Is Gilt Going After Groupon’s Business Model? The Competition Builds

When we reported Groupon’s massive $1.35 billion valuation, we noted that the locally focused group deal site was valued at more than 3 times the $400 million valuation investors gave Gilt just last year.

Apparently, we’re not the only ones who noticed.

As of a few days ago, Gilt is now offering Gilt City, a New York specific section of the popular site dedicated to deals on local experiences ranging from a 3-course meal for two at Rouge Tomate, to frozen yogurt at 16 Handles and discounts on salon services at Vartali Salon.

There are notable differences from Groupon: offers are updated weekly rather than daily, but there are multiple deals rather than a single one and merchants can offer multiple options. {TechCrunch}

Vartali Salon, for example, offered two haircut deals, a Keratin/Brazillian straightening offer, and a 3-step processs. Both of the haircut offers have sold out, as has the 3-course meal at Rouge Tomate, and orchestra seats at the musical A Little Night Music starring Catherine Zeta-Jones.

Gilt’s significant existing user-base means that unlike other Groupon competitors, they’ll be able to launch with built-in demand in enough cities to pose a solid offense. With many people questioning how long the excess merchandise will last, and what will happen when there are no longer enough true clearance items to satisfy growing demand, this seems like a good way to increase overall sales when growth in the discount designer fashion segment hits the predicted wall.

One company that seems like a natural fit for the model is Daily Candy. After their acquisition by Comcast, the newsletter that offers daily snapshots of fashion, food and fun added sample sales to compete with Gilt, but the Groupon model would certainly make even more sense for the locally-focused company. We’d be surprised if there isn’t some kind of announcement from Daily Candy before the end of this year.

In addition to the existing shopping sites, newspapers like the San Diego Union Tribune have been eyeing Groupon style business models as a way to offset declining classified advertising revenue. So in addition to Gilt and Groupon (and Daily Candy, if they move quickly), we wouldn’t be surprised if New Yorkers could soon have the option of deals from New York Magazine, the New York Times, the New York Post… There’s certainly no shortage of print publishers who are looking for ways to make more money from their online operations, and with Groupon’s revenue growing almost as quickly as the number of competing sites, their model makes an attractive target.