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Simon’s ‘Digital Value Shopping’ Venture Could Bring in $1 Billion

Simon’s Property Group’s new online outlet marketplace, Shop Premium Outlets, opened Wednesday to the public as part of a new multi-platform venture that includes flash sales pioneers Rue La La and Gilt Groupe.

The venture between Simon and Rue Gilt Groupe, a company backed by serial entrepreneur Michael Rubin, comes after Rue acquired Gilt about a year ago. Simon is contributing $280 million to the venture, which will benefit from RGG’s e-commerce expertise. The new combined firm is “poised to surpass $1 billion in online sales,” Simon said of its first foray into e-commerce.

The site has been in beta testing since March, with the goal of providing another option for outlet tenants, which fulfill orders themselves, to generate incremental sales and drive traffic to physical centers. The operation also generates another stream of revenue–it receives a commission from sales at the SPO site–to the mall operator and real estate investment trust.

David Simon, chairman, CEO and president of Simon, said, “Our strong capabilities in the physical outlet space, combined with RGG’s exceptional e-commerce success, will give shoppers enhanced access to the world’s best brands and the most compelling deals both online and in-store.”

Simon added that online value shopping “presents a tremendous business opportunity for Simon, given our credibility, trust and relationships with brands, retailers and shoppers.”

SPO currently has showcases more than 2,000 designers and 300,000 products, with more merchants slated to join over time as new enhancements come online, Simon said. SPO will also help brands and retailers on the site drive additional online sales and support inventory optimization and customer acquisition.

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Simon plans to promote the “digital value shopping” venture using a portion of its more than $100 million plus annual marketing budget and access to 2 billion annual shopper visits. The partnership will also leverage the combined databases of Simon and RGG, which reaches more than 35 million shoppers.

Michael Rubin, executive chairman of RGG, said, “The online value shopping market is a massive opportunity ready for the next disruptor.”

Of the partnership with Simon, Rubin said the deal brings together leaders in online and physical commerce to “deliver the excitement of outlet shopping online to consumers and innovative solutions to our brand partners.”

Rubin was the founder of GSI Commerce, which he sold to eBay Inc. for $2.4 billion in 2011. GSI created, developed and ran the online shopping sites for brick-and-mortar brands and retailers.

RGG’s two brands will complement SPO as part of a growing value shopping e-commerce portfolio. RGG will be responsible for the day-to-day operations of SPO. Each platform will continue in operation to serve distinct customer segments.

Mark McWeeny, CEO of RGG, said, “Our expertise in e-commerce, data-science, curation and customer experience was the foundation for this partnership. Together with Simon’s leadership, we are excited about the future opportunities ahead for this new, innovative retail platform.”