New York based e-tailer ideeli was just picked as the fastest-growing company on Inc Magazine’s annual 500 List, with an eye popping three years sales growth of 40,882 percent. Of course, if you looked at Betabeat’s traffic growth since we started back in March, we could claim a pretty impressive 300,000 percent growth, but hey, it’s all relative. Since Silicon Alley is home to both ideeli and Gilt Groupe, which pioneered the online flash sale, we wanted to chat with ideeli CEO Paul Hurley and get his take on how this rapidly evolving industry will look a year from now.
Q: What are the big things happening in flash sales?
A: Well in a few years you won’t be using the word “flash sale.” Real-time buying will just be part of ecommerce. And of the people in our category who are pursuing that market, we are the fastest growing. This isn’t just about a 24-hour sale. It’s tapping into bigger trends in retail and media. How do you find and engage customers in the real time universe of the web.
Q: So right now you’re focused on growth over profit?
A: These are very, very large marketplaces. Originally I was intrigued by the way brands could find and engage audience online. But in 2009 we pulled a monster pivot from a platform that helped brands find and engage audience online to a flash sales site that moved their excess inventory. The new business turned out to be a far better way to engage with the real time customer.When we look at our customers, we can map it out, slower growth would be very profitable, but we’re looking for the operating leverage of scale.
I’m not an apologist for Groupon, but these are such huge marketplaces and such big disruptions, you want to grab as much as possible. 80 percent of U.S. households have not heard of flash sales. Everyone you and I know has, but not casual web users.
Q: How will you defend you business if a massive online retailer like Amazon gets into the game?
A: You never want to count Amazon out and we’re a paranoid bunch. They bought a couple companies in Europe and started Myhabit in U.S.. But there are two things: One, operationally this is very very difficult to run. And two, the big advantages we have, is that there is a whole different set of concerns, with the shopping experience, where a key portion of the value is related to the emotional engagement. Last week I went on Amazon and bought a grill brush. It took me ten seconds to find the best one, and I don’t care if that brush is two seasons old, I don’t feel embarrassed. the products we’re selling, there is a lot of emotion and attachment to trends, to fashion, to cache.
Q: How is the bleak economic picture affecting your business?
A: Recessions are very good for businesses like ours, because there is so much excess product available, and people are looking for good deals. Most of our market is aspirational consumer, we do big brands but not couture. Partly what happened at Gilt was they built a brand around the promise of luxury discounts, and that is not a scalable model. We have a much larger target market of lower end shoppers.
Q: So Gilt is not a competitor?
A: We don’t compete with Gilt, they are whole different animal. Our competition is more from folks like Rue La La and Haute Look. But frankly, this market is so big, growing so fast, it’s wide open right now, no one player can suck the air out of the room.
Q: And you’re planning to stay in New York?
A: Absolutely. Even with the higher cost of rents here, it’s worth it. In a high growth business like ours, what matters the most is access to great talent, and New York has that in spades.