Gilt Groupe.
Much has been said about the Daily Deal phenomenon. When a two-year old site such as Groupon grows so quickly that it is able to spurn an acquisition offer from Google – to the tune of a much-ballyhooed $6 Billion offer – well, we’ve got a new phenomenon called “Social Commerce.”
But, did Groupon “invent” Social Commerce? You could argue about that til the cows come home but here’s a fact: Gilt Groupe has been around longer. It operates in the fashion and luxury brand niche.
And Gilt will “beat” Groupon. We’ll tell you why, but first a caveat.
We’re not defining “beat” as force Groupon out of business. But, in this case, we’re talking about long-term success. Groupon shows no signs of slowing – but we think that Gilt has a better long-term business model. Simply put, Gilt Groupe is Built to Last.
Reason 1: Product. Not only does Gilt have better product, in this case they actually HAVE product. Groupon is nice and all, what with the deep discounts on restaurants and other local experiences. The product they offer, though, is rather virtual. You buy a coupon, you go to the retailer, you take advantage of the deal, you get your stuff – food, services, whatever. Done.
Since Gilt focuses on fashion, they have the advantage of tangibility. Even though you’re not buying a Gilt-branded pair of jeans, you are getting the item from Gilt.
You don’t shop at Groupon – but you do shop at Gilt.
Reason 2: Exclusivity. “Membership has its privileges.” When Gilt started in 2007, it was downright impossible to get an invite. Only members could get access to the deals, and that kept the riff-raff away and also kept “scarcity” as a selling point.
Only 100 of these jeans will be sold. Only 10,000 of you have a membership. Fight for ’em. In…3…2…1.
Restaurants that use Groupon aren’t exclusive ones – they are ones that want to get people through the door and are willing to deeply discount their product to do so. This dovetails nicely to reason 3:
Reason 3: Valuing the Product. Let’s say you’ve got a restaurant and it costs you $50 to produce a meal for two people that you end up charging them $60 for. (20% markup is rich in the restaurant industry, but go with us here.) To work with Groupon, you’ve got to discount that $60 meal to $30. You’ve then got to give Groupon $15 of the $30 that you sell the Groupon for.
(Oh, and if you work with Groupon in the first place, you probably don’t have a handle on what your marketing budget is, so you’re willing to throw money at the next big thing.)
I won’t get into the math behind what it takes to get the people in the seats; but I will say that your restaurant experience better be really worthwhile – otherwise, you have conditioned your visitors to expect your food at half price, and you have soaked yourself in the process.
Meanwhile, back with the fashionistas…It’s widely known that markups in retail are huge. Like, well, sometimes it costs $1 to make a pair of jeans that gets sold for $250.
Since Gilt is dealing with an industry that is used to this – and since Gilt knows that the manufacturers have “stuff” leftover (maybe they ordered too many blue shirts in XL, or whatever) – they can turn the numbers into a win/win/win.
Quick, over-simplified example: Jeans that get sold at a boutique for $250 are probably bought wholesale by the boutique from the brand for $100. The brand itself makes a markup of at least $50 – covering its costs to get the product from the manufacturing floor to their own warehouse.
The brand is also sitting on inventory that must be sold – so if it sits there unused, the value of it keeps going down.
So Gilt approaches the brand and says they’ll buy the items for something north of cost, but south of markup. Let’s say $75 – but with the stipulation that they must move a certain number of pairs of jeans or else there’s no deal. Then, not needing an insane markup to make its “nut,” Gilt goes with a figure of $125 – a deep discount, but still, frankly, an expensive pair of jeans that not everyone can afford.
Win/win/win – jeans brand, Gilt, customer. The first two are big winners – and the customer also gets access to a product that still has cachet – it’s a luxury brand, but at a value price.
Reason 4: Long-term relationship building. I love this one the most as a brand marketer: the way Gilt treats the brands it works with.
Without getting into the vagaries – which you can certainly find if you do a little sleuthing – suffice it to say that every facet of the brand-Gilt relationship is structured as a win/win. From how they pay brands – wiring the money – to how they search for deals that are treated as exclusives (you’ve gotta love that if you’re an emerging footwear maker or make suits) – this is a brand marketer’s dream: a killer relationship with a partner that wants everyone to succeed.
Don’t get me wrong – I’m not saying that Groupon doesn’t want its partners and customers to succeed.
But the proposition to the brand starts off almost immediately on the wrong foot.
Groupon to Brand: “Discount your product at least half, then we’ll talk.”
Gilt to Brand: “What luxury items can we help sell for you in a way that makes everyone a winner?”
It’s not a question of which business model we like better – both are viable, both are built to scale. But, if you had to ask which one is Built To Last – our money’s on Gilt Groupe.
Ready for all sorts of Social Media Creamy Goodness? So are we! Time to dive into these relatively new tools – and compare their utility with Twitter. Follow along, young Jedi.
quora.com
First, Quora. Yes, another “Social Media Tool.” Not THAT kind of Social Media Tool – but the type that you can put to good use.
Questions and Answers on Steroids?
Another version of Yahoo!’s Q&A thing?
The LinkedIn Killer?
Honestly, kicking the tires on this puppy has led us to realize a couple of things here. First of all, you can probably get some good answers to your questions, and you can probably position yourself well as someone with something to say, if you use the site.
Secondly, it’s going to be a matter of time before the Spambots and “Social Media Tools” of the variety that try to sell you spambots and push-button systems get a hold of Quora.
From a UX experience, it’s okay. I’m not turning cartwheels, but I’m not kicking my PC yet either.
From a “Why?” perspective – I’m still not convinced.
Twitter had me convinced within a few minutes of its usefulness. Dive in to conversations, make connections, learn from each other. Don’t totally get that yet with Quora.
Hashable. After just one use, I have earned “Hashcred.”
The next question is what I can DO with this Hashcred.
Probably more was written about Hashable after its launch than Quora. Probably less is being said about Hashable now on social media because, well, it’s more of a tool that sits on top of other sites than a stand-alone.
To try this out, I decided to connect an action IRL – in this case, sending mail to @JPedde, whom I owed a Slurpee Coin – and using the hashtag “#sentmail” to tag this action. Below is what transpired on the Hashable site.
Result of a Hashable Interaction
Next, my Twitter account, which was linked to Hashable recently (earning me hashcred), posted a simple message:
Now what?
Well, while the motive APPEARS to be adding some real-life interaction to this online stuff we Social Media Types do all the time…Hashable might add a little less to the equation than Foursquare or Gowalla.
Plus, it doesn’t have all the Question and Answer capability of Quora.
So?
Verdict: Don’t Chase the Category Killers.
Seriously, these could both be great, world-beating tools. Or they could go the way of Netscape.
This brings us back to that advice that we’ve stuck to from the get-go:
Use what works for you. There are no rules. Dive in. Have fun. Don’t like it? Move on to something else.
Time to help online seller Etsy to come to its senses.
An update: a decent amount of social media traffic on this – not a “Trending Topic” but still worth noting that a few influential bloggers have rallied around this cause.
Also, note that, IMHO, this is not a “Freedom of Speech” issue – as the offenders could sell these items on a street corner or in their own store. This is about Etsy doing the right thing – removing “harassing” items that “promote illegal activity.”
Some really tasteless “Rape Congratulation Cards” are for sale on Etsy. As of this writing, the site has yet to pull down the items – and they appear to be standing behind their “we take no responsibility” philosophy.
Here’s a link to the Change.org petition. Let’s see if we can get Etsy to think again.
Thanks, life123.comIt has arrived. That wisdom that comes with a birthday that is divisible by 10.
What’s crazy is that I find myself ruminating on the past 10 years – thinking back to how turning 30 made me “legitimate,” and started a decade of, well, lots of stuff.
Is ruminating the right word?
Well, the very last thing I want anyone to do is be subjected to a load of crap on this site. So, instead, here are a few things I’ve picked up in the past decade:
Your significant other is likely definitely smarter than you.
Trust your gut.
If you have to choose between two or more opportunities: take the job (or gig or client engagement) that pays more money.
Some people will never get what they deserve. Get over it.
Often, the job that no one else wants is the job that provides the best opportunity for you.
Don’t be afraid of failure. (I ran a startup called U Sphere; it went under. People still ask me about it, want to know what I learned.)
Ideas are like water: the only way you’ll know if your idea is worth anything is to try to do something with it.
Remove toxic people from your life.
Working by yourself has its pluses and minuses. Consider both.
Don’t get hung up on what you name the product or service or business. Give it thought, sure, but there are more important things to worry about.
Avoid companies that are traded on the pink sheets.
Pick up the phone.
Don’t leave a voice mail message unless you absolutely have to.
Don’t read your own press clippings, if you have any.
When launching a business, think about sales cycle. If you call a prospect and they ask you to call back “next year at this time,” you are in the wrong business.
Put the Blackberry down when you’re eating dinner. (Kid #1 told me this in 2005. Stuck with me.)
The direct route is the best.
Being a Cubs fan is torture. Think long and hard before subscribing.
Being a Bengals fan means you don’t have to worry about watching the NFL playoffs.
A plus for someone in your circle does not necessarily mean a minus for someone else. Happiness is not a zero sum game.
If your business card is not a conversation piece, then you probably don’t need to hand it out.
Guys: on a two-button sportcoat, button the top button. On a three-button sportcoat, button the middle button.
If the boss asks you to lie, don’t do it. You may well lose your job, but you’ll be able to live with yourself.
If the other side in a negotiation won’t tell you who they are, who they are working for, or what they want with you, move on. It’s not a negotiation, anyway.
Adoption is just another way to build a family. Doesn’t make adoptive parents or kids any more or less special than anyone else. Just different.
Corporate America loves to say they’re “entrepreneurial.” However, at the end of the day, Corporate America hates hiring “entrepreneurs.”
Empathy is a nice trait.
So is politeness.
Belt and shoes should match.
You can wear an inexpensive suit – but if you add a pocket square, you’ll make it look much more expensive than it is.
Socks are an extension of the pant. Same color is best.
Your children may think someone else has a cooler job than you. That’s okay.
The best emails are sometimes the ones never sent. Ditto for tweets and Facebook posts.
Some people don’t want to have kids. Asking them why they don’t have kids is not cool.
Ditto people who are single.
The best way to build a business is to actually build a business.
Never turn down a chance to sit with a VC person, even if only for 10 minutes. And don’t waste their time: be succinct.
Life’s about way more than business. Maybe your passion is business, maybe it’s something else altogether.
Faith, Hope and Love are very important things.
The greatest of these, without a doubt, is love. (Yes, that’s Biblical.)
I’ve made connections, made friends, learned a ton, and am so very grateful for your time, your thoughts, your comments, and you just being you. All of you. You know who you are.
Spending the balance of the year posting items that didn’t make it out of our “Drafts” folder. You’ll thank us later.
You are not alone in hating busy work. Busy work is not cool, a real downer, very unhip.
We had great dialogue recently with a guy named Mike Cassidy, also known as Membership Jedi. Mike tells us that he likes to ask WTFF – or, to be more Rated G, “Why Are We Doing This Again?”
Actually, Mike’s thoughts are really good ones – and, when applied to Social Media Marketing, really timely. Here’s an example, “ripped from the headlines,” using a hypothetical company that is ready to “dabble” in Social Media.
Executive Team: “Let’s Get On Tweeter.”
You: “Why?” (NOTE: Don’t correct the executive team at this juncture.)
ET: “It’s what every other [insert industry] company is doing.”
You: “Why?”
ET: “It will allow us to connect with our customers.”
You: “Why?”
ET: “So they can tell us what they like about us.”
You: NOW it’s time to stop asking “Why?” And here’s why.
Depending on your industry, you’re going to have a varying degree of “like” of your products. If you are a mobile phone company and you have a spotty network, the “likes” will be focused on issues centered around things that don’t matter to the user experience, like how pretty your logo is.
And in just about any industry, your likes are going to be ratcheted up higher and higher depending upon what level of bounty you are putting on the like. “Like us and get a $5 coupon.” “Like us and be entered for a chance to win a spanking new vehicle.” The execs need to know that the like has to be attached to something – and they may not like what they’re hearing.
Be prepared, young Jedi, with a solution, too.
If you’re in a high-volume customer interaction universe, it could be possible that the “dislikes” are already being registered when the customer is on the phone with a rep, or in the store at the cash register. Solution: get hold of that feedback. Measure what that would mean to your department if you had to act on it on behalf of the organization. Provide an alternative – even if that alternative means “doing nothing.”
In most cases, the knee-jerk reaction from the Executive Team is “get us on the Flavor of the Week.” That Flavor right now is Social Media, but in a few months it could be something entirely different. If you ask why, and you do so in an insightful way, and you provide solutions to the potential problems, you’ll be well on your way to selling this social thing. IF it makes sense for your company.
