Flash Sales Companies’ Business Model

Source: NYTimes, Feb 2011

some analysts wonder whether Gilt, and the band of flash sales sites, will prosper as the economy recovers, inventory levels tighten and consumers open their wallets wider.

This business model relies on selling designer merchandise at a steep discount, but it’s not so good for the designers, and the stream is drying up,” said Patricia Pao, the founder of Pao Principle, a consulting firm for luxury retailers.

Mr. Ryan said 40 percent of the clothing it sold was made specifically for Gilt. In addition, its new verticals are growing: Jet Setter and Gilt City make up 20 percent of the business.

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