RIP: Rest in Pieces
Flash Sale Sites
Born 2007 – Died 2016
In the history of retailing channels of distribution, perhaps no single format has had a shorter lifespan than the catalog showroom. Rightfully so, most people would say, since it was perhaps the stupidest retail model – go to a store to wait in one line to order from a printed catalog, wait in another to pick it up and pay for it – ever created. It died a faster death than anything in the history of retailing.
Because for all intents and purposes, this year marks the effective end of the flash sale website as a distinctive format for shoppers to purchase consumer products. Sure, most of the original crop of players in the space are still around in one form or another and some even still practice what now seems the quaint practice of offering a limited number of products for a limited time period at a perceived (if not always real) savings. But with the sale at the start of this year of segment leader Gilt Groupe to Hudson’s Bay Company and then the more recent purchase of home furnishings specialist One Kings Lane to Bed Bath & Beyond this spring, the sector is pretty much – and I use the technical term – kaput.
The Flash Phenomenon
In their heyday, flash sale sites were a retailing phenomenon. Hitting stride at the bottom of the Great Recession, flash sites pushed all the conspicuous consumption buttons:
- Brand name merchandise not readily available at the time online.
- A timed selling window that appealed to the buy-it-now-or-else gene that characterizes the true shopping junkie.
- Prices that carried with them the suggestion that this was a once-in-a-lifetime deal too good to be true…or pass up.
And it was all happening on that worldwide web thing, the new darling of the retail world at the time that carried with it the naïve hope that it would be the savior—rather than the slayer – of conventional retailing. And for a while, it all worked. The first wave of flash sites – in addition to Gilt and OKL it included Rue La La, Haute Look, Ideali and some outliers like Groupon – thrived, and shoppers flocked to them in impressive numbers. So too did investors. Private equity money chased these start-ups and assigned silicon-inflated values upon them. Both Gilt and One Kings Lane hit near-billion-dollar valuations at their peaks.
The Bloom Starts to Fade
The feeding frenzy from all sides was on…and then it wasn’t.
Shoppers started to get weary of the time-pressed parameters of flash sales. Brands that were once pretty much the exclusive domains of these…well domains, began to appear more frequently, both directly from the brands themselves and other retailers. As the need for more and more offerings increased, the flash site sales got less and less interesting, watered down to a mélange of run-of-the-mill generic products you could just as easily find on Walmart.com.
Soon the flashes started to flicker. Fab.com, which had come along on the second wave with a format of odd-ball-bordering-on-the-bizarro products, felt the way to succeed was to completely change itself every eight to 12 months, totally confusing the customer who soon found the whole experience tedious and moved on elsewhere.
Other standalone flash sites started to look for the escape key. Rue La La, bought by CSI Commerce in 2009, was one of the first to cash out. Two years later, Nordstrom picked up Haute Look and eventually combined it with its Rack online operation, creating some synergies and giving it instant access to a viable and ongoing online vehicle much faster than building one itself.
That same thinking was the basis of the two big deals this year. Gilt, which is generally acknowledged to be the largest of the flashers, became part of the Hudson Bay group of retailers and we’re already seeing a physical integration with its Saks Fifth Avenue unit. For Bed Bath & Beyond, which has been a laggard online, OKL gives it a toehold in the channel but perhaps just as importantly provides some credibility in the home décor and furniture categories. BBB’s business in these areas is severely underdeveloped, particularly compared to its increasingly most serious competitor, the Home Goods division of TJX. As the sale just occurred only recently, it’s not clear what Bed Bath will do with its new toy. Company officials, in their usual BBBspeak, were vague when asked about it recently but past purchases have been excruciatingly slow to be developed, sometimes layered onto the mother ship, sometimes kept separate.
The only thing certain is that the OKL and BBB cultures are wildly different and whatever transition occurs it’s going to probably be awkward and painful all around.
Another Phase for Flash
Regardless of what happens, the businesses Hudson Bay and Bed Bath purchased are far from their original flash roots. Yes, there are still timed sales with limited inventory but they make up a relatively small portion of the offerings on most flash sites today. The majority of sales now are pretty much standard e-commerce transactions: buy this thing at a decent price now…or whenever.
So, the flash sale site lifespan has effectively lasted less than a decade, which surely is a retail record. Many of the brand names will no doubt live on and some will find prosperity, morphing into post-flash models. Look for a few to even have physical preferences. But like the flashing craze of years ago, Adobe Flash and flash drives, flash sale sites aren’t quite what they used to be. Just ask iPhone app designers. Ultimately, the very definition of a short-term limited sale proved to be eerily accurate.
Warren Shoulberg is editorial director for several Progressive Business Media home furnishings business publications. He was a flash site fan for many years but now, not so much.