August 15, 2010

Flash-Sales Trend Providing New Spark For E-Commerce - IBD - Investors.com

Lets face it — the bloom is a bit off the e-commerce rose these days.

Consumers have been shopping online for years. Lots of e-tail sites tout similar items, with standard perks like moderate discounts and free shipping.

So the name of the game increasingly is differentiation. How can a company set its e-commerce offerings apart from rivals?

This is spurring the rise of offbeat e-commerce sites that sell products online with an unusual twist to separate them from the pack — "flash sales," or deals that expire in a few hours or days.

"These sites succeed because they have interesting products for sale for a limited time. That hooks people," said Forrester Research analyst Sucharita Mulpuru.

"Consumers are voting with their wallets and showing they really like these flash sales concepts," said Scot Wingo, CEO of e-commerce software and services provider ChannelAdvisor. "It's about the steep discounts."

The trend gained steam on June 30, when e-commerce king Amazon (AMZN) bought tiny flash-sale e-tailer Woot.com. The purchase price wasn't disclosed. Woot has 2.75 million registered users.

Seattle-based Amazon has been buying a lot of unique e-commerce sites. Its biggest buy in the space took place last year, when it paid $900 million for online shoe seller Zappos.com.

Woot was founded in Carrollton, Texas, in 2004 by Matt Rutledge, an Internet entrepreneur known for his offbeat sense of humor. Woot offers a single unique and steeply discounted online deal a day, often in electronics. One recent deal was a set of M-Audio recording studio gear for $59.99 plus $5 shipping. The site has discussion boards, articles and other data about items offered.

The idea is to get consumers so psyched about the product that they buy it.

Can such a limited repertoire succeed? Online news site Business Insider says Woot posted $164 million in sales for 2008, the most recent figure available. Market tracker Compete says Woot drew 2.2 million unique visitors in May. More than 10% of the traffic is said to have been referred by Facebook, underscoring Woot's links with other social media networks.

There are theories about Woot's popularity. One is that online shoppers get overwhelmed when they visit huge online emporiums like Amazon.com, much as some offline shoppers prefer specialty stand-alone stores to big malls.

Focus, Simplicity, Discounts

Woot has focus and simplicity on its side, analysts say, not to mention frequently a deep discount.

Analysts say Amazon did well to keep Woot and Zappos as their own sites, rather than as part of the larger Amazon.com site.

By DOUG TSURUOKA, INVESTOR'S BUSINESS DAILY August 13, 2010

Flash-Sales Trend Providing New Spark For E-Commerce - IBD - Investors.com

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