This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Flash sales represent a fast-growing category that retailers should consider.Intheirshortexistence,members-onlyshoppingsiteshaveamassedanenviableincreaseinusersandsales.Forexample,ideeli’s2010visitshavegrownmorethan150%overlastyear,andGiltexpectstogeneratebetween$400millionand$500millionthroughflashsalesin2010.Thereisanopportunityforretailers—particularlythosewithexcessinventorytoliquidate—totapintothismarketbyreachingouttoconsumersinunderserveddemographics,branchingintounexploredcategoriesandcreatinganentertainingshoppingexperiencetoguaranteerepeatvisits.
Flash sales were born out of the recession and will have a lasting influence even after the economy improves.In2007,luxurybrandsandretailerswereleftwithexcessinventoryjustasconsumersbegantoreinintheirspending.Flash-salespioneersroseoutofthisenvironmenttotakeadvantageofthesedynamics.Originallyamethodofsellingoverstockdiscreetlytolabel-starvedshopperswithouthavingtoresorttodiscounterssuchasT.J.Maxx,flashsaleshavebecomeanacceptedecommercevehicleintheirownright.Therecessionhaspermanentlychangedthewaypeopleshop,soevenwhendisposableincomerises,consumerswillbereluctanttopayfullprice.
Retailers adopting flash-sales techniques are in a special position.Multichannelretailersmaynotbeasnimbleassmallerpure-playflash-salesbusinessesorhavestaffwhollyfocusedonproducingdailysalesevents,buttheyhavetheadvantageofnamerecognition,establishedrelationshipswithvendorsanddetailedcustomerdata.Retailerscanfindsuccessfromvaryinglevelsofcommitment,whetherstagingsurpriseflashsalesforemailsubscriberslikeBananaRepublic’s“three-hourlunchbreak,”teamingupwithanexistingmembers-onlysitelikeTargetdidtopromotethreefallcollectionsonGilt.comorbuildinganonlineweekend-onlyfactoryoutlet.
Mobile is a natural fit for flash sales and the potential is big.Privatesales,whichbeginatasettimeeachday,havethriveddespitepracticallimitations.Armedwithsmartphones,shopperscanmakepurchaseswhilethey’recommutingorsittinginawaitingroom.Unliketraditionalecommercesites,flashsalesdonotrequireextensiveproductdescription,multiplepagestoscrollthroughortheneedtosearch.Theyareanidealcandidateforhandhelddevices,andthesitesthatalreadyhaveamobilepresencearepredictingrevenuesfromthatchanneltobeinthedoubledigitsfor2011.
Flash sales are expanding into new categories.Eventhoughthereisstillanemphasisonluxurygoodsandapparel,privatesaleshavebegundiversifyingintohomedecor,babyproductsandtravel,aswellasserviceslikebeautytreatmentsanddining.Whiletheremaybehighdemandforitemssuchasmarked-downGuccibags,thereisafiniteamountofpremiummerchandisetogoaround,andoverstockislikelytoshrinkwhendesignersdiscountless.Thereisalsothechanceofbuyerfatigueaftertheyseethesamebrandsadvertisedacrossmultipleflash-salessites.Thereisstillroomforcompetition,andretailersshouldtaketheopportunitytoclaimaniche.Thismakessenseformerchantsthatalreadyhaveanarrowfocus.Wine.com,forexample,hasparlayeditsexpertiseintoaprivate-salessiteatWineShopper.com,andShoebuy.comhascreatedamembers-onlysitewithShoebuyEvents.
“The flash segment started because the recession hit. Everyone had extra merchandise and we sold it. It’s very similar to how outlet malls started 20 years ago, or how QVC and HSN were 25 years ago.” —Greg Bettinelli, SVP of marketing at HauteLook, in an interview with eMarketer, October 2010
“People in New York and LA are a little bit spoiled because they have access to a bunch of stuff. But most of the world has never seen some of these discounts—like 7 Jeans at 50% off—and that’s compelling.” —Greg Bettinelli, SVP of marketing at HauteLook, in an interview with eMarketer, October 2010
“Flash sales represent what I call retail 2.0, where there’s much less reliance on search-engine-based marketing and much more on viral marketing, which helps, from an ROI perspective, to drive down the cost of customer acquisition.” —Adam Michelson, director of ecommerce at Optaros, in an interview with eMarketer, October 2010
US Unique Visitors to Select Flash-Sales Sites, Oct 2009 & Oct 2010
Oct2009
Oct2010
%change
HauteLook 622 953 53%
Ideeli 532 932 75%
Gilt 369 583 58%
Rue La La 244 530 54%
Total US internet audience 198,218 212,788 7%Note: ages 2+; home, work and university locationsSource: comScore Media Metrix, provided to eMarketer, Nov 18, 2010122044 www.eMarketer.com
Select US Flash-Sales Sites, Ranked by Buying Power,Q1 2010
Rue La La 383
Gilt 288
Ideeli 260
HauteLook 259
Total retail category 125
Note: *propensity of a user to purchase online; a score of 100 representsthe average internet userSource: comScore, "State of the US Online Retail Economy in Q1 2010,"May 27, 2010115957 www.eMarketer.com
Rue La La’sappsandmobilesiteaccountfor13%ofitssales,andthecompanyestimatedthatcouldjumpto20%bynextyear.Ithasalsoenabledimmediateface-to-facefriendreferrals.Byintegrating“bump”technologyintoitsapp,smartphoneownerscaninstantlysendaninvitetoanotherbybumpingphonesinatoast-likemanner.
“In addition to shopping, we knew they wanted to share—they earn $10 credits with new members. So we knew if we could connect social and shopping we’d have a winning app.” —Stephanie Brocoum, VP of member marketing at Rue La La, quoted in Internet Retailer, October 2010
“The sales are activated by the mobile channel, but the transactions themselves aren’t happening yet. We anticipate that within the next 12 months, far more than 10% of our transactions will be directly from the mobile device.” —Greg Bettinelli, SVP of marketing at HauteLook, in an October 2010 interview with eMarketer
“We’re going to be the editors and tell you what’s unique for winter. ‘So it’s this black riding boot—and you need a turtleneck cashmere sweater, one statement necklace and a certain handbag.’ We put them together in a curated sale.” —Tamara Rosenthal, executive director of brand marketing at ideeli, in an interview with eMarketer, October 2010
Rue La LaandGNCheldasaleoffering$25vouchersfor$50worthofin-storeitemsinOctober2010.Thedealsoldoutinonemorning.
HauteLookandThe Body ShopsimilarlycollaboratedinSeptember2010usingatwo-prongedapproach.Thefirstdaytheyheldatraditionalonlineproductsale,followedtheseconddaybyasalewherememberscouldbuy$50ofgoodsin-storeoronlinefor$29upfront.
“Online to offline activation is the idea of moving online ecommerce traffic into the stores. The ability to do a sale and also sell something that drives foot traffic back to the stores is a big business opportunity.” —Greg Bettinelli, SVP of marketing at HauteLook, in an interview with eMarketer, October 2010
“We’re building a community. We listen to our membership in the sense that every sale has a discussion board, so people can comment and talk to one another. They can really get involved in the sale and ask each other how items fit.” —Tamara Rosenthal, executive director of brand marketing at ideeli, in an interview with eMarketer, October 2010
Rue La LahasbeeninvolvedwithliveeventsonTwitter,aswhenitsstyleeditortweetedduringthefinaleofBravo’sfashioncompetitionshow“LaunchMyLine.”ThewinningcollectionfromtheTVprogramwasfeaturedinaRueLaLasale.ThecompanyhasalsobeenhostinglivechatwebcastsonFacebook,whereuserstypequestionstocelebritiessuchasWhitneyPortandELLEmarketdirectorJoannPailey,tobeaddressedinon-screenvideos.
“Younger, more fashion-forward store customers are also shopping online. The multichannel, cross-channel shopper spends three to four times more than the single-channel customers.” —Denise Incandela, president and EVP of Saks Direct at Saks Fifth Avenue, in an interview with eMarketer, October 2010
Jones Apparelstagedapop-upstoreonFacebookinFebruary2010topromoteajewelrycollectionthatwasacollaborationbetweendesignerRachelRoyandmusicianEstelle.Thethree-dayeventwasapreview,withsomeoftheitemsbeingexclusivetotheFacebooksale.Linksforpurchasingwentdirectlytothebrand’sownsite.Thespecialmerchandisesoldoutin6hoursandRachelRoy’sfanbaseincreased35%onFacebook.
“There are some brands that prefer to be on a private-sales site rather than a general ecommerce site, so the products that we can offer on Eziba are different and sometimes more exclusive than they are on Overstock.” —Jonathan Johnson, president of Overstock.com, in an interview with eMarketer, October 2010
“We have purchasers in different states and typically can source deals over a larger geographical area than our competitors. Wine.com is pretty big, so we often get deals others can’t. We use that leverage to get those deals for WineShopper. A small flash-sales site usually can’t get the sources and the deals that we can.” —Cam Fortin, director of business development at Wine.com, in an eMarketer interview, October 2010
“What we do is hard. It’s a different type of business and it’s all we do. We know how to send emails to the right person at the right time. We know how to produce sales events quickly.” —Greg Bettinelli, SVP of marketing at HauteLook.com, in an interview with eMarketer, October 2010
“When we first encountered members-only flash sales, we thought we were in the unique position given our vendor relationships and customer credibility to take advantage of that opportunity and extend Saks.com to a new demographic…. The key for us is understanding where the price point sensitivity is.” —Denise Incandela, president and EVP of Saks Direct at Saks Fifth Avenue, in an interview with eMarketer, October 2010
“The challenge for retailers is that private-sales events are private because consumers have to join or be invited to them. Big-box retailers already have a customer database of online and offline shoppers, so there’s no sense of exclusivity.” —Adam Michelson, director of ecommerce at Optaros, in an interview with eMarketer, October 2010
The takeaway:Smallerandnimblerdedicatedflashsiteshavetheluxuryofbeingabletoconcentrateondoingonethingwell,withlowoverhead.Yetmultichannelretailershaveawealthofcustomerinformation,brandrecognitionandinfrastructuretheycanusetotheiradvantage.
“I don’t think it’s oversaturated. When customers see what they’re looking for at a deal, they adapt pretty quickly. There are a lot of players in this market, but it will probably thin out.” —Jonathan Johnson, president of Overstock.com, in an interview with eMarketer, October 2010
Greg BettinelliSVP of Marketing
HauteLook.com
“Flash sales and private sales are becoming a more accepted type of commerce. There’s clearly something about being able to get access to aspirational brands at incredible prices in a really fun format. There’s an emotional attachment to the experience. But probably someday it will get fatigued like every other format.” —Greg Bettinelli, SVP of marketing at HauteLook.com, in an interview with eMarketer, October 2010
Denise IncandelaPresident and EVP
Saks Direct
“If you take a step back, the larger opportunity is liquidating off-price merchandise online, whether it’s a member-only flash sale today or something different six months from now. It’s about giving people better access to that.” —Denise Incandela, president and EVP at Saks Direct at Saks Fifth Avenue, in an interview with eMarketer, October 2010
Adam MichelsonDirector of Ecommerce
Optaros
“There’s more room to grow by demographic or by product line. And within the online group buying sales sites, big-box retailers will eventually host private events that are tied in with a local deal of the day via Groupon or similar provider. Internationally, the market’s definitely not oversaturated.” —Adam Michelson, director of ecommerce at Optaros, in an interview with eMarketer, October 2010
Flash Sales 13
Tamara RosenthalExecutive Director of Brand Marketing
ideeli
“The category is here to stay but it’s going to be very hard for other entrants to amass the same list. It’s hard to say exactly where it’s headed but there is a tremendous amount of potential in terms of overall growth. We’re just scratching the surface.” —Tamara Rosenthal, executive director of brand marketing at ideeli, in an interview with eMarketer, October 2010
The takeaway:Theexpertsareinagreementthatshoppershaven’ttiredofflashsalesandthatthereisstillroomformoreentrants,aslongasnewcomersareabletodifferentiatethemselvesbydemographictargetsorproductofferings.
“There will be a blurring between the private-member sites, the local Groupon approach and the deal-of-the-day sites. Pretty soon it will be hard to distinguish a private-event site from a Groupon offer. All of these sites are connected and all are a natural fit with mobile.” —Adam Michelson, director of ecommerce at Optaros, in an interview with eMarketer, October 2010
John AuerbachGeneral Manager
Gilt MAN
“The entire customer experience will be personalized to preferences, sizing and recommendations based on previous purchases, and more.” —John Auerbach, general manager at Gilt MAN, in an interview with eMarketer, October 2010
Greg BettinelliSVP of Marketing
HauteLook.com
“Whether they’re private sales, staged by third-party partners or members curating their own sales for each other, there are just all sorts of things that you could do using social media that haven’t been done in ecommerce before.” —Greg Bettinelli, SVP of marketing at HauteLook.com, in an interview with eMarketer, October 2010
Cam FortinDirector of Business Development
Wine.com
“People will come up with more customer-specific triggers tailored to specific interests. So it’s ‘Tell me about this type of deal. Don’t email me every day, unless there’s a certain percentage savings or an item in this category is on sale’ or something like that.” —Cam Fortin, director of business development at Wine.com, in an eMarketer interview, October 2010
The takeaway: Personalizationwillbethebiggestshift,accordingtoourexperts.Shopperswilldecidewhatkindsofflashsalestheywanttoknowabout,andhowandwheretheyreceivethenotifications.Theywillstartseeingproductrecommendationsbasedontheirownbehaviorandpreferencesaswellasthoseintheirsocialcircle.Anditwillallbetailoredlocallytowhereashopperlives.
Flash Sales 14
Conclusions
Retailersplanningflash-salessitesshouldnot
focussolelyondiscounting.Marked-down
merchandiseisjustoneaspectofaflashsale
andmightnotserveretailerswellinthelongrun.
Exclusivityismoreimportantthanclearance,
sodonotsellthesamethingsthroughflash
salesthatarealreadyonsalein-storeoronline.
Instead,retailersshouldusethemembers-only
approachforspecialcollections,previewsorto
rewardloyalshoppers.
Create incentives to trigger repeat visits and lure new members.Establishedcustomersarealreadybombardedwithemailpromotions,socomeupwithcompellingreasonswhytheyshouldsignupforanewtypeofsale.AdamMichelsonofOptarossuggeststhatretailersofferperksbeyondthetraditionalreferralbonus,suchasfreeshipping,crowdsourceddealsbasedonaminimumnumberofvotesonthesameitem,andinvitationstoin-storeevents.
Know the target customer. Whilethecustomerbaseisshifting,flashsalestendtoattractayounger,trend-consciousshopper.SaksFifthAvenue’sDeniseIncandelamentionedthatthosewhosignedupforFashionFixwereyoungerthanSaks’coreshoppersoSakshasfeaturedbrandsthatwouldappealtothisdemographic.Ontheotherhand,whenOverstock.comshoppersjoinedEzibatherewasalearningcurve.Overstock.com’sJohnsontoldeMarketerthatsomeoldercustomerswerenotfamiliarwithhowflashsalesworkedandgotfrustratedwhenthemerchandisedisappearedafterafewdays.
Flash sales can work for a multitude of products. Shopperswillalwayssearchforluxurybrandsforless.Yetastheybecomeaccustomedtoprivatesales,theywillbeamenabletobuyingavarietyofproducts.Evenwithinapparel,themostcommonflash-salescategory,therearenicheslikebridal,plussizesandswimwearthathaveyettobefullyexplored.Retailers—especiallythosewithaspecialty—canbenefitfromestablishingthemselvesintheflash-salesspacebeforeanupstartbeginstoclaimterritory.