Over the last few years shoppers have learned to love digital merchandisers like Fab, Gilt, and Rue La La. These companies have been setting records with turnovers reaching hundreds of millions of dollars. They’ve also attracted the attention of leaders in the financial world like Anton Levy, Managing Director of General Atlantic, who sits on Gilt Groupe’s Board of Directors.
How does a flash sale e-commerce site work? Well, they work like most retail companies, but there’s a bit of a twist because you’re dealing with an online retailer. There’s no brick and mortar location, which makes it much easier for the retailer to focus their pitch on a specific customer.
A dependable supply chain is another essential element for the success and smooth function of a flash sale site. A traditional store promotes sales for a specific period of time. However, their reach is impacted by weather, the costly task of stocking shelves, waiting for sale items to be delivered, and the vagaries of their consumer’s fickle desires.
Flash sale sites have the ability to efficiently source a specific product or range of products to offer on sale for a limited time. They have a guaranteed customer ready to target because the ability to purchase these items—often luxury items priced at a steep discount—is spread on social media.
Once a customer has registered with the flash sale retailer, they’ve begun a digital data dance and regularly receive emails, text messages, and Facebook updates. The retailer launches a sale on specific item or range of items only after they’re assured that they have a specific quantity of items available for shipping.
Promoting the sale to a select audience of customers who’ve already identified their interest in the items is an immediate improvement over the traditional brick and mortar retail store model. The power of a countdown clock, when combined with a limited quantity of luxury items–often by a well-know designer or brand–is a sure-fire profit proposition.
However some indicators show that flash sale sites might be entering a difficult period. They’re facing competition from online retail giants like Amazon and Alibaba. Amazon’s recent introduction of one-hour delivery in certain markets recognizes the value of a customer’s time.
Speaking at the recent Retail and Consumer Goods Summit, Steve Davis, Rue La La CEO, reminded his peers that changes in the retail industry are a constant and that the best strategy for improving store and online sales is to prioritize the customer’s shopping experience and value their attention. “Time is precocious,” he said, “and any time that a retailer or any business can give back to a customer, you are creating a magical business opportunity. Time is a giant friend to innovators; it’s a giant foe to the status quo.”
Flash sale sites are no retail flash-in-the-pan—they’re here to stay. Online retailers need to focus on increasing conversions, serving their regular customers competitive discounts, and staying informed about their competitor’s advancements.