Analysts called flash sales one of the hottest marketing techniques of 2011. These days, industry prognosticators are more likely to be talking about even hotter trends — like mobile – and labeling flash as passé. But flash sales still hold potential, at least as far as some venture capitalists are concerned.
BtoC vendors will try just about any marketing technique to generate consumer excitement these days. And flash sales certainly have appeal. Promoting luxury products at deep discount for a limited period of time captured plenty of consumer attention when marketers like Gilt and Rue La La became well known among dedicated shoppers. It’s the underlying economics of the business models that may be trouble for pure plays though. As Spencer Ante notes in a recent Wall Street Journal article, these types of sites must have growing memberships who are willing to shop steadily and suppliers who are willing to turn over luxury goods at deep discounts. Consumers appear to be tiring of flash sites like Ideeli and OneKingsLane where the number of unique visitors is dropping. But other sites, like Fab, are seeing huge growth in unique visitors. Venture capitalists are so impressed by the company they’ve put up another $105 million to fuel an overseas expansion. In general, the industry has expanded beyond apparel and into sectors like furniture, art, and kitchen products. Another strategy operators have taken is to back away from constantly emailing members about sales which can generate fatigue. Instead, pure play operators are angling for social shopping – the direction Fab has taken.
Flash sale firms operate solely online and initially appealed to consumers who were struggling during the recession. A safer strategy now may be to play the niche game. Doing so allows operators to connect with a unique consumer group. This strategy also has the added benefit of avoiding direct competition with Amazon which is rumored to be preparing for entry into the luxury apparel market.
With marketers and venture capitalists still spending money on this format, it’s safe to say that flash sale advertising is likely to continue for some time to come but operators will be quickly changing strategies and focus to keep consumers entertained and spending money..[Sources: Berk, Christina. Time for Flash Sales to Adapt or die. Cnbc.com. 25 May 2012. Web. 30 Jul. 2012; Ante, Spencer. Are Flash Sales Still ‘Fab’ulous? Online.wsj.com. 19 Jul. 2012. Web. 30 Jul. 2012; Little, Katie. Young and fashionable. USAtoday.com. 17 Feb. 2012. Web. 30 Jul. 2012; Solomon, David. Ecommerce M&A. multichannelmerchant.com. 1 Jun. 2012. Web. 25 Jul. 2012]