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Carol L Schroeder

Flash Chance

December 19, 2012

KikkerlandWhat is a flash sale? A poll in the current issue of Gifts and Decorative Accessories magazine shows that 21% of the suppliers surveyed by Brandwise (from an anonymous representative sample of companies) sell through an online flash sale site.

And yet many of us are not familiar with this phenomenon, and how it impacts us as retailers.

We all know that some of our vendors sell their discontinued products and overstock to outlet stores such as T. J. Maxx, Marshall's and Tuesday Morning. And we undoubtedly agree that seeing deeply discounted merchandise similar to what we are selling -- sometimes actually identical to what is on our shelves -- is harmful to our sales, and to our reputation as honest merchants.

But how does an online flash sale work? According to Time magazine, one of the original online flash sale sites is called Gilt. "Gilt's success has attracted dozens of imitators, and flash sales have turned into a booming $2 billion business. All these slickly produced websites, including HauteLook [owned by Nordstom's], My Habit, Rue La La and Fab, follow the same model of enticing consumers to buy high-end merchandise through limited-time online events. The flash-sale industry has moved well beyond its high-fashion roots, selling everything from baby carriages to kitchen utensils to exotic vacations."

Consumers register with the flash sale site, and as members they receive alerts of short-term bargains. Unlike daily deal offerings such as Groupon, there is no minimum number of participants needed to "tip" the deal, and quantities are always limited to the stock on hand.

I found some of the products from Kikkerland that are in our store on the Fab site. I admire the way that Fab introduces the brand, which could actually help our sales of the products from this company. And the items from Kikkerland on Fab are not deeply discounted—in fact, since Kikkerland sells direct to the public on their own web site, it seems to me that they are competing with themselves. (Their Bunny Ear Buds, for example, are on Fab.com for $14 -- marked down from $18 -- and are available on Kikkerland's own site for $20.) But I would have liked to have had this item offered to us, as Kikkerland customers, at a discount so that I could sell them for $14 too.

Companies are using flash sales to test products as well as to liquidate them. I would like to point out to our vendors that retailers are happy to perform both of these functions. We're delighted to give feedback on new designs, and can often use discontinued products as sale items in our store. We recently bought 100 holiday serving trays and spreaders from Lady Jayne—a company that routinely offers an "estate sale" to its retailers -- and used them as a giveaway for a holiday open house. Our customers were thrilled to receive an $8 item for free, and we loved the fact that we bought them all of them for just $250.

As Ken Nisch says in this issue of Gifts and Decorative Accessories, "the flash sale has gotten the consumer to think in a much more nimble way." We welcome specials from our vendors so that we can offer our own flash sales, inviting customers to come into our stores right away to get a great deal.