Are Flash Sales Good for Brands?
This week I could have bought a two-for-one wine tasting at a local winery, a new mountain bike at a steep discount, or a vintage gold and turquoise necklace for my wife at 50% off. But, I didn’t (sorry, honey).
All these deals were available on the flash sale sites that seem to be popping up everywhere from Groupon to Amazon to Facebook to my local newspaper—everyone seems to have a deal site these days. And though I didn’t buy, I do remember some of the brands that were offering discounts, but don’t remember any of the non-branded offers. This got me wondering about the real value of these deals from a branded manufacturer perspective.
Most deal sites are selling products and services at 50% or greater discounts and take at least half of the revenue produced by this sale. So unless you are selling at ridiculous margins, you are not making any money off the flash deal. In fact, you are usually losing it.
While the exposure may be worth the price, running too many promotions on flash sale sites could pigeon hole you as a discount brand, and diminish your pricing power. If a customer buys a product at half-off, what will motivate them to pay full price next time around?
Despite these drawbacks, there are ways to run a flash sale promotion that maximize the rewards. For more information on flash sales and to find out how to craft a promotion that takes advantage of the benefits and avoids the pitfalls, download our whitepaper: Should Branded Manufacturers Participate in Flash Sales?
There has been a lot of buzz around flash sale sites lately. Whether they are a flash in the pan remains to be seen. According to CNN, traffic to many flash sale sites is leveling off and even diminishing slightly. It will be interesting to see how things net out.
With that, I need to get out of here. I have ANOTHER half-price massage waiting for me…