Flash Sale Sites Pivot

Source: NYTimes, Aug 2011

the competition is overwhelmingly steep, not only from similar sites like HauteLook and ideeli, but also from discount stores like Ross and T.J. Maxx and department store outlets like those of Nordstrom and Barneys.

Compounding flash-sale sites’ problems, manufacturers have cut back on production since the depths of the recession so there is less inventory available. And even as the economy sours again, sales of full-price luxury goods are booming.

“They’re doing what was the whole danger of the retail business in the first place — investing in inventory — and that’s the part that’s a little unintuitive here,” Ms. Mulpuru said. “I wouldn’t say it smacks of desperation, but it’s definitely an attempt to figure out how they can pivot and change their business model because the first one didn’t work out as they planned.”

most of the flash-sale sites remain, like Gilt, unprofitable, analysts say, and many have also tried to grow by expanding into new areas, though not into full-price commerce. Rue La La and ideeli, for instance, have branched into children’s apparel, travel and local deals, but have rarely sold full-price items.

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