Selling To Flash Sale Sites – What To Expect
Flash sale sites aren’t as novel as they used to be, but they still host strong membership pools with extensive marketing and sales. Though the craze has died out, loyal shoppers are still considerably participating in the flash sale model. They have become brands in their own rights, through which other e-commerce businesses can market and promote.
Online businesses, especially smaller ones, are seeing significant success by utilizing the flash sale site model.
What do you need to know about them, and how can you use these platforms for your business?
What is a flash sale?
Flash sales are discounts offered for a definite period of time. There are three aspects to a flash sale: short time spans, limited product quantity, and deep discounts. These three factors encourage customer urgency. Additionally, discount on scant products with a short buying period increases the exclusivity of the sale.
Flash sales are a combination of limited time, limited stock, and great value.
What is a flash sale site?
Flash sale sites are e-commerce platforms specifically designed for flash sales. These sites have multiple sales occurring at one time, and they sell a variety of brands and categories on a single platform.
Flash sale sites offer a constant rotation of products on a streamlined system. This provides a great purchasing avenue for loyal discount shoppers.
What are the benefits of a flash sale?
Flash sales have become especially beneficial for small businesses looking to move stale inventory and boost brand awareness.
1. Reduce inventory
Flash sale sites were initially created as a way to get rid of excess or leftover inventory. Planning inventory isn’t always easy, especially if you’re a new company. Flash sales are a great way to encourage sell-through of units that are out of season or have been sitting in your warehouse for a while.
Flash sales can help move an overstock of slow-moving units. This reduces warehousing costs and makes room for new, fresh inventory.
Flash sales also started as a luxury and designer discount space. Now, though, designers are creating their own discount outlets and moving away from this business model.
This has opened up a new avenue for smaller brands to utilize the flash sale site platform.
These sites typically require membership for customers to partake in the flash deals. This means the sites already have a pool of potential, loyal customers on their site who are ready and excited to purchase.
New or small businesses can utilize this platform to gain exposure to a new market of consumers. Though flash sales are a short-term stimulus, they can improve brand awareness in the long-term.
This lets you instantly tap into the customer list of the flash sale site, improving visibility and leads.
Flash sales focus on creating a sense of urgency, immediacy, and exclusivity. This heightens the customer’s motivation to purchase while the flash deal is going on.
This is especially useful for small or new brands that don’t yet have strong brand awareness. Customers know the urgency of the sale when they log on to a flash sale site, so they could purchase your product—even if they haven’t heard of your brand before.
Flash sale sites build this idea of exclusivity and urgency, which transfers to your brand as well.
What are the downsides to a flash sale site?
Even though there are strong opportunities with flash sales, they can easily fail if not approached in the appropriate way.
1. Low margins
The items you choose to sell on a flash sale site are typically “leftover” pieces. These are units that aren’t moving fast enough (or at all). You put them on a flash sale site at a deep discount to try to move the units out of your inventory.
But selling at a deep discount cuts deep into your margins. In fact, flash sale sites usually set the price at 40 to 70% off suggested retail.
This doesn’t necessarily hurt your profits if you have a high-margin product. You can still make a profit even with the discount. However, a discount on a low margin product could cause you to actually lose money on the items.
Thus, in some cases, the purpose of a flash sale is not to boost profit but minimize loss.
Keep in mind that you’ll also have to pay a fee to the flash sale site, which further cuts into your potential profits.
2. No loyalty
The customers purchasing on the flash sale site are loyal to the site first and foremost. Flash sales can help boost your visibility, but they don’t necessarily encourage repeat customers.
In fact, the majority of customers on flash sale sites are discount shoppers—meaning that even if they are loyal to your brand, they’ll only purchase when you are selling at a discount. This isn’t necessarily the kind of loyalty you want to attract.
3. Loss of control
One of the greatest concerns with a flash sale site is the loss of control of your brand. You basically hand over the reigns to the flash sale site.
In most cases, the company will run the promotion start to finish. You don’t have much say over your branding or promotion. This lack of control makes some business owners worrisome, especially if they want to maintain a tight brand voice and image.
So what do you need to know in order to minimize these downsides and optimize the benefits?
What should you expect selling to flash sale sites?
1. Determine if the site is right for your product.
There are a variety of flash sale sites, each with their own audiences and product categories. For example, Hautelook is great for designer clothing and jewelry, while Joss & Main is a better option for home décor. Do your research about the site’s products and audience before beginning a partnership.
2. You may need to wait awhile to get approved.
Most flash sale sites make vendors go through an extensive signup and verification period. You might not get an immediate response after you fill out their vendor form, and they may require additional information.
You’ll want to plan for this lag in time when determining how to run and market your sale.
Pro-tip: Contact someone from the flash sale site directly on LinkedIn or Facebook to get your name and brand in front of them. This can get your sale approved at a faster rate.
3. There are two options for flash sale sites: drop ship and distribution center.
Some sites, like Joss & Main, will ask you to drop ship each order to them. This means that they won’t stock or house your goods. After the sale is over, they will tell you how many orders they received, and they’ll ask you to send out the products. You’ll typically send the items to the flash sale business, and they will then send those items out to their customers in branded boxes. Basically, they don’t hold inventory for you.
Other sites, like Hautelook and Rue La La, will have distribution centers. This means that they will hold the inventory in their own warehouses. This allows them to send the items to their clients at a faster rate.
Shipping costs are usually dependent upon the site and whether you are drop shipping or distributing.
4. You’ll be required to label.
All drop ships will require a packing list and shipping label of the included units. This helps the flash sale company easily and quickly sort and send items. Distribution centers also usually require a label on each unit and pallet.
Pre-labeling and inventory management can take up a lot of your time. We recommend outsourcing this labeling process.
5. You may not have control of pricing.
Some sites will tell you their markup percentage. This can help you price competitively with other resellers.
However, a number of sites don’t disclose the markup percentage. In these cases, you’ll want to monitor the sale yourself to analyze the price to sales ratio.
Keep in mind that flash sale sites always want to offer the lowest possible price. This can impact your own discounts and sales in the future because customers might see that the discount isn’t as steep as it was on the flash sale site. Thus, we often recommend using a flash sale site for products that you will no longer be selling on your own site.
6. You could have access to predictive data.
Some flash sale sites have vendor portals, which include data and analysis centers where you can see how well your events are performing. This can help you see everything from top-selling items to best-ranked items.
This data is critical for understanding and optimizing future marketing efforts. Predictive data from large-scale sales is a strong way to better understand your market and pricing.
Selling on a flash sale site can be a profitable partnership for your brand.
Flash sale site platforms can help you gain a boost of visibility and sales. But you want to avoid losing control by ensuring you’re prepared for signup, shipping, pricing, and data analysis.