Back in 2007, daily deal and flash sales sites were rising stars in the ecommerce world. The explosive growth and the exponential increases in customers were staggering. However, in 2011, criticisms of these sites began to rise exponentially as well. Groupon, market leader and the first site of its kind, announced an $81 million loss during the last three months of 2012. Additionally, Fab.com, one of the fastest growing ecommerce sites, recently announced that they are going to drop their flash sale section.
So, what is the future of flash sale and group discount sites?
Though some people speculated that this is might be the beginning of the end for flash sale/group discount websites, I believe there are still possibilities for growth. According to Reuters, Gilt’s 2012 holiday sale grew about 30% compared to the year before and both Rue La La and HauteLook had 50% growth. For consumers, those sites are not just a flashy deal, but also a good way to discover new brands, places, activities and fashion trends. More than 54.3% of shoppers said they would use a flash sale website as a tool when shopping according to Compete’s survey.
However, flash sale and discount sites are still facing a lot of challenges and may need to consider making some adjustments in response to the changing market.
Employ Personalization as a Key Feature
With the amount of data that these services receive from their customers, there is really no reason why they shouldn’t be using personalization to their advantage. The primary reason for this is that personalized recommendations save time for consumers, something that is important when dealing with the short window of opportunity that comes with a flash sale. Suppose my favorite shoe brands are on sale today, without personalized service, I would need to look through all the other styles and find the one I wanted. Many times, my size would be sold out by then. Groupon has a section called “just for you” based on your past purchases. At the same time, Gilt.com just recently added a new page called “Your personal sale” based on purchase history, location, etc. With two of the market leaders employing these techniques, this is definitely something all ecommerce sites – not just flash sale services – should try out.
Improve Customer Service and UX
Customer service has always been of utmost importance when it comes to retail. Based on a study by Dotcom Distribution, about 44% of comments on social networks about flash sale sites are negative. Some of the most common complaints are about shipping, logging in, marketing, and customer service. Because every other one of the flash sale processes are expedited, the shipping time became the most common complaint – one in five comments on Facebook are related to negative shipping experiences.
Mobile! Mobile! Mobile!
My phone buzzes at noon every day and the Gilt sale notification popes up to reminder me to check the deals. If I happen to be free, there’s a good chance I will open the app and check out the deals. Mobile is the future for retailers and for flash sale/group discount sites, it is indispensable. The sales usually start at a certain time of the day and mobile allows everyone to access the sale on time at any location. In 2012, 50% of sales on Rue La La , a top flash sale site, came from mobile. Other flash sales sites are also seeing growth in their mobile revenues. For group discount site like Groupon, mobile allows consumer to use it as their electronic wallet. If someone bought a yoga class, all she/he needs to do is to present the voucher on their phone before they enter.
Restore the reputation and attract new consumers
Many people have lost faith in flash sale/group discount sites. A good deal may not be attractive enough to draw their attention. These sites should think of creative ways to rebuild reputation and create buzz.
A few ideas from me:
- Open up pop-up shops in multiple cites
- Launch personal shopper services
- Add Insider points function (points could be used to redeem credit)
- Provide vacation packages (including hotel, local activities and store discounts)
- Be creative!
He is the summer Marketing Intern at Compete. She is currently a rising senior of Mount Holyoke College, double majoring in Psychology and Statistics. She is passionate about digital marketing and data analysis. Connect with her on Google+ or LinkedIn.