One of our favorite twists on e-commerce? Flash sale sites, which combine the art of the deal with wallet-friendly prices. Since the Great Recession turned many consumers into avid deal hunters, they naturally flocked in droves. Three years later, the Internet is rife with sites like Gilt, Rue La La, and ideeli – some of which even have their own spinoffs to focus on food, travel, or activities.
Be it through a flash sale or a regular web site, consumers do not want to pay more than they have to. When shopping for clothes online, 81% of shoppers say they learn about the product by looking up its price, as well as information on discount coupons (50%) and shipping promotions (50%), according to the Cotton Incorporated Lifestyle Monitor™ Survey.
Envirosell’s Paco Underhill, CEO, says this is the ongoing saga of the apparel business.
“We all recognize there are so many things in our lives where the costs are non-negotiable — like cable or mobile phones,” Underhill says. “But in apparel, the price is always negotiable. Somebody has to exercise some form of discipline.”
Flash sales sites bank on consumers’ reluctance to pay full price. Daily emails capitalized on this with alerts to each day’s promotion, but too many emails may have a negative consequence — and they might not be the most effective means of attracting the consumer.
Among consumers who buy clothes online, just 26% start shopping via email from retailers or brands, the Monitor finds. Shoppers are more likely to begin shopping right at retailer or brand websites (64%), followed by search engines (31%).
Underhill says the problem with flash sales is that consumers reach a point of oversaturation.
“People’s attitudes toward social media and the Internet are in a constant state of evolution,” Underhill says. “We’re approaching major precipices, one being people are becoming overwhelmed, and they start to shut it down because too much is thrown at them.”
Currently, just 3% of online shoppers buy clothes from membership sites like Gilt, and Rue La La, the Monitor shows, despite the fact that 85% of consumers browse the internet for apparel and 72% buy clothes online.
But interest in deal sites is still there. comScore, Inc. recently found that in the first quarter of 2012, apparel flash sites increased their monthly unique views year-over-year, with HauteLook.com jumping 85%, Ideeli increasing 63% and Gilt Groupe growing 46%, although it was down 9% since the start of the year. To perhaps counter any softening in flash sale interest, Gilt has added Park & Bond, a full-priced men’s designer arm, as well as its e-zine Gilt MANual.
Retail.org reports combined flash sale volume is predicted to reach $6 billion by 2015, but that doesn’t mean the market hasn’t had its share of growing pains.
BDO USA’s Stephen Wyss, partner, says flash sites just have to deal with some of the same problems regular retailers go through.
“The market became saturated. So now flash sites have to build customer loyalty, and they can do that by making it easier for shoppers — so they don’t have to go to seven different sites for the best deals.”
Technology will continue to change the business model for flash sales — and retail overall, Underhill says.
“Flash sales won’t exist three years from now as they do now. They’ll be much more customized to each shopper and eminently more local. Private shopping bots will scan what’s on sale, keep track of what’s in your closet and see what fits your lifestyle. They’ll wade through everything for you — not just flash sites.”
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