Gilt Groupe Inc., the largest flash-sale e-retailer in North America by 2012 sales, is now handling fulfillment for TheClymb.com, a flash-sale e-retailer of outdoor apparel and gear. This is the first time the 7-year-old Gilt has provided fulfillment services to another e-retailer, and Gilt execs say they intend to offer such services to other e-retailers and brands in the future on a limited basis.
“This will not be a GSI,” says Chris Halkyard, chief supply chain officer and general manager of distribution services for Gilt, referring to the eBay Inc.-owned fulfillment vendor formerly known as GSI Commerce that now operates under the eBay Enterprise umbrella. “This is very strategic for us. We want to do this on a case by case basis with brands that we are doing business with who need some help on e-commerce distribution.”
Gilt’s primary fulfillment facility is a 303,000-sq. ft. facility in Shepherdsville, KY, near Louisville. Gilt began handling TheClymb.com’s fulfillment last September, and Halkyard says the average package volume at the facility has grown about 20% since, which has allowed it to negotiate for better shipping rates with the United Parcel Service.
For TheClymb.com, which is privately owned and has more than 3.2 million members, the move has cut fulfillment and delivery time significantly, says Cam Ferroni, TheClymb.com’s chief operating officer. He says 95% of orders for physical goods—the e-retailer also markets adventure vacations—ship from Gilt’s facility within 24 hours. “We’ve basically shaved about seven days off the overall process,” Ferroni says.
Previously, TheClymb.com used a fulfillment vendor in Brooklyn, NY, to ship orders, but Ferroni says TheClymb.com’s needs outgrew the room the facility had available. While he declines to name the vendor, it was through it that TheClymb.com execs got to know Gilt, which also used the facility for a portion of its orders. Ferroni says TheClymb.com was considering all of its fulfillment options, including building its own distribution center or using another traditional logistics provider, when it called on Gilt for advice. He says TheClymb.com’s growth path—the e-retailer added 1.2 million members in 2013 alone—and challenges operating in the flash-sale space are similar to what Gilt had gone through. That got the ball rolling on the deal that ultimately led to TheClymb.com moving its fulfillment to Gilt.
“They were growing very fast, and experiencing some of the same growing pains,” Halkyard says of TheClymb. “The reality is, is distribution in the flash-sale space is a challenge.” Both Halkyard and Ferroni note that while both are flash-sale e-retailers, their customer bases and the SKUs they sell don’t overlap.
For Gilt, taking on TheClymb.com’s business is a way to maximize the Shepherdsville facility, which opened in 2010 and includes robotic handling systems from Kiva Systems (now owned by Amazon.com Inc.). Halkyard says Gilt designed and built the facility big so that it could grow into it. “You design for years, not weeks,” he says, noting that while Gilt did not have to expand the overall footprint of the facility to accommodate TheClymb.com’s warehousing needs, it did build up to better use vertical space. Fulfilling for TheClymb.com “gives us a method to get revenue from using existing capacity,” Halkyard says. Gilt’s facility also handles TheClymb.com’s returns.
Both e-retailers decline to say what the financial arrangement is, noting that their technology teams worked together to custom-build how order and fulfillment data would flow both ways. Both e-retailers built and manage their order management programs in house.
“Having the room to grow has been critical for us,” Ferroni says. “And by being able to work with them, we’ve been able to get higher volume discounts on most of our costs.”
Gilt is No. 54 in Internet Retailer’s Top 500 Guide, which ranks North American retailers by their web sales. Gilt generated an estimated $540 million in online sales in 2012. TheClymb.com was not ranked for 2012.
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