Today’s post is a bit of a departure from our normal fare. For months we have chatted with friends about those ubiquitous flash sale sites, a phenomenon almost unheard of until the last several years. Usually we talk about upcoming sales, new or different sites, and how good the bargains are; lately the conversation has focused more on that last theme. I finally decided to explore the topic, hoping it will provide a modicum of entertainment, perhaps you can even share input and insight from your own experiences.
Just a few years ago those in search of discounted merchandise visited factory outlets, or off-price retailers like TJ Maxx and Ross Dress for Less. Upscale department stores also offered their unsold inventory at outlet shops like Saks Fifth Avenue’s Off Fifth and Neiman’s Last Call. (In fact, the “luxury off-price” business model proved so successful many of the high-end outlets now have merchandise made exclusively for sale at their discount stores and they continue to open even more off-price stores.)
But then These Troubling Times arrived. When the Great Recession hit, stores were faced with enormous amounts of unsold merchandise that was discounted, then discounted again, and perhaps several more times. In many cases it still didn’t sell. This was particularly true for luxury retailers, they had racks overflowing with merchandise no one wanted, or could afford to buy.
More in this story from Reuters:
“The original flash sales model for the U.S. exploded during a time when there was this huge abundance of excess inventory,” said Steven Dennis, founder of SageBerry Consulting and a former executive at retailer Neiman Marcus.
Gilt is credited with launching the first flash sale site in the US, but others soon followed. And they continue to follow, as explained in this story from The Business of Fashion.
“Gilt’s success also spurred hundreds of other competitors to enter the flash sales market, from start-ups like Ideeli and Rue La La to strategic players like Amazon’s MyHabit and Nordstrom’s Hautelook.”
For those unfamiliar with the flash sale sites we share a brief primer. They are referred to as “members only sites,” a term
generally excoriated occasionally questioned in this space, as most anyone with an email address can “join”. Once signed up, daily emails are sent with a list of that day’s offerings, as well as a preview of upcoming sales.
Below, the Haute Look landing page.
Most sites require that you sign in before showing whatever sales they are offering, although not every site requires a log-in immediately. Here is another home page example from Zulily, a site specializing in merchandise for “Moms, Babies and Kids”.
Once past the sign-in page you see the specific sales in progress. A glance at Beyond The Rack’s sale events underway last Friday shows Burberry, Coach, and “limited edition pre-owned Chanel” among the offerings.
Beyond The Rack June 1, 2012
There are even “prep-centric” flash sale sites, like Five Mile.
FiveMile.com June 1, 2012
Brands offered by Five Mile are familiar to many a prep: Knot Belt Company, Southern Proper, Castaway, Salmon Cove, to name only a few.
Once you are signed in you can start doing your product perusal, always intriguing and generally a lot of fun. Should you want to purchase an item, things operate like any other e-commerce site. It is in order fulfillment that the process may be different: what you purchased may ship from any number of places. It could come directly from the original manufacturer, it may be shipped from the flash sale site’s warehouse, or from a third party. Sites are usually very good about posting estimated shipping dates, below we show examples gathered on Friday:
- Editor’s Closet item description on a Chloe dress: “Ships same business day if ordered before 2pm EST”
- Joss & Main French Laundry Pillow: “Expected Arrival Date: Between 07/18/2012 and 07/23/2012″
- RueLaLa Vineyard Vines Men’s Polo: “Ships in 5-7 days”
- Ideeli David Yurman Silver Ice Necklace: “Expected to ship between Jun 19 and Jun 25, 2012”
The broad range of delivery dates serves as a reminder shoppers need to pay attention to the fine print, especially if making a time-sensitive purchase like a gift, or something for a special occasion. One more caveat: popular brands, such as Lilly Pulitzer, sell out very (*very*) quickly. It is not unusual to see items marked as “sold out” less than a minute after an event has started.
The explosion in sites has been enormous, the marketplace is now crowded. Some of the larger companies like Gilt have expanded into new terrain with specialty shops like Gilt Taste.
There are offerings for almost any niche or interest or activity, from travel and tourism deals to artwork, daily deals and local bargains. An example of what one site is doing via CNN:
Home furnishings flash sale site One Kings Lane recently announced the addition of Vintage & Market Finds, where a selection of marked-down furniture, accessories and art are available for five days at a time as opposed to its usual 72-hour time frame and new items are added daily.
Another dilemma created by a crowded field? Consumers becoming overwhelmed by email offers landing in their electronic in-box around. A CNBC story from last week:
Email fatigue is one of the biggest challenges flash-sale sites face. Emails are the primary way of disseminating deals, but after a while web shoppers can tune out and unsubscribe. This was even more true as more flash-sale sites came on the scene and as active shoppers subscribed to more than one flash-sale site.
“It has gotten to be an incredibly crowded marketplace, and there is the risk that all these offers can overload consumers,” said Stephen Wyss, a partner in the retail and consumer practice at BDO.
With stores becoming far more savvy in what (and how much) merchandise they order, there has been a steep decline in the availability of all that bargain inventory, especially luxury brands. One outcome is the growth of themed sales, no longer grouping items just by brand or designer, but by theme. Merchandise may be grouped by season, like “Flirty Tops for Summer” or “Backyard BBQ Essentials”.
There are even manufactured sales, such as an event Gilt held the second week of May, a sale titled “Revenge: Emily’s Beach House,” playing off the popularity of the TV show.
Gilt. com 5/17/2012
Here is a portion of the sale description:
The Hamptons was Emily Thorne’s old neighborhood, until something happened that destroyed her family and their reputation. Years later, she has returned to right those wrongs.
While it’s a lot smaller than Grayson Estate next door, Emily’s beach house is no shack. It’s the epitome of laid-back yet luxurious East End style. This sale includes authentic props from the set of Revenge; the most well-known is the porch swing, originally built by Emily’s father. You’ll also find the pedestal table found on the patio, and a candlestick from the living room. We’ve complemented these props with accents, from artful dishware to sconce lights.
Another tactic, making deals to launch certain collections via one of the sites. As mentioned in Thursday’s post, the Trina Turk for Banana Republic collection was offered online at Gilt.com more than a full week before consumers can buy it at Banana Republic. (But the merchandise was not a bargains, pieces were sold at full price, the appeal being the chance to get items before anyone else.)
Retailers have fought back by jumping into the arena, doing their own flash sales. Below, a screen grab of an email I received from Neiman Marcus.
Another example, Brooks Brothers did a limited time sale this weekend offering up to 75% off its Black Fleece line, the following image is from a Brooks Brothers email promoting the sale.
It isn’t just upscale retailers taking part.
And some have moved their outlet stores online as well, J. Crew “opens” its online factory store during the weekend.
Another rapidly growing area is Facebook, many start-ups are offering flash sale sites on their fan pages, especially jewelry vendors. A photo of an item is shown, and the first shoppers who enter a comment saying they want the item are able to purchase it. Again, the sense of limited merchandise and a short time span prompts buying from those who don’t want to “let it get away,” or be “left out,” with actual financial transactions generally handled off-site.
We have been fortunate with many of the sites and made some *marvelous* purchases over the years, particularly back in the early days of the genre. Good products, great prices and solid service. Later this week we’ll have Parts 2 & 3, looking at some of the more preppish brands sold on the sites, as well as an examination of just how good the deals really are these days… or not.
ADDENDUM: If interested in signing up for any of the sites, here are links to some where I have shopped *and* enjoyed a positive experience. Another interesting facet of the flash sale business model are the varying rewards offered for those referring customers, most offer merchandise credits of anywhere from $10 to $25 if someone uses your invitation link and also purchases something.