Daily deals have emerged as a unique alternative strategy for retailers to drive sales and revenue. By releasing must-have offers for a limited time, merchants, restaurants, salons and other consumer-oriented brands have relied on daily deals to boost brand awareness. Flash sale sites also have established a strong presence in the retail industry, with sites such as Rue LaLa and Gilt Groupe maximizing urgency and gamification concepts to increase purchases.
Primarily defined as a site that offers goods during sales that last only 24 hours, flash sale models have made inroads at retailers such as Neiman Marcus and Bloomingdale’s for special invitation-only sales. “The immediacy of flash sales and the overall variety are the most appealing factors,” said Nikki Baird, Managing Partner for Retail Systems Research (RSR). “It’s something new every time and they’re always a great deal. Most importantly, it’s saying to shoppers if you don’t act now, you might miss it.”
In response to this growing trend, eMarketer recently studied the current progress of flash sale e-Tailers. Compete’s The State Of Online Retail revealed that during August 2011, the top three flash sale sites, in terms of online buyers, were newcomers My Habit (26%), Beyond the Rack (25%), and Fashion Vault (24%). Conversely, veteran sites including Gilt (12%), Rue LaLa (12%) and Hautelook (9%) accumulated fewer sales.
A majority of consumer deal seekers rely on email announcements for information on sales and events, according to research from Experian Cheetahmail. Overall, 18% of traffic to flash sale sites was driven by email, while only 13% and 11% came from social media and search, respectively. Email marketing also led to significantly higher click-to-open rates. More than half (56%) of businesses had higher click-to-open rates for flash-focused announcements versus regular campaigns.
“The plain truth is that email is the most effective at driving site traffic, whether you’re a flash sale site or a traditional retailer,” Baird said. “That’s why you get so many email offers from retailers — they still work the best. I think timing is more important for flash sales than other retailers, though, because of the limited time that the product might be available.” Baird noted that Gilt Groupe excels in optimal email timing. By sending out email reminders 10 minutes before sales open, the e-Tailer gives shoppers enough time to finish tasks so they can browse and purchase items.
Experian Cheetahmail also promoted some standard flash sale best practices, such as implementing shorter sale time frames and holding sales in the evening — when consumers are home from work — rather than the afternoon. Two-hour sales accumulated 14% higher click-to-open rates, while three-hour sales accounted for 59% higher transaction-to-click rates than standard promotional emails. Overall, emails sent in the evening experienced 33% higher total click rates, 20% higher transaction rates, and accumulated 27% more revenue per email compared to lunchtime messages, according to the study.
As more shoppers gravitate to daily deal and flash sale sites, innovative e-Tailers will come to the forefront by featuring unique shopping experiences that focus on exclusivity and leveraging guest curators, noted Baird. “Aha is a good example of a company experimenting with exclusivity and curation, so that the flash isn’t all about price,” she said. “The things they offer aren’t discounted. They can range in price from $20 to $2,000 or more, but they are items ‘hand selected’ by a group of well-known stylemaker curators, sometimes with guest celebrities curating. It’s still a ‘Once it’s gone, it’s gone” concept, but with less of a last-ditch feel to most other flash sites.”