Vente-Privee’s Granjon, Flash Sales Pioneer, on Competing in the U.S.
Way before Gilt Groupe or Rue La La, there was Vente-privee, the Paris-based flash sales site that launched in 2001 and unwittingly created a new commerce category in the process. The site was created by Jacques-Antoine Granjon and colleagues, who were veterans of the clothing closeout business in the offline world.
Today, Vente-privee is huge and profitable, registering $1.5 billion in sales in 2012 and selling food, wine and concert tickets in addition to the core business of discount clothing to 2.5 million visitors a day.
But in 2011, Granjon’s company created a 50-50 joint venture with American Express — Vente-privee USA — with the hope that the strengths of each partner could help make a dent in an already crowded flash-sales market here in the U.S. Two years later, those efforts are still a work in progress under the leadership of CEO Kathy Brady.
Last week Granjon visited the Vente-privee USA staff at its Manhattan headquarters. I sat down with him following an all-hands meeting to talk about why his company is still private, what he thinks of his American counterparts and what his U.S. operation has to do to make it. Here’s an edited version of his thoughts on key topics.
On advertising … or lack thereof
We are Google-free and do no advertising at all. Everything is on word-of-mouth and service. We have natural traffic because we create great offers and then we feed that traffic with other offers.
On “free” advertising in France
We bought a theater in Paris and we sell tickets to the shows at very good prices. The press started talking about it and we have stars do shows for me that are only sold at Vente-privee. That’s free advertising.
On U.S. copycats
In the U.S., companies started to copy us … Gilt, Rue La La. They thought they understood the business and raised lots of money and are still not profitable, while we raised not a penny and are profitable. Why? Because they don’t do it right away. This was my job even before [founding Vente-privee] but they come from the Internet, marketing, finance … not from commerce. They do business in another way and this way doesn’t work. They don’t make money … and they will all die slowly.
Look at Totsy, which is closed … finished. Profitability is the key to business. We don’t do business to go on the stock exchange but to build long-term relationships with brands and customers.
On the reason for entering the U.S. with American Express
Because they called. We love the U.S. and, with American Express, feel more secure. They have members and we don’t spend money on marketing; we slowly use members of American Express. And they have trust.
On expectations for Vente-privee USA
When we started with American Express, we recognized it was going to be difficult. We had two goals: quality of service to brands … and the experience of shopping, that was quality, full of trust and creative.
In the U.S., we basically don’t exist yet. We are so small. Maybe we’ll never be really big here, because this is the country of discounts. So we have to be very creative. It is an adventure.
On what success looks like for the U.S. business
To grow and be profitable very quickly, while all the competition is not profitable. In the U.S., it is complicated, though. We invested a lot of money to scale right away but the volume hasn’t come as quickly. We’ll do $40 million or $45 million this year and next year we’ll be profitable or almost.
It’s all about the offer. Offers create traffic and the traffic allows you to create other things. If we don’t create the right offers, we will just be like the others and that’s what we don’t want to do.
On the dangers of venture funding
Fundraising can be very good and I don’t mean to criticize it. But the people who put the money in often want a return on investment after about five years. Sometimes that’s too short to make good choices for the business. I see young people creating a company just to sell it. I sold 20 percent of the business but it was at a good time for me.
And look at Jeff Bezos. He said, “Don’t put money in the company if you want something in the short-term.” But sometimes people raise money to sell the company very quickly and I don’t believe in that.
On goals for the Paris-based business
We want to be selling more food, wine, more inventories, and ticketing, but always on discount. That’s the DNA of our business and we don’t want to change that. If it’s not discount, it’s another business.
Right now our revenue is 78 percent France and 22 percent Europe. I want to go 50-50. I want to be a huge European company. In France we are, but I want to be the same in Europe.