Flash Sales Adding New Ring to eCommerce

Applying $900M in retail therapy to Flash Mobs concept

The evidence of Flash Mobs – groups of people “randomly” assembling and doing the same activity – have proliferated the Internet over the last few years. Groups of strangers suddenly converging on a busy lunchtime train station to perform a song and dance number from “Sound of Music” has been an often-viewed video on YouTube.  The TV show Modern Family recently had Mitchell perform in a Flash Mob to impress Cameron.

Flash Sales have taken the Flash Mob concept and converted it into $900M in retail therapy for consumers.

Over the past 3 years, the concept has been applied to retail therapy, aka – shopping. A Flash Sale is depicted by limited quantities of merchandise available for a limited period of time in a specified online spot. Initially the trend started with high-end luxury items during the recession, with prices slashed to a point of affordability. Now, the concept has gone more mainstream, including everything from clothing and kids items to bedding and vacations.

The four leading flash-sales sites—HauteLook, ideeli, Gilt Groupe and Rue La La—are predicted to generate $900 million in sales this year and double the number of online visits, according to a new report from eMarketer “Flash Sales: What Retailers Need to Know.”

Gilt alone is expected to generate between $400 million and $500 million this year. Not surprisingly, the demographics of Flash Sale shoppers are younger females, according to Experian:

• 57.5% of Flash Sale shoppers are women
• 27% are ages 25 to 34

Earlier this week, HauteLook celebrated its 3^rd anniversary with a Flash Sale from Diane von Furstenberg. If you “like” DVF on Facebook, shoppers were offered a 60% discount on selected items from the current line.

The timing of the sales has become more flexible. They used to all begin at 10am CT, which all of the sites competing against each other. Now things have diversified, and you will see evening sales as well as ones on the weekend. Neiman Marcus does a noontime dash, if that’s how you want to spend your lunch break.

Consumer’s Perspective

As a frequent visitor to Flash Sales, here are some things novice shoppers need to be aware of.

While most of the sites allow you to “return” an item you don’t like, you have to be careful. A return is almost always for a website “credit,” only. In my view, that isn’t a return. And it makes me less likely to buy. I’m not a fan of purchasing items that I don’t know how they will fit / look once I put it on my body. If you don’t like it, you’re sorta stuck. One friend always says “If I don’t like it, I can always sell it on eBay.” Good luck with that – and no thank you!

Sites charge for shipping, unlike most etailers today. Of those that do charge for shipping and handling, the prices on Flash Sales sites still tend to exceed those of other ecommerce sites.

The fun part of the Flash Sale is the limited items and the need to move fast. Fast as in you need to be on the site and have entered the particular store right as the sale starts. I cannot tell you how many times (pretty much every time, actually) that I go into a John Hardy Flash Sale and most items are already sold out. And this is when I’ve been sitting on my computer, hitting the refresh button, just to get into the sale. Only to find everything is already unavailable? Annoying. It makes me question the amount of inventory actually available.

You can’t preview most sales, which would be a very smart move. I’d love to be able to see the items – and know the prices. Some sites might have an annoying Flash presentation of some of the items, with icky music and an annoying voice over. It’s a waste of my time. I’d like to figure out if I even want to spend the time trying to get on to the site and get out of another commitment because I know there is something I want. Try leaving a meeting because you need to go check out an online Cole Haan sale to make sure someone else doesn’t snag your dream boots. It doesn’t always go over well. And then when they’re not even selling your dream boot? Ugh!