It’s hard to talk about eCommerce without mentioning flash sales, or daily deals. This popular promotional strategy has been around since the early 2000s and its popularity continues today.
Some businesses are solely flash sales sites, while others use it as an occasional technique to acquire new customers and boost sales. Either way, flash sales can be an effective strategy for all types of merchants.
If you’re considering running flash sales, take a look at our introductory guide to make sure you know everything you need to run a successful sale.
What is a Flash Sale?
Flash sales are often referred to as daily deals or deal-of-the day. These sales are an eCommerce business model in which a site offers a single or limited product selection for a discounted price over a short period of time. Sales typically last anywhere between just a few hours to 24-36 hours.
Flash sales often happen during shopping holidays like Black Friday or Cyber Monday, but are also used throughout the entire year to increase sales.
The History of Flash Sales
Flash sales became popular when the site Woot.com launched in 2004. The site featured a different sale every day for only 24 hours. Within a few years, there were over a hundred different sites that offered a similar format. Today, there are over 500 sites in America. Notable daily deal sites include Groupon, Zulily, and Living Social.
The popularity of flash sales in the U.S. went hand in hand with the economic recession in 2008. Flash sales offered extremely cheap items that consumers were willing to buy. The short time periods made sales exciting and fun.
Since then, flash sales sites like Groupon have experienced a rise and fall of success. In 2010, Groupon launched its IPO with a valued price around $13 billion. Within a year, they lost about 80% of its stock values. Over the years, many of the smaller daily deal sites have either downsized, gone out of business, or revamped to a more traditional selling style.
So, what happened? A couple of different factors affected flash sales over the years.
- Flash sale fatigue – Consumers began to ignore emails and deals because of flooded inboxes
- Recovering economy – Consumers didn’t need to rely on such low prices
- Not sustainable revenue – Too low of margins for companies to sustain business model
- Shoppers got smarter – Consumers could research and find low prices without time limit
For a full history of the rise and fall of flash sales, check out this in-depth article from eCommerce Rules.
Despite the falter of companies who rely solely on daily deals, more traditional eCommerce sellers can (and do) still use flash sales as a successful promotional technique.
Why Run a Flash Sale
eCommerce sellers know too well the race to having the lowest price. Today’s informed consumers can easily research, compare, and buy from the sellers with the lowest price. A flash sale is an opportunity to give consumers exactly what they’re looking for. Then, running the deal for a short period of time gives customers that extra jolt to act fast and buy now.
And, merchants see results. Overall, flash sales reportedly generate a 35% lift in transaction rates.
While flash sales do help sellers compete on price, that’s not their only advantage. There are many reasons why a seller would run a limited sale. You could want to get rid of excess inventory. Some use it as a tactic to lure in new customers in hopes of retaining them afterwards. Others are looking to increase overall sales and profit.
Whatever your reasons, a flash sale could be just what you need to try something different. On the other hand, flash sales aren’t for everyone.
Should You Run a Flash Sale?
Just because you can, doesn’t always mean you should.
When considering a flash sale, companies must decide if it’s the best route to sales. Some of the drawbacks of flash sales are they:
- Erode your profits
- Don’t result in loyal customers
- Hurt your brand image when run incorrectly
- Flash sale fatigue where customers just don’t care
However, eCommerce merchants can overcome disadvantages like these with careful planning and preparation. It takes more than slashing prices, distributing a few emails, and setting a time limit to make a flash sale successful. Check out some of our top tips for planning a flash sale.
Planning a Flash Sale
A successful flash sale has a few key components:
- Targeted audience
- Thoughtful marketing and promotion
- Right price
- Available inventory for projected demand
- Automated backend processes
While these components sound simple enough, there’s a lot of work that goes into them.
Sellers must choose their audience and determine that they’re interested in your product. Email marketing and social media promotion should be thought out ahead of time and be enticing. Your offer must stand out among the dozen other discount offers in their inbox.
Then, the price must be right. Your discount should be big enough to send people running to your site. If you’re a luxury brand that never goes on sale, 10% might be enough. If you sell everyday products and consumers are used to sales, 10% might seem like nothing.
One area where a lot of sellers go wrong is forecasting demand. It’s great that you want to get rid of some extra inventory. However, you better have enough inventory to satisfy your customers. They don’t want to rush to your site, order a product, and then find out that you actually don’t have enough inventory to ship their order. Those customers will be quick on social outlets to voice their disappointment in their negative experience.
Most of the preparation for a flash sales goes back to who you’re targeting with your sales, what products you’re selling, and how you want to sell those products. In this article, Shopify Plus does a great job detailing how to plan a flash sale based on that criteria.
However, flash sales take more than just careful planning of your audience and products. Sellers must have the right backend processes to execute the sale. Even those with the best intentions and thoughtful frontend preparation end up ruining their brand with flash sales.
How To Ruin Your Business Doing Flash Sales
eCommerce merchants usually have no problem successfully setting up their marketing and promotion of their flash sale. You’ve done the work and hit the send button on your email kicking off your sale. Now, you lean back and watch the orders come in.
You eagerly watch as hundreds even thousands of new orders pour into your order management system within the first hour. You can’t believe it! More and more orders keep pouring in. But then, it happens.
Your ERP or website crashes because it can’t keep up with the order volume. Chaos begins. Frustrated customers call in wondering why they can’t place an order. You’re frantically trying to revive the site. You lose order data. Customers quickly turn to social media to let others know that you’re failing.
This can happen to any retailer, even the big guys!
A negative flash sale experience like this leads to you losing trust with existing customers and creates a terrible first impression with new ones. All within a day, what seemed like an easy way to boosting sales ends up tarnishing your business’s reputation.
But, problems like these can be avoided!
Check out our next article on how to avoid and overcome common flash sale failures. You’ll see how proper integration and automation of your backend processes and systems can prevent you from ruining your business during flash sales.
Or, you can download our ultimate guide to running flash sales! Download the guide here.