Running a “Flash” Sale Right

Flash sales are the re-emergence of an old idea—the digital equivalent of limited-time or sample sales in brick-and-mortar stores. Inspired by the promise of discounts on a product they crave, online shoppers flock to their favorite retailer’s website on a specific day or at a specific time to take advantage of the flash sale promotion.

When they’re done well, flash sales have the potential to deliver important benefits to independent retailers. In addition to boosting sales of a specific product or product line, flash sales can raise consumer awareness about the brand and encourage shoppers to browse other, non-sale items on the site.

But here’s the catch: today’s online shoppers are seasoned e-commerce veterans who are accustomed to highly engaging shopping experiences, personalized features and a truly seamless purchasing process. Independent retailers who jump on the flash sale bandwagon too quickly not only jeopardize the sale, but also run the risk of turning waves of new and existing customers away from their brands.

The Flash Sale Marketplace

The flash sale concept is growing among both chain stores and independent online retailers. According to a recent comScore report, visits to flash sale sites doubled in 2012, a trend that was confirmed by Dotcom Distribution client Fab.com and other leading online retailers.

Although a flash sale can be an effective tactic for unloading seasonal merchandise, forward-thinking e-commerce retailers hope that the event will produce more meaningful outcomes. Ideally, shoppers will also purchase full-price merchandize during their site visit, gain valuable exposure to the retailer’s digital brand experience and become a loyal customer or maybe even a brand advocate.

It’s a strategy that seems to be working for many online brands. Reuters has reported that during the 2012 holiday shopping season, e-commerce retailers that utilized flash sales grew twice as fast as online retailers that decided not to employ flash sales during the same time period.

But the possibility of rapid growth has motivated many independent retailers to prematurely launch flash sales, long before they are prepared to handle logistical or promotional requirements. In some instances, flash sales have become marketing nightmares, severely damaging the brand’s reputation with targeted audiences.

Flash Sale Fundamentals

Flash sales can be a great way for boutique retailers and other independent online merchants to rapidly generate additional site traffic and grow their brands. But the key to a successful flash sale is preparation. Like a brick-and-mortar sample sale, flash sales need to be adequately promoted and supported by back-end logistical planning.

Product Selection

Successful flash sales begin with product selection. Since the idea of a flash sale is to attract potential loyalty customers to the brand, retailers need to invest time and energy in the alignment of sale products with targeted audiences, rather than choosing sales products based on margins alone.

During the planning stage, retailers need to develop granular profiles of the shoppers they want the flash sale to attract. Armed with insights about high priority shoppers, the retailer can then narrow down the list of candidate sale items and select the right product mix.

Sale Promotion

Flash sales are predicated on the assumption that shoppers will visit the site and make a purchase decision during an extremely short sale period. But some shoppers need time to evaluate the merchandise and commit to a purchase, especially if they are used to reading online reviews or social media recommendations before they buy.

To streamline the decision-making process, smart flash sale retailers promote the sale with previews—opportunities for shoppers to evaluate sale items before the actual sale. A carefully designed preview strategy can also encourage customers to share previewed merchandise with their online social networks.

Inventory

More than 45 percent of flash sales sell out of merchandise before the sale has ended, creating unnecessary tension between the retailer and scores of would-be customers who visited the site expecting a positive buying experience.

Logistics providers play an important role in helping retailers evaluate and prepare for flash sale inventory requirements. The best logistics providers offer real-time inventory tracking and other tools that can help ensure the brand has adequate in-stock inventory on the day of the sale.

Shipping & Delivery

Flash sale retailers often overlook the importance of shipping and delivery requirements. But in the current e-commerce environment, consumers evaluate retailers on their ability to extend the brand experience to their doorsteps and provide timely delivery of merchandise.

The implication for independent retailers is that shipping and delivery considerations need to be addressed before launching a flash sale. If customers are forced to wait four weeks to receive their products or if they receive their order arrives in multiple installments, most of the goodwill the flash sale created will evaporate.

Independent retailers have even more incentives than chain retailers to properly prepare for flash sales because many customers will be experiencing the brand for the first time. But with a solid strategy and adequate planning, it’s possible for independent retailers to leverage flash sales to achieve measurable growth and brand expansion.

 

Contributed by Maria Haggerty, president, CFO and COO of Dotcom Distribution. In her position, Dotcom co-founder Maria designs and implements the extensive reporting and controls for our clients. Maria began her career as a CPA at Arthur Andersen. Her commitment to style and attention to detail are pillars of Dotcom’s silver-platter approach to fulfillment.