Flash sales offer fantastic deals for a very short period. They create exclusivity and demand by limiting time and what they sell. Though the model is a recent phenomenon, flash sales sites have become very popular. Are they going to define the next level of e-commerce, or are they a mere flash in the pan?
As the name suggests, flash sales are “sales in a flash.” They are excellent deals, sometimes offering up to 50-70 percent off, but last for a very short period. For brands and designers seeking to liquidate unsold or off-season merchandise, flash selling is promising to be a successful way of offloading stocks.
Even offline retail giants such as Wal-Mart have short-term sales. K-Mart has “blue light special” that is a form of flash sale, also known as private sale since it comprises “exclusive sales” available only to select members. (One has to be a member of the website to take part in the sales.) The sale begins at a specific hour for a limited time and the merchandise is usually sold out in a couple of minutes.
Online flash sale sites in India have come up in response to rising investor interest in private sale portals across the globe such as the Gilt Group and Rue La La in USA and ventee-privee.com in Europe. Today, the flash-sale shopping sites have developed a faithful following. The range of products sold varies from fashion to home to loads of other categories.
Flash sales sites may not be critical to consumers; however, there is enough potential with respect to dissatisfaction among aspiring consumers (major buyer segment) due to awfully high prices charged by big brands and famous designers.
Flash sales appeal to consumers who view shopping as entertainment or to fashion enthusiasts and bargain-hunters. However, it is interesting to note that unlike traditional online retailers which have young men as the main customers, flash sales are largely driven by women.
In India, portals such as exclusively.in, bagittoday.com, fashionandyou.com, brandmile.com, and theprivatesales.com have attracted consumers, while such as vente-privee.com, ruelala.com, gilt.com, ideeli.com, billiondollarbabes.com, woot.com (Amazon), btrendie.com, jetsetter.com, and myhabit.com (Amazon) are ruling the roost in the American and European markets.
Big brands, famous designer names and best deals have been the business mantra of flash sales till now. Many flash sales retailers consider member engagement to be one of the biggest metrics for success.
The inventory for flash sales is volatile. It carries more width than depth of stock-keeping units (SKUs) as opposed to traditional e-commerce, allowing for virtually no margin of error. In this background, every piece must be accurately accounted for. Mistakes lead to short shipment and, consequently, unhappy customers. Also, a large portion of flash sales inventory comes from over-stock, returns, and buyouts. The stock often arrives in a terrible condition, accompanied by inaccurate or missing packing lists.
In general, challenges in flash sales in India are more or less similar to those faced by traditional online retail, such as no uniform tax structure, lack of more effective e-commerce polices at the macro level, low penetration of Internet (especially broadband), inefficient logistics, less credit-card usage, and fragmentation of the market.
Flash sales were originally created to rapidly clear the inventory but the trend is destined to last long because it is another avenue for offline and pure-play retailers to increase their revenue.
About the Author
Piyush Deogirikar is COO at Mother Earth Retail, Bangalore. He is an MBA from IIM Bangalore and has around 14 years of experience in the retail industry.
