How To Succeed In Flash Retail: Make Money Right Away

Flash-sales pioneer Jacques-Antoine Granjon, who co-founded Vente-Privee in Paris in 2001—and then watched it be copied by U.S. startups like Gilt Groupe, Rue La La and Totsy—thinks he knows why those flash-sales companies still aren't profitable, according to an interview with All Things D published on Monday (July 1).

"In the U.S., companies started to copy us—Gilt, Rue La La," Granjon said. "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."

He added: "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."

By "my job," Granjon means the clothing closeout business. He and his co-founders were veterans of that trade before starting Vente-Privee. The almost-zero-investment financial approach of off-line closeouts is still reflected in how his company does its marketing—"We are Google-free and do no advertising at all. Everything is on word-of-mouth and service," Granjon says.

Ironically, while Vente-Privee has $1.5 billion in sales in Europe, the company broke its own rules when it cut a deal in 2011 to create a U.S. spinoff in partnership with American Express. That company is now struggling like its competitors. "We invested a lot of money to scale right away but the volume hasn't come as quickly," Granjon said. "We'll do $40 million or $45 million this year, and next year we'll be profitable or almost."

For more:

- See this All Things D story

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