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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.

No you don’t, Gilt Groupe. But thanks for playing anyway, I guess?

Why Sale Sites are Missing the Boat on Prestige Beauty

In an already overly saturated marketplace with Gilt, Hautelook, Rue La La and Ideeli, and with the addition of 2 additional competitors in Amazon.com’s Myhabit and the original sale site, EU based Ventee Privee, why is it that the prestige beauty category has been a challenge for online flash sale sites, especially in terms of frequency of events?  Below, 10 reasons why these successful sites fail in the beauty category while they prosper in other ones like fashion and travel.  And then, 3 suggestions to improve both the quality and quantity of events.

 

Reasons why prestige beauty has been a disappointing category:

 

1.      There are plenty of products, but there are not enough “Best Brands” for just 1 sale site, let alone 5 or 6. 

2.      Yes people purchase products and brands, but within beauty, especially prestige beauty, 1st and foremost they buy SOLUTIONS (anti-aging skincare, frizz fighters, volume for hair, no more acne, etc.).

3.      Prestige brands typically do not discount, or at least call it discounting.

4.      The seasonal and over production excess inventory issue that is common with fashion brands is much less an issue with beauty brands.

5.      Retailers/buyers give prestige brands a hard time for doing sales due to the fear of cannibalization against their market share.

6.      Sale sites are not seen as brand builders like retailers such as QVC, HSN, ULTA and Sephora. 

7.      Prestige beauty differs from other categories like fashion since part of the reason fashion and accessories are purchased are for show in public much like the car you drive.

8.      Sale sites are not a beauty destination like QVC, HSN, Sephora or ULTA.

9.      Sale sites focus solely on selling brand names at a discounted price with no emphasis point of difference, performance, clinical results, before and after imagery, etc.

10.  Sale sites should not be labeled or called “sales”; they are a “SAMPLING EVENTS”

 

Top 3 Solutions:

 

1.      Theme events over brand events – copy what works best for retailers like themed solutions, before and after images, clinical results, etc. to highlight products so there is a call to action to purchase causing the consumer to have an emotional attachment.

2.      Tie back products to retailers for repurchase through partnerships so the brand sees growth and not just a 1 time purchase.

3.      Find creative ways to discount so it does not look like a brand is discounting (QVC: Introductory Pricing, Today’s Special Value)