Not a great day to be working at Gilt, though for the 45 employees that the company has laid off it would probably be a better day if they were still working for the fashion flash-sales site.
This is all despite racking up a $1.1 billion valuation, scores of imitators and a lot of buzz that the savvy combination of fashion and bargain-hunting was the shape of things to come in digital retail.
But reality has not been quite so easy, even though the firm described itself as EBITDA-profitable in 2012. But so far, in eight years of operation, the company has never managed to achieve being actually cash flow-positive. Though there was once a thought the company would go public, the initial 2013 target date slipped back into 2014 and then slipped into non-existence as the site has struggled in recent years to keep its traffic healthy.
According to SimilarWeb, Gilt is 46 among all clothing shopping sites and 1,162 (and falling) among all websites in the U.S. It reportedly has about $600 million per year in revenue.
“Traffic has been dwindling since last year,” one source told TechCrunch. The source further characterized the layoffs as “streamlining headcount in order to make up for the loss in traffic and revenue.”
Gilt is one of many burgeoning eCommerce ventures that generated a lot of attention out of the gate — usually with discount-intensive models — only to stumble in the second phase of the race in trying to build out viable economies of scale and margin against well-established major league players, like Amazon and eBay.
When asked directly about the layoffs, Gilt responded through spokesperson Jennifer Miller, SVP of corporate communications.
“While it [is] always difficult to lose talented people, we are confident the changes we made today position Gilt to be a profitable business in 2016.”
The talented people included in this round of layoffs include Gilt’s CMO and international head; neither will be replaced. Many marketing responsibilities will move to Gilt’s CIO.
International operations – 20 percent of the company’s revenue will continue to run, but not under a designated SVP. Oksana Voronenko will be senior director of international, reporting Steven Schneider who will oversee International as well as daily deals site Gilt city. Japan operations will continue as before under Joanna Dubin.
The layoffs represent about 5 percent of the staff — 35 full-time roles and ten temp roles.
The struggles that Gilt (and Fab and zullily) have faced have raised questions not only about the viability of building out large-scale eCommerce markets but also on the investment atmosphere that supercharged Gilt’s valuation so fast. With so many noted second-phase stumbles, some are wondering how much longer the climate of free-flowing venture capital can last.
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