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Gilt Groupe's unit for local deals, Gilt City, has snagged another big distribution partner: Us Weekly, the celebrity weekly with paid circulation of nearly 2 million.
While Us follows a long list of publishers into the daily deals market, it's a significant addition to a sprawling effort to adopt and adapt pieces of Groupon's massive deals business. Slicing that pie up may yield, moreover, somewhat more manageable portions than Groupon is wrestling with. As Gilt City tries to stay true to its high-end fashion factions, for example, it's attempting to build a Groupon clone that 's entirely un-Groupon.
While major powers Groupon and LivingSocial offer oceans of deals in seemingly countless markets, Gilt's year-old service is trying to stand apart partly on the strength of partners' editorial filters. For Us Weekly, Gilt has built "Celeb Spots" for offers on the spas, restaurants and clubs that celebrities frequent in New York, Los Angeles and Miami. Us Weekly locates the hot spots, and Gilt cuts the deals with merchants.
"As opposed to offering every deal under the sun, we're curating a lifestyle," said Heather Freeland, chief marketing officer for Gilt City. "It is very different. Instead of a random assortment of offers, there is cohesion."
The Us Weekly partnership, where Gilt City handles merchants for a cut of the revenue, is just the latest distribution deal. Gilt City, along with other similar companies that pass offers through to websites or publications with established audiences, is also sourcing deals for Facebook's and New York magazine's deals services. It also has a consumer-facing deals brand, also called Gilt City, in six U.S. cities. However, that service only counts 1.6 million subscribers, which is why striking a deal with Us Weekly to get in front of its nearly 2 million paying print readers, more than 13 million overall print readers and yet more consumers on the web all comes in handy.
Groupon has expanded to 175 markets in North America and 43 countries around the world, according to the company's recent public filings. LivingSocial, too, has made recent acquisitions for larger global reach. Both services also offer a wide range of deals from dinners out to medical services. So they've had to throw bodies at finding new deals all the time.
Niche players such as Gilt and Thrillist, however, are trying to show that massive global reach may not be the only way into the deals market, which BIA/Kelsey estimates will hit nearly $4 billion in the U.S. by 2015. The New York Times, too, has launched a deals site for up-market products and services for one market only.
The deals-behemoth model has appeared less attractive after Groupon filed for a $750 million public offering. The 3-year-old company has already begun to pay out its more than $1 billion in venture funding to Groupon execs and, despite its more than half-billion dollars in quarterly revenue, is operating at a loss thanks to high fixed costs like a string of global offices and 7,000 in headcount.
Like Groupon, Gilt Groupe designed an email-based e-commerce service in 2007 that shook up a then-stodgy category online, retail. Gilt's limited-time, steep-discount online sales for women's fashion have also been cloned in recent years, while the company has expanded to flash sales for men's clothing, food, travel and home goods. Gilt Groupe introduced Gilt City in beta last July and officially introduced it to six markets last September. Gilt Groupe recently raised $138 million in new funding from investors including Matrix Partners, General Atlantic and Softbank Group.
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