Aug. 13 (Bloomberg) -- Jacques-Antoine Granjon has made millions selling high fashion at cut-rate prices online. Now, the French entrepreneur with a rock-star-like image, who recently appeared with Iggy Pop in a promotional video, wants to do the same with wine.
Vente-Privee.com, the Web retailer Granjon founded in 2001, has become France’s biggest online seller of wine, and last month it started exporting discounted bottles to Germany and Spain. The entrepreneur, who turned 50 on Aug. 9, is betting steep markdowns on Bordeaux and Burgundies will appeal to consumers even as they cut spending amid austerity.
“The Internet started with finance and sex, that’s what got people addicted,” Granjon said while lounging on a leather couch in his art-filled office outside Paris. “We keep people coming back by surprising them with great brands at incredible prices.”
Revenue at the closely held company, which operates in eight European countries and the U.S., climbed 14 percent to 1.1 billion euros ($1.36 billion) last year, while Europe’s largest retailer, Carrefour SA, saw declining sales in the region.
That strength in tough economic times indicates that Europeans will still spend on luxury if the price is right. Consumer sales online in Europe grew 19 percent to 246 billion euros, surpassing North America’s 237 billion euros, according to Web retailer trade association Emota.
The success of Vente-Privee, which gets as many daily visitors in France as Amazon.com Inc., is attracting interest from investors, though Granjon declined to name them. He says the company is profitable and generates enough cash to finance its projects. For now, an initial public offering isn't in the cards, he says, as the group focuses on establishing the U.S. venture.
Where Vente-Privee differs from other discounters is how and what it sells. Granjon calls Amazon “the WalMart of the Web” because of its wide array of products. Vente-Privee, by contrast, specializes in what it considers higher-end goods ranging from Huggies diapers to Armani handbags and Chronoswiss watches that can fetch $10,000-plus in stores. The company seeks to restore the appeal of surplus merchandise by repackaging it with fresh photo and video advertisements, and listing each item for just a few days.
The tactic, Granjon says, helps “feed the brand,” giving visitors -- 1.3 million daily in the first quarter, according to e-commerce association Fevad -- a reason to come back to browse for deals.
Offering discounts of 40 percent to 50 percent on wines such as Louis Latour Grand Cru Charmes-Chambertin 2003 Burgundy and Chateau Rollan de By Medoc Cru Bourgeois 2008 Bordeaux is a natural extension of that, Granjon said. Vente-Privee says it sold 2 million bottles in France last year, for total wine revenues of 20 million euros.
“Wine is emotional,” said Granjon, who hired sommeliers from the Hotel Crillon on the Place de la Concorde and the Michel Rostang restaurant (two Michelin stars) in Paris’ 17th arrondissement to handpick bottles. “It’s the sun, the work of men, the soil. It becomes really exceptional when we put a discount price on it.”
Granjon’s success will depend on whether more European consumers add wine to their online shopping list. While about half of e-shoppers bought trips and clothing or fashion accessories, only 16 percent purchased food or wine online in the past six months, according to Fevad.
Still, for Vente-Privee, the risk is low. It only buys and takes receipt of goods once customers have paid for them. And its discounts are open for limited periods, usually about three days, so if a product isn’t selling, Granjon’s team of 1,500 employees can easily pull it from the site in favor of more appealing merchandise.
“Their clients are fairly well off, and they’re willing to log on at midnight because they’re so anxious about missing a good deal,” said Sophie Pernet-Lubrano, an analyst at research firm Idate Digiworld in Montpellier, France.
For winemakers, Vente-Privee provides new buyers for excess inventory and helps drive full-price sales.
“It’s really a marketing campaign -- we’re shipping out paid samples, not discounted products,” said Michel Chapoutier, a winemaker in the Rhone Valley. “People then recognize our brand on wine lists in restaurants, or call us to order another case.”
Things may prove more complicated in the U.S., which Vente-Privee entered in November through a joint-venture with credit card company American Express Co. Laws governing wine sales there are determined by the states, some of which have banned shipments of alcohol from out-of-state.
For now, Granjon is focused on pitching discounted fashion to Americans. In that, Vente-Privee, which pioneered the flash-sale model in France, will be up against long-established rivals like Gilt Groupe Inc. and Rue La La, as well as Amazon’s myhabit.com.
“It’s a crowded space,” said Gene Alvarez, a research vice president at Gartner. “Consumers in the U.S. already have so many ways of finding deals on a daily basis, Vente-Privee’s challenge will be getting known as the place to go for a really cool buy.”
Plans to sell the company or seek a stock market listing will depend on whether Granjon can outmaneuver his U.S. competitors and convince Americans that his site offers better deals.
“Americans are used to discounts, but they like buying and they’re not scared of the future,” Granjon said. “We’re going to be creative and bring brands that are very exclusive.”