The $1.5 billion scramble for Vente Privee by Gilt, eBay and Amazon


[France] On stage at last year’s Le Web an argument broke out between co-founder Loic Le Meur and TechCrunch’s Michael Arrington over whether Europe was capable of producing a ‘big win’ Web company or whether Skype was, perhaps, just a one-hit wonder. Like heavyweight fighters, both of them traded some heavy blows in subsequent blog posts. But during the live on-stage Gilmour Gang, one company was mentioned by Le Meur which left the rest of the assembled staring blankly: Vente-Privee.

Probably the reason it prompted such sideways looks however is that this is not a classic web app startup, but an ecommerce hub. Vente-Privee began in France in 2001, but has only recently become a powerhouse of a new wave in Europe: online private sales clubs involving designer fashion brands, otherwise known in the fashion retail industry as the “overstock market”. Its success has lead to a bunch of clone sites, while Vente-Privee itself is on target to €650m in turnover globally this year. In other words Europe is not out to lunch – as Arrington put it – it is out to shop.

Private buyers clubs are business models tailor-made for the recession, offering big discounts on designer goods among virtually guaranteed buyers. They also hit revenue almost from the word go.

That success has now lead to a number of US companies becoming very interested in either entering this world or expanding their operations. TechCrunch Europe thus understands, from some very good sources, that Gilt, Amazon and eBay are all actively looking at acquisitions in the European private shopping club space. The price for Vente-Privee alone is being talked about in terms of a $1.5 billion sale. Some sources even put the figure at between $2 billion and $4 billion.

One VC I spoke to said Vente Privee was “very attractive” to the big ecommerce beasts like Amazon and eBay, and a roll-up of these types of clubs is potentially in the offing across Europe. Another said “It would be a good move – depending on price – from either Amazon or eBay.”

It’s not that surprising. Aside from its existing operations, Vente Privee is even now pushing into high end fashion, and, I’m told, just did a sale for the Chloe brand that was not advertised anywhere else, which shows how far the site has come inside the famously closed fashion industry. The company now has over 1,000 employees and 18 photography studios at its French HQ, housed in the vast, former printing factory for the Le Monde newspaper. It has now started an assault on the fashion UK market, which is worth £50 billion annually.

Back in the UK, eBay has been dabbling in the private sales market. It recently introduced eBay OUTLET on its UK site.

This new addition to the eBay platform sells merchandise at up to 70% off retail prices from various brands that have their own shop-in-shop presence on the site. For eBay buying Vente-Privee could work extremely well. It has a large audience, but it’s known for auctions, not for private overstock sales.

Private shopping clubs have exploded over the European continent.

Last year Newspaper group News International invested in BrandAlley UK, a joint venture with French online boutique BrandAlley France, itself backed by France’s Banexi Ventures.

In Russia, online shopping club, operated by Privat Trade, counts Mangrove Capital Partners as a backer.

In April this year BuyVIP, the Spain-based private online buying club, raised about $20 million in its third round of funding, led by Kennet Partners. Mangrove (along with Bertelsmann, 3i and Molins Capital) is in that as well.

And two year old brands4friends – with two million members in Germany – is on course to do sales of €85 million ($124.3 million) this year – more than three times as much as last year. Unsurprisingly founder Christian Heitmeyer is being courted by VCs, but so far has backing from Partech International, Holtzbrinck Ventures, and… Mangrove Capital Partners again.

In the US, Gilt Groupe, Ideeli, Rue La La and others are creating a similar wave of hype – and cash.

But Europe’s private buyers clubs had better hurry with their courting of the US leviathans. Retailers are planning their inventories better in this down market so overstock sales may begin to dry up. It would be a shame miss that window for a $1.5bn exit.

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