Vente Privée’s failure in the US; former employees point to founder mismanagement and megalomania

Vente Privée’s failure in the US; former employees point to founder mismanagement and megalomania
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The French company that coined “Flash sales,” a phenomenon that has been cloned around the world by the likes of Gilt Groupe and others, has announced it will discontinue activity in the United States just a few years after launching a joint venture with American Express. Vente Privée has built a powerful eCommerce business in France, where it sees 80% of its €1.6 Billion coming in, built off the back of a workaround to the regulation prohibiting retail stores from having Sales outside of the bi-annual 3-week periods dictated.

As reported on Fortune, American Express & Vente Privée had poured $20 Million each into the venture. Sources close to the joint venture say that conflicting culture between the US joint venture and Vente Privée’s founder, Jacques-Antoine Granjon, played a large role in the venture’s failure:

“The founders would hand-pick executives for roles, causing the U.S. team to reshuffle their organization to accommodate, only to have the new hires change their minds. A former employee says the most telling symbol of the culture at Vente-Privée is a mural Granjon commissioned from artist David Mach. It features Granjon and his board as Jesus and the apostles at The Last Supper.” – Fortune

In France, Vente Privée is often cited as one of the greatest startup successes; however, the company’s inability to export itself (its makes up just 20% of its revenue) demonstrates clearly that the company, like many French giants, rode the wave of legislative protectionism to carve out a place in the market. Would Vente Privée be able to compete with regulation around retail sales weren’t so heavy in France? Likely, today; however, their inability to make it work in the US shows the disconnect between the company and the global economy that is the Internet.

 

 

 

 

8 Responses

  1. Avatar
    AdeMARS

    1st line : “a phenomenon that has been cloned around the world by the likes of Gilt Groupe and others”
    last paragraph :”however, the company’s inability to export itself (its makes up just 20% of its revenue) demonstrates clearly that the company, like many French giants, rode the wave of legislative protectionism to carve out a place in the market”
    This is a little contradictory… Has Granjon built an innovative and efficient business model or not?
    And is it reasonnable to throw away all “French giants” with him? Including many companies which make most of their money outside France?
    Let’s go deeper, many “giant firms” from Japan (Sony), Korea (Samsung), USA(GM) etc were born or have been helped through protectionism. Why act like if it’s only France?
    There’s a lot of prejudice in this article and not much hindsight.

    • Avatar
      Liam Boogar

      Tristan,

      I don’t think the lines are contradictory. VP was first to the market with their model, but was unable to translate that into a global business (so far) – others have argued that they are leaders in other European markets, however those markets are largely undeveloped.

      I’m not throwing away anyone. I’m simply noting that many incumbents today are there for the same things that built VP. I think Sony, GM & Samsung are great examples. Look what happened to Sony when the global economy came together? And GM? Samsung spread its wings and rode the “Apple vs. Samsung” wave (in addition to having multiple stable business lines); success today vs. success yesterday.

      Yesterday’s leaders had country-based barriers to entry. Today, those don’t exist.

      I may have prejudice – I was certainly not surprised by the failure – but I don’t think I like hindsight, or insight.

    • Avatar
      AdeMARS

      Liam,
      thanks for your reply.
      I still believe there is contradiction.
      We have to acknowledge Granjon invented an incredibly succesful business model : it has nothing to do with French protectionism.
      Then he failed in the US. Maybe Granjon is not fit for the US market, that’s all.

      “the company, like many French giants, rode the wave of legislative protectionism”
      This is false. And again protectionism is not French. It’s everywhere.

    • Avatar
      Max

      I have to say, in France, Vente-Privée has terrible customer service. I bought a bicycle from them that turned out to be defective (which I learned when the brakes jammed up on me and I took a scary tumble in traffic!) They admitted they had a problem with the bikes and I could return it, a process which took 6 months. There’s no way to directly contact the company for customer service so I had to wait until I heard from them during each step of the way. Then, after I got the bike back to them, I got an email that they were sorry, but my reimbursement was “refused.” Merde.

      Perhaps that’s why they failed in America, unless they had a different model for customer service there than they do in France. When I consider buying something again from them in France, the delivery window is one month away, which is a pretty long time. So I’ve stopped using them in France, but I think Liam is right when he says that they don’t really have that much (or any) competition in France, so they are succeeding here.

    • Avatar
      pod

      It is clearly contradictory.
      The all time you explain how great the business model and how the business model itself is already well exported. Then you tell us how there is a management problem .

      You simply cannot conclude by saying “it’s a great company but its model is way too french”

  2. Avatar
    Stefane Fermigier

    “wave of legislative protectionism”

    -1

    (Sans rapport avec la choucroute).

  3. Avatar
    Bob

    Liam – spot on. The competitive advantage in France was clearly not available in the states, and sadly the ‘overseas investors’ were blinded by their own arrogance to allow US executives to slightly alter France’s suggested approach to a radically different US market. Just look at the website – it’s ideal for France, but is the least bit intuitive or interesting to an American. To the French it seems to be intriguing and whimsical — a load of malarky in my opinion. If vp is “the best” (ahem…ONLY) place to buy discounted fashion goods in France, why would any French shopper care about what the online shopping experience is like? I’d put up with 40 clicks to checkout too.

    To settle the argument in this thread: it’s not contradictory at all. vp designed a very clever business model – one that many companies have since adopted, but failed to make it work in the states. And there are in fact success stories in the states! Look at Zulily, albeit a niche site. They are a profitable flash sales site in the states. They were clearly more cost effective and focused than their competitors in the space.

  4. Avatar
    Facebook

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