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Members-only flash sales, structured around limited time and availability of merchandise, grew out of the recession and have continued to flourish over the past three years.
“The four leading flash-sales sites—HauteLook, ideeli, Gilt Groupe and Rue La La—are predicted to generate $900 million in revenues in 2010 and double the number of visits to the category over the previous year,” said Krista Garcia, eMarketer research analyst and author of the new report “Flash Sales: What Retailers Need to Know.” “Multichannel retailers are also starting to adopt flash-sales techniques, but first they need to understand the consumer and how to make scarcity and exclusivity work for them.”
In their short existence, members-only shopping sites have amassed an enviable increase in users and sales. For example, ideeli’s 2010 visits have grown more than 150% over last year, and Gilt expects to generate between $400 million and $500 million through flash sales in 2010. There is an opportunity for retailers—particularly those with excess inventory to liquidate—to tap into this market by reaching out to consumers in underserved demographics, branching into unexplored categories and creating an entertaining shopping experience to guarantee repeat visits.
According to July 2010 Experian research, fashion still dominates the flash-sales category, taking the top six slots for that month. The remaining four sites reflect the diversified future of member-only sites: zulily and Totsy offer products for moms and children, One Kings Lane sells home decor and Jetsetter is Gilt Groupe’s travel site.
Experian also found that 57.5% of visitors to these sites were female, which mirrored online buying generally; comScore reported that females made up 57.9% of internet users who made any type of purchase online and males 42.1%. Shoppers ages 25 to 34 made up the largest share of visitors to flash sales, at nearly 27%, and the largest share of shoppers had a household income of between $30,000 and $60,000.
“While the customer base is shifting, flash sales tend to attract a younger, trend-conscious shopper,” said Garcia. “Retailers can slice by demographic and host flash sales for different needs and life stages. Moms have long been a marketer’s favorite, and members-only sites like Totsy and zulily have appeared to fill this niche. Why not tap into pet owners, cooking enthusiasts or sports fans?”
The full report, “Flash Sales: What Retailers Need to Know,” also answers these key questions:
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Check out today’s other article, “Most Marketers Shift Toward Branded Content.”
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