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US flash sale site acquires competitor

US-based fashion retailer Rue La La on Tuesday acquired Gilt Groupe, forming the Rue Gilt Groupe.

Both are flash sale sites offering designer goods for discount prices, however they serve distinct customer segments, according to a statement from Rue La La.

While the brands will continue operating separately, there are plans to take advantage of efficiencies on the back end, including an advanced technology platform for mobile commerce and personalisation.

The newly formed company will reportedly reach more than 20 million members, and is expected to quickly surpass US$1 billion in total sales, according to Michael Rubin, executive chairman of Rue La La.

“This transaction places the Rue Gilt Groupe in the premier tier of e-commerce growth companies. Our two distinct brands have large, highly engaged customer bases, cutting edge technology and mobile leadership,” he said.

However, Gilt Groupe’s struggles since it launched at the start of the Groupon craze in 2007 have been well documented.

After teasing an IPO that never transpired, the discount site was acquired by Saks owner, Hudson’s Bay Company, in 2016 for US$250 million, a mere quarter of the US$1 billion valuation it had received in a funding round in 2011.

Rue La La itself was acquired in 2011 for an undisclosed sum by Kynetic, which also owns Fanatics and ShopRunner. But it seems to have fared better.

Mark McWeeny, CEO of Rue La La said the business achieved record revenues and profits in 2017 and is poised to further strengthen its leadership position in fashion off-price e-commerce through the Gilt acquisition.

The deal is expected to close in July 2018.

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