Exciting Commerce // Unlimited

Gilt Groupe Raises Up To $100 Million Fresh Capital

The leading US private sales shopping club Gilt Groupe, according to Business Insider, has raised between $80 to $100 million in a new financing round. The valuation is presumed to lie at one billion dollars.

Gilt is expecting to have revenues for the current business year in the order of $500 million.

"To date, the New York-based Gilt Groupe has already raised more than $80 million in several rounds from Matrix, General Atlantic and others. Revenue is expected to be near $500 million in the current fiscal year, with valuation for the new financing hitting about two times revenue. That’s pretty similar to the price paid for HauteLook."

Business Insider's name can be taken literally in this case, as the news service shares some of the same founders/owners as Gilt. Their report contains some interesting details/rumours about the US market for private sales clubs:

• Gilt Groupe may be having overstocking problems
• GSI Commerce is struggling with RueLaLa
• Amazon is preparing a US start for BuyVIP

The private sales club sector is currently again on the move. The private sales club HauteLook was recently acquired by retail chain Nordstrom for $270 million.

One Kings Lane, which specializes in home furnishings and decor has lately received financing from Kleiner Perkins and Greylock in the order of $23 million.

Related posts:

• Vente-Privée Grows 15% in 2010 to About 780 Million Euro
• Live Shopping Now A Tech Megatrend in Silicon Valley
• ShowRoomPrive Makes Number 2 Spot in France’s Private Shopping Club Scene

Originally posted in German by Marcel Weiss and Jochen Krisch, adapted for excitingcommerce.com by Jason Soo.

How Etsy deploys code and uses AWS for data crunching

Etsy-CTO Chad Dickerson provides some fascinating insights on the Q&A-Site Quora into how Etsy is working:

"We practice continuous deployment and make small changes frequently to the site. We use what we call "config flags," which are more or less an exact copy of what Flickr does (see the Flickr engineering blog) and a lot of the code for features runs "dark" for days or weeks, and feature launches mean flipping a switch in the code."

"When we make mistakes, we conduct blameless post-mortems and assign remediation items to the appropriate team members."

"Overall, engineers are treated as creative collaborators in the overall process with design and product, and products are worked out and iterated on with engineers instead of simply being handed to them for implementation."

Stefan Karpinski, data scientist at Etsy, meanwhile writes on Quora about how Etsy uses AWS and Hadoop:

"We replicate many useful production database data sets to S3 and also log a wide variety of web events to S3. From there, we have a pretty extensive analytics stack that lets us correlate, aggregate, and analyze that data. For that pipeline, we use sequences of Hadoop jobs generated by Cascading via a JRuby data flow DSL that we've forked and done a lot of work on (https://github.com/etsy/cascading.jruby)."

"In terms of serving data on our website from AWS, we generally don't. For actual web serving, we have a fairly traditional PHP/sharded MySQL infrastructure. It's well-understood, reliable, mature software. Unfortunately, such a thing as "well-understood, reliable, mature software" does not yet exist in the world of open source cloud computing."

"We've gotten to a point where we can go from asking complex questions about user behavior on our site to having detailed answers based on months of data within hours. That's powerful stuff."

Related posts:

• Real time: Etsy enables PubSubHubbub-enhanced feeds
• Etsy Grows Revenues from $180 Million to $314 Million
• Etsy 2010: How Social Can Commerce Get?

Nordstrom buys HauteLook for $270 Million

The US retail chain Nordstrom has bought the US shopping club HauteLook for 270 million US-Dollar:

"In one of the larger exits so far in the flash sales business, retail chain Nordstrom has acquired flash sales site HauteLook for $180 million in Nordstrom stock and three-year earn-out of up to $90 million. HauteLook has raised $41 million in funding."

In 2009 HauteLook was on place 191 on the Internetretailer Top 500 list.

Related posts:

• Bestsecret: (Est.) 60 Million Euro Revenues with 150,000 Members
• Shopping for Shopping Clubs: Privalia Trumps Brands4Friends and BuyVIP in Latest Investment Maneuvers
• Vente-Privée Grows 15% in 2010 to About 780 Million Euro

Bonobos, Birchbox & Others: Who Has The Stuff To Become The Next Zappos?

Leading American e-commerce investors such as Accel Partners, Insight Ventures or Lightspeed Venture Partners who invested 10 years ago in Zappos (now a part of Amazon) or 5 years ago in Diapers (also now a part of Amazon) won’t be investing any more in traditional sales models.

Instead, US investors are seeing the next Zappos as something more like a Bonobos, Birchbox, ModCloth or Shoedazzle. These ventures have business models which employ unique and difficult to copy components (see presentation from the Imagine Conference) and all were able to enjoy big finance rounds in 2010:

Anyone working on exciting and new e-commerce concepts in the areas of Fast Fashion or Beauty is heartily invited in March to present at our Live Shopping Days conference in Berlin.

This year we will be enjoying a presentation from Accel Partners on e-commerce models with disruptive potential. In the past, Accel financed companies such as Etsy, Groupon, Diapers, ModCloth, Spreadshirt, ShowroomPrive and recently Bonobos with $18.5 million and Birchbox with $1.4 million.

Related posts:

• Imagine: New Opportunities for eCommerce Entrepreneurs
• Shoedazzle Gets $13 Million from Lightspeed Ventures
• Announcing the Live Shopping Days 2011 in Berlin

Originally posted in German by Jochen Krisch, adapted for excitingcommerce.com by Jason Soo.

Real time: Etsy enables PubSubHubbub-enhanced feeds

Etsy has introduced PubSubHubbub-enhanced feeds as a beta. PubSubHubbub is a protocol with an awful name developed by two Google engineers to make the real time handling of content easier for both publisher and consumer. Here is the definition of PubSubHubbub by Wikipedia:

"PubSubHubbub is an open protocol for distributed publish/subscribe communication on the internet. The protocol extends the Atom and RSS protocols for data feeds. The main purpose is to provide near-instant notifications of change updates, which would improve on the typical situation where a client periodically polls the feed server at some arbitrary interval.
In essence it provides for pushed Atom/RSS update notifications instead of requiring clients to poll whole feeds."

So what exactly does that mean for Etsy and its ecosystem? Superfeedr, the service that is hosting Etsys PubSubHubbub (PuSH) hub, provides some insights:

"How many emails would Etsy need to send to inform their users about price updates, or new products? thousands, every day, to every users. That clearly wouldn’t work. Yet, people also buy on Etsy because they find the information about new products on other sites, whether they are the shop owner’s blogs, wishlist sites or even daily deals!… etc.

Up until a few days ago, these 3rd party sites had to poll Etsy constantly to get updates and find about new products listed. Today they can subscribe to the stream of all Etsy products, which makes it incredibly easier for them to consume the data and keep a fresh and up to date inventory. Building applications like Groupon on top of this feed should be pretty easy = )."

You can find more information on PubSubHubbub at Etsys DeveloperCommunity.

Related posts:

• Etsy 2010: How Social Can Commerce Get?
• Etsy Grows Revenues from $180 Million to $314 Million
• Social Commerce: Etsy Returning To Its Roots

Imagine: New Opportunities for eCommerce Entrepreneurs

Last week in Los Angeles, Exciting Commerce’s Jochen Krisch gave a presentation at the Magento Imagine Conference.

Driving Business Innovation with Magento

View more presentations from excitingcommerce.

At the moment, the lion’s share of online business is realized by the weakest of all possible business models. The result is a bitter price war. Price is often the last remaining differentiating factor amongst legions of interchangeable online shops.

In the last 10 years however, dozens of alternative online business models have crystallized, some of which have potential to be far more profitable.

In the presentation, Jochen Krisch portrays how innovative e-commerce entrepreneurs can use open source solutions such as Magento to build and drive new business models forward (see our book list on Advanced Business Models: The Library for Pioneering Entrepreneurs).

Originally posted in German by Jochen Krisch, adapted for excitingcommerce.com by Jason Soo.

Confirmed: eBay Holds 49% of Magento

Now it’s official: eBay is owning almost half of Magento. eBay mentioned this today at the eBay Analyst Day:

"Mark dropped a bomb: eBay acquired 49% of Magento"

For outsiders it is hard to imagine why Magento would bind itself so strongly and unilaterally with eBay/Paypal. It would have been expected they would have looked for a more neutral investor.

Magento announced a $22.5 million financing round already last year and at that time informed the Magento partners on the eBay/Paypal involvement.

It’s not known whether or not eBay had a second investment round with Magento since then.

Related posts:

• Magento To Fuel Expansion with $22.5 Million Growth Capital
• Balance Sheet 2010: How is eBay looking in 2010/11
• Magento Update: Where is Magento Today?

Originally posted in German by Jochen Krisch, adapted for excitingcommerce.com by Jason Soo.

im Büro und wollte dich Fragen, ob Du + Nagendar OK für unseren Montag morgen Termin sind (ich habe 9 Uhr vorgeschlagen).

Hab' bis gestern abend keine Terminbestätigung von Dir bekommen. Eine kurze Rückmeldung wäre nett.

Beste Grüße
Jason

Bestsecret: (Est.) 60 Million Euro Revenues with 150,000 Members

Bestsecret’s PR event last week in Munich was indeed out of the ordinary. Because much according to their moniker, Bestsecret is one of the most discreet of all private sale clubs. Active since December 2007, the club run by German textile wholesaler Schustermann & Borenstein has avoided big advertising campaigns. What would be the point, since CEO Marian Schikora turns down on average 3000 membership applications per month.

The goal of the press event was first and foremost to re-acquaint the audience with the business philosophy of Bestsecret.com. Their strategy is indeed markedly different than many of the other private sale clubs:

• Bestsecret.com has set a limit of no more than 250,000 concurrent memberships to the shopping club. As soon as this level is reached, there will be a freeze on all new members.


• It’s already difficult now for interested shoppers to get into the shopping club. In comparison to competitors like Brands4Friends, internet users are not able to apply themselves for a membership. Access can only be received when an existing member gives a recommendation, and this can only be done one time for each purchase made in Bestsecret.


• A recommendation doesn’t guarantee you a place in the membership ranks. Bestsecret takes care that not too many users in their membership base are coming from the same postal code.


• Furthermore, membership has conditions attached. Members are not only asked to keep brands and prices discreet. They are also required to purchase a minimum of 150 euro worth of product per year. Those who don’t reach this quota over a 12 month period lose their membership. This method insures that the company retains only active users in their membership base. This weeding out process also includes members who return more than 80% of their purchases.


• Bestsecret is operating a 10,000 square meter warehouse in Dornach near Munich in Germany. Orders are therefore usually reaching their customers in Germany by the next business day (unlike other shopping clubs, which may need 4 weeks for fulfillment). On stock are between 4,000 – 6,000 products. On average, 5 sales campaigns run per day which last year resulted in 750,000 deliveries – about 2,500 shipments per business day. Bestsecret plans 4,500 shipments per day for 2011.


• Currently, Bestsecret has 150,000 active members. With an average annual turnover of 400 euro per member, Exciting Commerce roughly estimates their revenues at 60 million euro per year. With that order of magnitude, the best kept secret of the German fashion industry would be in the same league as Vente-Privée, who last year managed to earn gross revenues of 70 million euro from the German market.

On the topic of Vente-Privée: Vente-Privée founder Jacques-Antoine Granjon sees it the same and attaches high value to the relationship with their suppliers. In the future, Bestsecret plans to grow in a controlled way. To maintain their authenticity and exclusivity, the private shopping club will never have a million members (“Private sales for a million customers is a farce”, German article). The brands and suppliers of Bestsecret can be satisfied with that attitude, without needing special studies to substantiate their strategies.

Related posts:

• How Vente-Privée Wants To Grow From 1 to 10 Billion Euro
• Vente-Privée Grows 15% in 2010 to About 780 Million Euro
• eBay Takes Over Brands4Friends for 150 Million Euro

Originally posted in German by Stephan Meixner, adapted for excitingcommerce.com by Jason Soo.

eBay: The 'training wheels for e-commerce'

The blog eBaystrategies provides some interesting insights on the business life cycle of an online retailer starting out on eBay:

"I used to refer to eBay as 'training wheels for e-commerce' quite a bit because I thought it was not only true, but something they should be proud of. Unfortunately, the management team at the time took offense at that, so I avoided the term. I still feel it's true and whenever someone asks us how they should start selling online, eBay is always the first answer.

Once a business starts ramping on eBay (Toddler seller) and then starts to hit scale (Adolescent/Adult seller), it's a natural progression to expand to other channels. We call that point the transition of a 'seller mindset' to a 'internet retailer' and that's where the 'Young Internet Retailer' step in the lifecycle starts. Once you start down that path, then adding additional marketplaces, search and CSE are natural progressions."

They show you what they mean with a case study of the eBay seller 'ebuys77' that transformed into Shoe Metro.

Related posts:

• eBay Testing Own Groupon Clone in India
• eBay Takes Over Brands4Friends for 150 Million Euro
• Fashion Vault: eBay Gets Into Private Sales Club Business

LivingSocial gets closer to Groupon, works on expanding mobile app

LivingSocials $10 for a $20 Amazon gift certificate deal was quite successful for the group buying site as Hitwise is reporting:

"LivingSocial has closed the gap, now with over half the visits of group coupon leader Groupon."

"Sure last week's surge was due to LivingSocial's door-busting $10 for a $20 Amazon gift certificate deal, and as the New York Time's reported last week, the Amazon offer wasn't a traditional group coupon. In this case LivingSocial purchased certificates from Amazon at an undisclosed cost and then resold them through their service."

Meanwhile Groupon is countering with a similar deal in scope with its $20 Barnes and Noble gift card for $10.

Interestingly LivingSocial is also working on adding 'real time discounts' to its mobile app:

"Over the next couple of weeks, LivingSocial tells us, it will be adding real-time discounts to its mobile applications to enable consumers to search for discounts at nearby restaurants on the fly.

Likewise, it will give merchants the tools to find customers immediately should business get slow."

Specialised local group buying sites in the likes of Groupon and LivingSocial are still getting funded. The families/moms-specialised Plum District secured a few days ago 8.5 million US-Dollars in a Series A funding led by Kleiner Perkins Caufield & Byers.

Related posts:

• LivingSocial Buys LetsBonus, Coming Soon To Germany
• Amazon Onboard with Groupon Clone Living Social for $175 Million
• eBay Testing Own Groupon Clone in India