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The Guide to eCommerce Flash Sales

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Flash sales can be a powerful tool for encouraging customers to make a purchase on your online store and engage with your brand. But without proper preparation, flash sales can actually pose some risks, often backfiring on businesses which launch them without foresight.

This guide offers an overview to help you get the most out of your flash sales. We will discuss how to determine if a flash sale makes sense for your business, best practices to follow when running a sale, and common pitfalls.

What is a Flash Sale?

A flash sale is a promotion where a retailer offers a discount for customers who purchase items within a short time frame. The sales are typically not announced ahead of time. They may involve all items in a store or just a certain selection.

While there is no universal consensus on exactly how long a sale can last to count as a flash sale, most flash sales last two or fewer days. For example, a report by Experian defined flash sales as sales lasting for less than twenty-four hours and found a three-hour sales window was ideal for maximizing sales activity.

Depending on a retailer’s goals, flash sales can take various forms. For example, a retailer seeking to clear out inventory nearing expiration could offer a flash sale for those items. Alternatively, a retailer aiming to boost sales during a time of week when sales activity is typically slow could offer a flash sale during that period. A retailer could also host a flash sale during a window when activity is normally strong, with the goal of driving even more sales.

No matter how you decide to construct your flash sale, you can realize noticeable benefits to your business, including: 

  • Increases the urgency to buy
    Due to the limited availability of the discounts, flash sales create a sense of urgency in customers which promotes quick decision making and discourages abandoned shopping carts and comparison shopping.
  • Drives website traffic
    When you announce a flash sale, you can expect to draw a sudden influx of traffic to your store or website, including from buyers who might not otherwise visit. This means more eyeballs on your offerings, as well as increased opportunities for cross-selling and upselling.
  • Enlivens the customer experience
    Flash sales can make the customer experience feel more exciting and fun. In turn, they help build positive associations with your brand.
  • Moves inventory By generating high volumes of purchases, flash sales help to move inventory quickly. This makes them especially beneficial for retailers who have inventory with a short shelf life.

The Risk of Flash Sales

While flash sales can benefit retailers, often retailers encounter challenges in a few key areas: 

  • Order fulfillment
    If you make a large number of sales in a short period, you need to be able to fulfill those orders quickly in order to ensure customer satisfaction. Around 38 percent of retailers worry about customers becoming upset because they don’t receive orders as quickly as they expect, and flash sales can complicate this problem.
  • Profitability
    The greater the discounts you offer during flash sales, the higher the traffic and sales volume you can expect. But if you discount too much, you run the risk of selling at prices where you could lose money. The average profit margin for a retailer is around 50 percent, meaning a flash sale where you offer a buy-one-get-one-free deal will only allow you to break even at best, if said margin applies to whatever you are selling. Flash sales which undercut profitability were likely part of the reason why Groupon, which relied heavily on flash sales, saw its value sink substantially after becoming a publicly traded company.
  • Timing
    Online purchasing rates vary by time of day and day of week, with Mondays and Thursdays seeing the greatest sales activity. If you hold a flash sale when customers are less likely to buy, the sale may not result in the product movement you aimed for. Of course, if you run the sale when demand is normally low in order to surpass the average, this may not be a problem.
  • Customer retention
    Attracting repeat customers is critical for retail success: A five-percent increase in customer retention can boost overall profits by as much as 95 percent. However, flash sales often attract one-time customers who take advantage of the flash sale, then never return. Fab.com learned this lesson the hard way. Once valued at over one billion dollars, this online retailer relied heavily on flash sales to move inventory. However, it was reportedly acquired for a small fraction of this sum due to declining profitability.
  • Store reliability
    If your website or store is not prepared to handle the surge of traffic caused by a flash sale without slowing down or crashing, not only will you not be able to process orders, but you will also deliver a poor customer experience. Nearly 53 percent of marketing professionals believe a negative customer experience leads to damaged brand reputation. There is significant risk in running flash sales in which you lack the literal and/or figurative bandwidth to handle.

Challenges like these arise when businesses execute flash sales without planning ahead properly or without ensuring a flash sale is the best strategy for achieving sales goals. In order to deliver the desired results, flash sales must be carefully integrated with other sales and marketing strategies so they are launched at the right time and support the right business objectives. It’s easy to run a flash sale, but much harder to ensure it aligns with and reinforces your business’s broader marketing and sales agenda.

How to Know if Flash Sales are Right for Your Business

In order to make sure you run a flash sale for the right reasons and at the right time, consider the following before committing:

  • What are your goals?
    You should never run a flash sale without a clear purpose. Have a clearly defined goal, such as moving overstock inventory or increasing engagement with a new target audience.
  • How do you communicate with customers?
    Do you have the tools in place for announcing your flash sale to consumers quickly, such as email lists and limited-time social media ads? Your flash sale will be of little use if few shoppers learn about it before it ends.
  • Can you predict profitability?
    Before committing to a flash sale, carefully evaluate your margins on what you plan to offer for sale, and ensure you can sell them at a discount while still turning a profit.
  • Can your site and operations handle increased interest? 
    Does your business have the ability to scale up quickly to handle the spike in traffic which is likely to happen during a flash sale? Scaling up requires both enough technical resources to ensure your website doesn’t go down, as well as enough staff or vendor support to handle order fulfillment and shipping.

By evaluating these factors ahead of time, you can be sure you are prepared to handle your flash sale appropriately, and leverage it to drive overall business growth.

Best Practices for Running a Flash Sale

Once our flash sale is under way, the following best practices can help you make the most of it:

  • Choose the right time
    Weekdays typically see higher rates of online shopping than weekends, and sales peak between about 8 and 9 p.m. Keep these trends in mind when choosing when to run your flash sale. If your goal is to maximize activity during a time which is already busy, you’ll want the sale to happen during a peak business window. Alternatively, if you aim to increase sales during a slow period, run the sale during off-peak hours. 
  • Shorter is better
    As noted above, the ideal flash sale lasts about three hours – and shorter tends to be better overall.
  • Align communication with your target audience
    The channels you use to announce your flash sale should reflect the audience you are targeting for it. For example, because millennials are less likely to open emails than people in older demographics, a flash sale focusing on products of greatest interest to millennials could be better advertised through popular social media channels rather than an easily overlooked email announcement.
  • Make your flash sale stand out
    To increase engagement, add a “hook” to your flash sale. For example, promise customers a mystery bonus item you will include with purchases made during the flash sale. Or, offer the flash sale to only certain customers, such as new registrants on your site. Strategic approaches like these can make the sale feel more exclusive.
  • Focus on customer retention
    Since it costs five times as much to gain a new customer as to retain an existing one, you should make every effort during a flash sale to ensure your shoppers return. For example, you can do this by collecting emails during the purchasing process and using the list you generate to stay engaged with shoppers and announce future opportunities to them.
  • Measure your results
    To ensure your flash sale delivers the desired results, be sure to collect and analyze data such as purchase rates, most popular items, and profit margins during the sale. This insight will help you plan your next flash sale, while also helping you avoid losing money on a flash sale.

Get the Most of Flash Sales with Magento

Magento's eCommerce platform offers a one-stop solution for managing all aspects of a flash sale. It provides the sales analytics and inventory-management features you need for planning flash sales, as well as assessing results. And because Magento can be run as a hosted platform, it helps online stores scale up seamlessly to meet spikes in demand. It does this by delivering a frictionless checkout and order fulfillment process, no matter how many purchases customers make during your sale.

To learn more about how Magento Commerce can help your eCommerce business get the most out of flash sales, request a free product demo.

The Guide to eCommerce Flash Sales