In the wake of the recession, the flash sale movement revolutionized consumers’ spending opportunities by offering them a chance to afford things they couldn’t anymore. While so many retailers were circling the drain, daily deal and flash-sale sites gave us a way to continue shopping and eating out without breaking the bank, which gave them almost immediate success.
But it’s now become a bit overkill, and shoppers are beginning to lose interest. The time-sensitive offers are more stressful than exciting and the overwhelming flood of emails throughout the day has made shoppers increasingly more likely to delete in bulk. That daily deal email used to be the most exciting part of the day and now that it’s happening every few minutes, it’s so annoying that you can’t even bear to open one.
So in order to survive, some of the industry’s biggest players are changing the rules of the game.
To stand out from the countless number of virtually identical discounters, many of these sites are narrowing their offers to reach and keep a particular audience, rather than lose one broad and jaded group of consumers. They’re also ditching the time restraints, which although were what lured in consumers in the first place, the surplus of offers they’re getting today is causing them to immediately bypass most, if not all, of them.
"I don't really want 30, 40 or 50 emails everyday," said Jonathan Marek, senior vice president at Applied Predictive Technologies, a retail analytics firm. "At some point, a consumer is going to say, 'I only want the five that I want.' That's the point that we're reaching here."
It's not that people have boycotted the industry altogether, as spending on flash sales jumped 21% last year, according to American Express Business Insights, an entity that gathers spending data from both its cardholders and merchants. And while that doesn’t seem like a bad number, these sites saw a 92% gain the year before. So even though shoppers haven’t stopped buying the deals, the movement is definitely losing oomph. According to data tracker ComScore, traffic to some of the industry’s biggest sites, including Gilt Groupe and Groupon, has dropped even in the past few months.
Increased competition and a seemingly lack of uniqueness forced more than 100 smaller deal sites out of business last year and many others into the hands of bigger players. KGB Deals, which offers locally-based deals, bought TheDealist and SocialBuy, while Gilt Groupe took over BuyWithMe.
The challenge of appealing to consumers personally is still something even the industry’s biggest players are struggling with, and why they’re making changes. Instead of going after all consumers at once, they’re breaking it down to reach them by interest.
Groupon added new categories such as “Getaways” for deals on travel and “Goods” for deals on merchandise. Gilt Groupe now has entirely separate niche entities including Gilt Men, Gilt Children, Gilt Home, Gilt City for local deals, Gilt Taste for food and wine, and Jetsetter for travel deals.
Many of these deals are no longer even flash sales, but may last throughout the day or for several days at a time. Some of the offers aren’t even discounted. The reason behind the expansion is not to do away with flash sales altogether, but to diversify, according to Andy Page, president of Gilt. Although the original concept of the noon flash sale gained Gilt so much popularity in the beginning, the changes have pushed the number of visitors to the site up by more than 40%.
"Industry wide, we're seeing these companies try to branch out. It's a way to leverage the existing user base to make more money off of them," said Clayton Moran, senior technology analyst with the Benchmark Company in Delray Beach, Florida.
One piece of advice from HLN Money Expert Clark Howard: Only buy the deal if you know you’re going to use it! But if you do find yourself stuck with a deal you don’t plan on using, check out sites like DealsGoRound where consumers can get cash for deals they don’t want before they expire.