The Death Of Flash Sales

  • March 24, 2014 at 12:01 PM EDT
  • By Retail TouchPoints Team
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By Mona Bijoor, Founder & CEO, JOOR

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The Fashion Revolution is upon us and there will be no room for turning back once the guillotine drops.

Armed with a fancy-free attitude towards product quality and customer attention, fashion flash sale sites have truly revealed themselves as the “mini-Marie Antoinettes” of retail. Throughout their three-year reign, “let them have their cake and eat it, too” was the relentless declaration emitted from the fashion flash sale monarchy, as they rolled out the red carpet to exclusive deals. With a poised snap of their fingers, these web sites made the hearts of runway fans and Middle American customers soar in the glow of shopping euphoria. 

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The notion of a “sweet deal” sounded too good to be true and all-together enticing to the masses; there was a downtrodden economy at their feet and, like most societies who’ve fallen prey to absolute rule, consumers needed a saving grace. 

With a steady influx of customer complaints, the unveiling of low quality fabrics, and the ultimate degradation of flash sale value, has turned these enchanting designer deals downright sour, igniting an out-and-out revolution.

 Rise To The Throne

In the wake of a crumbling economy, logging onto the fashion flash sale web site of your choice felt like a regal privilege. With a few swift clicks of a mouse to land on sites like Gilt, you now have access to Oscar de la Renta gowns and Prada handbags for nearly half the original retail price. This feeling of exclusivity made shoppers feel virtually svelte at a time where penny-pinching and strict budgeting was a hot-button topic of discussion in the world of retail.

Flash sale frontrunners like Ideeli, Fab, Rue La La, and Gilt rapidly rose as e-Commerce leaders, which can be directly attributed to the plummeting sales in brick-and-mortar sales, leaving major brands with a surplus of luxury items, from Chanel to Gucci.

And just like that, fashion flash sale sites swooped in to gather the goods and created the kind of shopping experience that sent American shoppers into a tailspin.

The Downfall

The circumstances are crystal clear: People have grown increasingly wary of flash sale sites’ staying power, legitimacy and relevance. The once loyal flash sale audience has figuratively and literally stopped buying into the luxury of shopping with flash sale sites, from Ideeli to Gilt.

Shoppers are taking their new-age rebellion to the Facebook pages of the flash sale sites that have scorned them, expressing their disdain for shipping times that take up to six weeks, misleading email marketing, and most importantly, poor product, otherwise known as aged fabric.

With 27% of negative Facebook comments targeting Gilt’s product, opulent quality in flash sale merchandise is on the outs and is shedding light on the rise of aged fabric. The surplus of product brought on by the downfall of brick-and-mortar sales gave way to the rise of aged fabric. The glamour of snagging that exclusively perfect piece seemed like the fashion fan’s dream; that is, until the snags caught up to us with undesirable product quality. 

The best retailers are the ones that take the time to analyze the custumer’s want for trendy pieces, while valuing their need for quality merchandise. To bring the retail experience full circle, top retailers actively work to bring these desires to fruition. Flash sale sites divert from this model and set their sights on selling items in the blink of an eye, while neglecting the significance of quality product. The fashion flash sale site is rooted in just that — flashy sales. Quality fabric and structurally durable accessories are forced to the outskirts of their business model.

As aged fabric becomes more widespread across the fashion flash sale landscape, consumers are being lured to fashion flash sale sites with the promise of getting their hands on luxury items. But 45% of flash sale offers sell out before the shopper can even review their virtual shopping carts, according to research from Dotcom Distribution. This essentially leaves shoppers in the dust.

The recent acquisition of Ideeli by Groupon for only $43 million in cash when it had raised $107 million in funding is a sharp indicator that these fashion sites are no longer valued on their own two feet. If that’s not a slap in the face against the reign of fashion flash sales, then the emergence of pitchforks across Facebook certainly is. 

Of the 1,776 Facebook posts analyzed, Dotcom Distribution found that one in five comments are about having an undesirable shopping experience. Shipping proved to be the prevailing issue for shoppers, with almost half (49%) of the negative comments targeting poor shipping practices. The leaders in poor shipping were Beyond The Rack and HauteLook reigning in 61% of negative comments rooted solely in shipping annoyances.

Up to 17% of shoppers took to Facebook and uttered grievances about marketing ploys that fell flat. Fashion flash sale sites often promise free shipping in their emails, but once the shopper logs onto the site, they are plagued with dreaded alerts reading, “free shipping on all orders over…” and the rest is history as far as the masses are concerned.

We’ve even recently seen that while a company may have an incredibly high valuation, the business model may not be as profitable as one would believe. Flash sale sites are buying big-ticket items and the cost of keeping such an inventory forces them to dig deep into their pockets and slows profitability. Holding close to 4,000 flash sales per day is a guise to eliminate inventory and is a risky business model.

 

Mona Bijoor is the founder and CEO of JOOR, the leading global wholesale marketplace connecting brands and retailers. Prior to JOOR, Mona worked as a strategy consultant for Chanel and Elie Tahari, and was a buyer for Ann Taylor and Destination Maternity. She was responsible for helping to develop Chanel’s e-commerce strategy. During her time with Elie Tahari, Mona spearheaded the growth strategy to build the company into a billion dollar brand. Her experiences in the fashion industry and first hand encounters with some of the biggest pain points in the buying process, led to the founding of JOOR, a technology solution to revolutionize the wholesale process. Mona is a graduate of the University of Pennsylvania with a B.A. in Human Biology and an MBA from the Wharton School of Business.

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