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Could it be the End of the Flash Sale?

For the last several years, shoppers have impatiently waited by their inboxes each day for an email from flash sale websites announcing their daily deals.

But are the days of dominance coming to an end for sites like Gilt Groupe, Rue La La, and Ideeli?

Reuters’ Allstair Barr explains that these flash sale sites, which offer big discounts on luxury items for a limited amount of time, are losing their grip  and changing their business models to try to stay afloat.

These websites came into vogue when the recession hit as a way for fashionistas to rummage through virtual bargain bins and for labels to get rid of large quantities of unsold items.

While these sites and the brands were relishing in what seemed like a match made in fashion heaven, they missed two problems looming on the horizon: the number of shoppers looking for flash sales was growing and designers began cutting production at the same time.

More simply, demand was higher while supply was lower.

Barr explains:

By September 2009, Gilt had 325,000 unique monthly visitors to its website, while HauteLook had 433,000. Ideeli had 312,000 and Rue La La had 206,000. A year later, unique visitors to these four websites had more than doubled, according to ComScore data.

While that growth was happening, retailers and manufacturers cut production by 10 percent to 15 percent. By early 2010, there was a lot less inventory.

So how have these sites responded? By branching out beyond fashion to bolster what they can call inventory to keep up with the demand:

“With high-end retail, there’s only so much inventory to work with. Scarcity is part of the high-end fashion brands’ strategy,” said [Gilt Groupe] Chief Executive Paul Hurley. “I’m not the most popular guy at parties in New York because all our friends are after high-end brands. But the opportunity is much larger elsewhere.”

Gilt has branched out into travel, home decor, food, wine and daily deals. Rue La La has expanded in a similar way.

Click through to read the full article on Reuters.