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What are Flash Sales? A Complete Guide

Flash sales! We have all encountered these, at least once! If you cannot recollect what I am referring to, take a look at this:

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Ring bells?

Yes! You see a discount offer in your inbox, but that is going to last for only a limited time.

You are thrilled!

You want it all.

You hurry and grab everything you wish for, emptying your pockets!

A sigh of relief!

Now you are the proud owner of the things that you have been yearning for forever, at least for a few months.

Now you can brag. You can now show off! Mission accomplished!

On the other side…

There is another person rejoicing – the person who sent you the email. That person just managed to successfully target you with a sale offer, making you spend.

It is revenue flow for that person.

But what did that person do to make you empty your pockets?

Yes, he created that ‘SENSE OF URGENCY.’

That is a flash sale in a nutshell.

Okay, now that you get the idea, it is time to understand everything about flash sales. If you are a consumer with no intent of getting into business, you can happily ignore this blurb.

Afterall, you will be the one who will be spending.

But if you are thinking of getting into business, or if you are already in business, this post is important for you.

READ!

It is going to help you.

What am I going to cover in this blog post?

Here is what you will learn:

  • What exactly is a flash sale? – A broader definition.
  • The rise and fall of daily deal sites.
  • Does your business need a flash sale?
  • How do you run a successful flash sale?
  • Do flash sales fail? What are the reasons?
  • Why do you need segmentation for a successful flash sale?

So, let us begin learning.

What exactly is a Flash Sale? – A Broader Definition

A flash sale occurs when an online retailer provides significant discounts or incentives for a limited time. The primary objectives of a flash sale tactic are to entice online consumers to make impulsive purchases, to boost short-term sales, or to liquidate excess inventory.

Flash sales are distinguished from standard internet purchases in three ways:

  • Promos and discounts are much superior to the standard offerings of your company.
  • A flash sale lasts much less time than the regular sale duration of your online store.
  • A small selection of goods is discounted, often in conjunction with low supply availability.

Although flash discounts are most popular on Cyber Monday and Black Friday, they may draw internet buyers at any time. Certain websites even make their primary revenue stream from flash sales in the form of “daily deals” flash. However, such an approach does come with certain drawbacks.

The rise and fall of daily deals websites

Daily deals are nothing new. Over the years (since 2004), many players came in. One of them was Groupon. The company launched in the year 2008 and shot up to become the undisputed king of the market almost immediately.

Many other companies followed their business model.

But…

Groupon was not destined to stay as popular as it became. The same fate befell those that used Groupon’s business model.

Between January 2010 and January 2011, the revenue that Groupon earned from the US alone shot up from $11 million a month to a whopping $89 million a month.

But by 2015, Groupon registered an 86% drop in its share value.

By 2015, Groupon stock prices had hit the price of $2.85 from $20 IPO price back in 2011. By 2019, the stock prices had dipped to $2.36. [Source]

It was the same fate for many others.

This sharp fall forced Groupon and others to re-evaluate their business model. Many of them resorted to downsizing to deal with dwindling revenue. So, shut down, and the others that were left behind were forced to alter their model of flash sales.

What caused this issue?

This is what is known as the ‘daily deal fatigue.’

You know what?

People do like flash sales. You like it, so do I. But what if you start getting hundreds of emails a day showing you deals after deals after deals.

Damn! That would be frustrating!

Flash sales aren’t meant to last 24×7.

They are supposed to be rare.

They are supposed to be a one-time event.

This rarity and the time-bound nature of flash sales is what gives the consumers that one jolt they need for engaging in impulsive buying.

Being blasted continuously with emails about deals is going to create fatigue among consumers.

Such continuous bombardment no longer keeps spark ignited. People become tired.

That is what happened with Groupon and other daily deals sites.

If you believe in statistics and data, here is something that should grab your attention:

You already started drooling, didn’t you?

This brings us to the next question.

Does your business need a Flash Sale?

You know what? No one is stopping you from running a flash sale. However, before you jump onto the bandwagon, you should consider the pros and cons of a flash sale.

When done right, your business can benefit from it. If done wrong, it can hurt your business in ways you have never imagined.

So, learn about the advantages and disadvantages of running a flash sale first.

Pros of a flash sale (when done right)

Increased loyalty

If you are offering a substantial discount during the flash sale, your customers will be more likely to stick with you and make future purchases. Remember, a flash sale can be a good way for rewarding your most loyal customers. In return, they can spread the word for you. You don’t need additional marketing budget allocation.

Remove excess inventory

It happens. No all products sell the same way you hope them to sell. This leads to a stockpile of old products. A flash sale can help you to get rid of that inventory that sits there collecting dust. With a flash sale for those items, you can make room for new ones that are in demand.

Take FOMO approach

Make sure that you limit the time period for the sale. At the same time, ensure that you also limit the available stock (even if there is a lot to sell). You should take the FOMO approach or the Fear of Missing Out approach. Those who missed your flash sale will never want to miss out again. As a result, they will be more likely to sign up for your newsletter so that the next time a flash sale comes up, they don’t miss out.

When done right, the FOMO approach can not only increase brand loyalty, but also get you new customers ready for impulsive buying.

New customers

A flash sale with substantial discounts can help you garner new customers. Those that did not want to buy from you might now try out your products at a heavily discounted price. If they like it, they may turn into your loyal customers. Brand loyalty is an important aspect for any business.

Cons of a flash sale (when done wrong)

Reduce your earnings

What percentage of profit do you get on each product that you are selling? If that profit margin is reduced by yet another 15% or 25% or perhaps 40-50%, what does it mean for the short-term and long-term viability of your business? Thus, proper planning and setting the proper discount is necessary. Plan your flash sale properly.

Draw the attention of the “wrong” client type

A flash sale has the potential to attract one-time customers. Once they secure a transaction, they disappear in the thin air, never to return. If you wish your flash sale to attract new devoted consumers, you must be vigilant against this kind of deal pirates. Trust me, you will find such deal pirates in every industry. 

May result in dissatisfied consumers

If you promote a flash sale too aggressively or too frequently, you risk creating dreadful flash sale fatigue. That is when consumers will blatantly tell you – ‘Dude, I don't give a damn about your flash sale. You and your emails are just annoying. You don’t want to be that hated marketer, do you? After all, that is going to find your brand a pushy, annoying brand.

Endanger your reputation

A flash sale may be detrimental to your image if you are unclear about how the sale will be conducted. Did you ever wonder what will happen if you fail to follow up with excellent customer service? Just because it is a flash sale, it doesn't mean that your customers will not expect a high level of customer service. Even though they are purchasing things at heavily discounted prices, they are still spending money, and they want to be treated like royalties. 

Now, if you think that you are going to get things done the right way, and that engaging in a flash sale is going to benefit your business, you better plan for it in the best possible way.

Yes, plans do not necessarily always work out, but you don’t have a choice. You must make it work, and you must make it work the way you think will be beneficial for your business’ reputation.

How do you run a successful Flash Sale?

I have been repeating the same thing over and over again, and I am going to say it again – You need an impeccable plan.

Here is a quick list of 8 things you can do to run a successful flash sale:

First – Understand the Benefits:

Understand that a flash sale can benefit your business in four ways – help you remove the old stock, help you increase your sales during slow seasons, help you and your brand to get visibility, help in increasing customer satisfaction.

Once you understand the potential benefits, you get a starting point. You will know what you want to achieve, and then plan out the flash sale accordingly.

Second – Customer Segmentation:

Remember to never let go of your wisdom. You must avoid dealing with pirates. This means that your target audience has to be extremely focused. These are the three types of customers you must try to engage with a flash sale:

  • Those who are loyal to your brand. You don’t want them to move to a competing brand.
  • Those who purchase from you once in a while, but mostly remain inactive.
  • Those who add products to their carts but end up abandoning the same.

Customer segmentation is an important aspect of your email marketing campaigns, especially when you are organizing a flash sale.

Things to remember here are:

  • People love exclusiveness. This means that you should send your email newsletters specifically to those who have been a loyal customer of your brand for a long term. So, create a separate segment for them.
  • Do not send broadcast emails, though they may seem to be a great option, but sending emails to those who have already purchased the items (at full price) before the sale won’t be happy to see others grabbing the same product at heavy discounts.
  • Flash sales can be a great way to win back certain customers who became inactive for a long time. A flash sale email can work as a win-back email making people remember as to why they signed up for your newsletter in the first place.
  • Study shows that 75% of people who add products to shopping carts end up abandoning them. Users can use flash sales to convert those people into your loyal customers.

Which products should you sell?

When marketing to existing consumers, choose an item that:

  • Has a high count of page views but a poor rate of conversion – in other words, a product that consumers consider but do not purchase, but look at it quite a lot.
  • You have surplus inventory and need to rapidly shift it in order to create room for new goods.

Methods to run a flash sale to get more repeat customers or target potential customers:

  • Include a countdown to the end of the inventory on the flash product page. When consumers realize others like and prefer a product, it has a significant impact on their subsequent choice – to purchase.
  • Assuming your email list is currently brimming with interested consumers, and you want to increase your customer base, maintain your email campaign divided into the following:
    • Customers who have ceased to interact
    • Members who are yet to make their first purchase should be on the list
  • Do you have rivals that offer goods that are comparable to yours? Market to the social media audiences of your rivals. Curalate discovered that three out of every four customers had bought a product after seeing it on social media.
  • Utilize Google Ads that are only active for a short period. Ads for flash sales may be triggered using the precise keywords connected with your flash sale items.

When marketing to new customers, choose an item that:

  • Is a product that your brand is well-known for, or a product for which you want people to remember your brand.
  • Is a product that your competitor is popular for. Set a flash sale for the product at a much lower price.

Third – The Time Factor

Do you really think that if a sale runs 24×7 it is called a flash sale? Think again!

An Experian study found the following interesting data:

  1. Email open rates increase by 14% on an average if the flash sale is for 2 hours.
  2. Email open rates increase by 59% on an average if the flash sale is for 3 hours.

Armed with this data, you must do some research on your own. Here is what you need to find out:

  • Which day of the week do your customers purchase the most?
  • At what time of the day do your customers purchase the most?
  • At what time of the day do your emails have the highest open rates?

So, not only should you consider the timing of the sale very serious, but also decide on the duration of the sale.

Fourth – The Discount Factor

Let’s get away with fancy words. Just answer this question:

If you are offering a 15% discount on your products just to make people sign up for your newsletter and make a future purchase, why would someone buy from your flash sale if the discount you are offering is just 15% or less?

Generally, people would like to participate in a flash sale only when they get a greater discount.

The general rule of thumb is to set a price or a discount where not only will your inventory be sold out, but also keep a decent profit.

So, the flash sale should be higher than the lowest possible price. People usually offer the lowest possible price during Cyber Monday and Black Friday.

Fifth – Free Shipping is the Key

This is a crucial step. Did you know?

  1. Emails offering free shipping have 72% higher engagement.
  2. Just to qualify for free shipping, 48% of the people will add more products to their shopping cart.
  3. Products with free shipping generate 53.3% higher revenue compared to products that do not have free shipping.

Now, here is another important aspect –

If your flash sale turns out to be insanely successful, what should you do next?

Guess what? 2/3rd of buyers expect to receive their orders in a maximum of 3 days. Nearly half the customers actually expect overnight shipping.

So, even if you manage to get tons of orders from your flash sale but fail to meet the shipping expectations your customers have, you are going to earn yourself a really bad reputation.

So, just to ensure that things don’t go against you, make sure that:

  • You already have your products packed and ready to be shipped before orders start flowing in.
  • If having everything prepacked is not a possibility, make sure you have extra hands at your disposal to help you with packaging as and when orders start flowing in.
  • Ensure that you inform people before and during the sale about the estimated shipping time. This will ensure that people have the right expectations.

Sixth – Create a Sense of Urgency!

You know what? Flash sales can fail – miserably for that matter! You may create a brilliant, animated email to grab attention, but what if people just say – ‘nah, I will get it later?’

It is not a hypothetical situation. That happens. Unless you create a sense of urgency, people are not going to act.

So, how do you create a sense of urgency? Here are a few simple tips for doing so:

  1. Keep your email copy short: Time is essence! Make them feel that. If you have an upcoming flash sale, you will want people to read through it quickly and get the information they need. No one wants to read through a manuscript just to get the time and discount details.
  2. Spell the discount in the email subject line: Great! You have a brilliantly designed email body. But did you know that when you put the discount percentage in the email subject line, conversion rates are as high as 18%? With the discount not mentioned, conversion rates are just 3.8%.
  3. A countdown timer is a killer addition: Did you ever race against time? That can put anyone under pressure. This is the psychological trick you can apply. Just throw in a timer showing the countdown in your email copy and on your flash sale landing page.
  4. Give reminder: People are busy. Even if you are setting up your flash sale for just 3 hours, don’t forget to send reminders during the last moments of the sale. Let them know that only a few minutes are left and once they are gone, they will never get the deal back.
  5. Use social media: Go to your different social media channels and become your own hipster. Actively engage with your customers throughout the duration of the flash sale. People like it.

Seventh – Inform Your Customers

Do not use your flash sale as bait. Ensure that you are being honest with your customers and keep them informed. Here are three things that you customers deserve to know:

  • Clarify to them about the products that are on sale and those that are not on sale.
  • If the products on sale are available only in limited quantities, make sure that you tell your customers about that. A study found that 45% of the items on flash sale sell out way faster than expected. You really do not want to have angry customers who reach your website only to find that the products are sold out.
  • Make sure that you have a very clear and concise return policy in place. This will ensure that you have fewer complaints.

Just to clarify, a flash sale is an arrangement between you and your customers. So, if you have certain terms and conditions, your customers are certainly agreeing to those terms when they participate in the sale. Don’t allow them to bully you, but don’t take undue advantage of your customers either. It should be a win-win situation for both parties.

Eighth – Limit Your Flash Sales

Flash sales should be rare. Don’t overdo them. If you engage in flash sales every now and then, the quality of your brand will take a hit. Once, twice, or thrice a year is just fine. But anything more than that is not a healthy practice.

Also, if you have limited flash sales, your customers will be more than happy to wait for them to get better deals.

Do flash sales fail? What are the reasons?

Yes, flash sales fail. Some of them fail so miserably that brands just go into oblivion. Don’t believe me? Here are a few prominent names:

  • Totsy – The company liquidated after it burned $34 million of funding.
  • Fab – It once had a valuation of $900 million. Now it is valued at $50 million.
  • Zulily – Once had $7 billion cap but Liberty Interactive purchased it for $2.4 billion.
  • Groupon – You read the story above.

Flash sales fail. And here are the main reasons:

  • Shipment: Shipping failure is the most important factor. Don’t make customers wait for weeks. Don’t deliver in installment.
  • Inventory: Ensure that you have enough stock. If not, make sure that you are communicating with the customers about the limited availability. People will be deeply disappointed if they don’t get the product they were hoping to get at a deeply discounted price.
  • Bots: Bots can invade almost anything online, even the ecommerce checkout pages, and prevent genuine customers from buying. Make sure that you have an anti-bot mechanism in place. Captcha is a great way to deter bots. You can implement Cloudflare, too!
  • Site fail: Flash sales will attract heavy traffic. Make sure that your site sits on a server with enormous bandwidth to handle the surge. Site crashes are one of the most important culprits behind flash sale failures.

Why do you need segmentation for a successful flash sale?

Today’s customers are different. They are more needy and demanding. They want personalization. They want personal attention. They need to hear what they want to hear.

So, plain email blasts are not really a good way to deal with things. Long before you launch your flash sale, you should consider segmenting your customers and communicating with them using an email series to learn about their preferences while also building a hype.

Based on the information you gather; you must segment them properly and then automate your email campaigns about flash sales accordingly to tune into each segment’s psyche.

Flash sales sound great, and when done right, they are indeed a great tool to earn customer loyalty and even grab new customers. It is not an easy task, but when was business easy anyway?