Flash Dance

A funny thing happened to all the flash sales web sites: they became retailers.

Perhaps no emerging retail format since the glory days of the original big boxers has arrived with more hype, more press and more uncontrolled exuberance than flash sale sites. Originally called pop-up sales, these sites bounced around under several generic labels until they gradually settled down under the flash site name.

So, today general merchandise websites like Gilt, Rue La La, Ideeli and HauteLook, as well as home-specific sites like One Kings Lane and The Foundary have become well established members of the community of businesses that sell stuff to people.

But any resemblance between flash sites and regular retailers is no longer coincidental: Whether they will admit it or not, these web sites have become every bit as entrenched in the world of retailing as any other store in the country.

That’s not the way it all started. While some people may claim otherwise, Gilt was really the first flash site to go live when founders Alexis Maybank and Alexandra Wilkis flicked on the switch in November of 2007. The idea was to combine the power of online e-tailng with the insider appeal of a Seventh Avenue sample sale, throw in a dash of Loehmann’s treasure hunt with a touch of Costco membership. and come up with a brand place to shop.

As the brick and mortar pop-up store was just coming into its own, Gilt was originally called a pop-up online sale. Zac Posen apparel was the first to go up on the Gilt site and eight hours later, it was all gone — and Gilt was on its way.

These timed sales – 36 hours then, closer to two or three days later – could only be shopped if you were a Gilt member. Like the original warehouse membership clubs, there were some criteria, but frankly, the chief one seemed to be the ability to fill out a short online form and be able to find the “send” button.

Gilt was soon joined by all manner of similar operations and within two years, the channel was pretty well established. In 2009 One Kings Lane – the address is to real estate as Betty Crocker is to the census bureau – was born as the first home-only flash site.

Give or take a few sales, Gilt, Rue and some of the others moved into home as well and while hard numbers are hard to come by, home is anywhere from 10 to 20 percent of these general sites’ sales. Click forward to today and a couple of fascinating things have happened…and one even-more fascinating thing has not happened. What has happened is that many of these sites have moved off their original timed, very-limited-inventory models to offer longer-run sales with a seemingly open-ended amount of goods in the warehouse. Gilt and One Kings Lane particularly, while still adhering to the flash model as their core business, has each adapted ongoing sales as part of their offerings. If these aren’t quite in-line, re-orderable programs they are the next best thing. Sounds like a regular retailer to me and don’t be surprised if there will be a lot more of this to come.

What has also happened is that the merchandise offerings are no longer overstocks, closeouts and other assorted discarded orphans. Many vendors are on regular rotations with these sites, putting sales up every six to 18 weeks depending on the product. And very often the prices on these products are no better – no worse either it should be noted – than what you’ll find at other retailers, both in-store and online, on most given days. If both of these characteristics remind you of the off-price channel of distribution it’s because they are pretty much the same model.

What’s happening too is that some of the sites have moved onto themed sales rather than sales keyed around specific brands or suppliers. Right now there are plenty of summer beach and vacation sales going on at many of the sites and the brand names – once the raison d’être of most flash sites – are subordinated to the general theme. Gee, I think I might have seen one or two traditional retailers do something like that.

One more thing that’s happening is an increased use of one-of-a-kind and vintage merchandise, particularly from One Kings Lane. Just as retailers such as Anthropologie, Ralph Lauren and even West Elm have had success mixing in one-of-a-kinds with regular goods, the flash sites have discovered the same formula. Put all those things together and it sure sounds a whole lot like conventional retailing, don’t you think.

But the one thing that hasn’t happened is what sets flash sale sites apart from general retailing right now. And that’s that all of those flash sites are alive and well and, so far, not going away. For a classification that has now been around for more than four years we have yet to see any shakeout of any consequence. In fact, we’re seeing more players come into the space, like The Foundary and Fab. Contrast that with virtually any other channel where the number of important players has been reduced to two or three at most. That will not last indefinitely. Gilt is almost universally believed to be getting itself ready to go public. One Kings Lane has just gotten some new private equity financing. HauteLook was bought by Nordstom last year and who knows who else is out shopping…or being shopped. Sooner or later the flash world will start to consolidate just as every other business segment has and what’s left will take its rightful place in the retail food chain.

And this flash dance will be over.

Warren Shoulberg is editorial director of several Sandow Media home furnishings business publications and is a charter member of way-too-many of the flash sites.

Warren Shoulberg About Warren Shoulberg

Warren Shoulberg is editorial director of several home furnishings magazines and has been reporting on the home business for a long time. He is currently working on his next book, Stupid Business.