Flash sales sites : a flash in the pan?

Abstract

The flash sales industry is forecast to be one of the fastest growing e-commerce segments with flash sales sites rapidly developing into part of the mainstream marketing mix. Yet, anecdotal evidence suggests that the sustainability of this business model is becoming uncertain as the industry is increasingly challenged by low barriers to entry, inventory shortages, and consumer fatigue toward deals.

Little research has been done to understand the effectiveness of flash sales sites’ strategies. To fill this knowledge gap, we investigate the impacts and effectiveness of four flash sales sites’ attributes – limited scarcity message, discounting, channels’ exclusivity, and product assortment – on consumers’ purchase intention for luxury fashion goods.

A two-phase approach consisting of interviews with industry players and quantitative data collection is adopted. We conducted a conjoint analysis to establish consumers’ responsiveness to the flash sales sites’ attributes and the relative importance of these attributes. Subsequently, we performed a cluster analysis to understand each consumer segment’s underlying motivation for purchase. We identified four consumer segments – “The General Buyers”, “The Limited Deal Buyers”, “The Sophisticated Buyers”, and “The Value-Conscious Buyers” – that exhibit different characteristics.

The findings contribute to flash sales sites’ understanding on the effectiveness of their business strategies, the profitable consumer segments to serve, and adaptations that can be incorporate to enhance sustainability of the business.