From last holiday to this year, eDataSource analytics indicate a significant increase in email subscribers for the leading flash-sale sites — an astounding 81% for the four sites we’ve been monitoring during this time period — Gilt GroupeRue La LaHauteLook and ideeli. And with 58% of U.S. online adults saying they are more price-conscious today than they were a year ago’, brands and retailers should strongly consider working with recognized flash sale sites to promote a sense of urgency and drive incremental revenues.

We looked at the subscriber acquisition rates for the top-5 flash-sale sites — the four previously mentioned plus MYHABIT — from December 2010 until October 20, 2011, and found that as they continue to grow their consumer bases and try new strategies, making these companies your friend instead of your foe might just be worth a try.
Gilt Groupe grew their list size by 108%; Rue La La and HauteLook both increased their reach by 80%; Ideeli went up by 20%; and the newest entrant MyHabit, which Amazon just launched this year, went up a whopping 151% between the end of June and October 20th.

Subscriber acquisition via social motivators

To grow their customer bases and drive revenue, flash-sale sites rely on the social nature of their shoppers and some basic behavioral motivators.  For one, there’s a level of exclusivity that comes with shopping on a flash-sale site. You need to become “a member”, and some are even by invitation only. For two, they typically offer a well “curated”, limited inventory of unique and hard to find products that are perceived to have higher value. And three, you need to act quickly – as soon as you receive the e-mail – so you don’t miss out. Because of these characteristics, consumers are compelled to share the fun experience with their friends and family who also start to make flash-sale shopping and impulse buys a daily habit. And it doesn’t hurt that most of these sites post on Twitter and Facebook multiple times a day, making it even easier for consumers to share and advocate on their behalf.
Average email open rates signal trouble, but not alarm
Unfortunately, email open rates for the top-5 flash-sale sites are average, ranging from 7.26% for Gilt Groupe to 13.18% for Hautelook.

This disparity may seem strange to you – it does to me – given that Gilt, who probably has the highest price point and the most exclusive products, also has the lowest open rate. So what gives? I have a few guesses:
1.) Maybe Gilt has a lower level of hygiene effort for the list in general, and therefore sends to more inactive recipients.
2.) They also seem to have a little more of a challenge with their inbox delivery than the other brands, which can of course negatively affect open rates. Gilt Groupe just recently changed their email service provider and the new IP address they are using might not have built up the reputation necessary to have optimal inbox delivery.
3.) The price points for Gilt may be out of reach for their newer audience members: the subscribers they acquired after expanding their membership and opening it up to the general population without the need for an invitation. This may have hurt Gilt’s air of exclusivity.
Go ahead, make my day
Some have said that flash-sale sites’ days are numbered, but with consumer bases that large, and with players like Amazon and Nordstrom (with MyHabit and HauteLook, respectively) entering the space, I don’t see them disappearing. I hope to see them continuing to evolve their models and making their subscriber databases more useful for targeting in order to increase inbox placement and opens.
Lastly, while I wouldn’t discount working with flash-sale sites, there doesn’t seem to be a lot of room for any other new entrants unless they have special merit or can differentiate themselves within the new social commerce environment. I’d love to see all types of flash-sale sites succeed. Let me know what you think in the comments below.

‘ Forrester Research, “US Online Holiday Retail Forecast, 2011,” November 11, 2011

 

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