The early days of flash selling are often pointed back to 2004 and the emergence of online deal-of-the-day retailer Woot. Many lessons have been learned since then, mainly, that a deep-discounting retail methodology cannot stand on its own as the core to a merchant’s business model. There needs to be practical and logical reasons and uses for flash selling, along with a well-thought out plan.
If you are considering flash selling for your retail business, it’s essential to understand the characteristics of how this selling methodology is used effectively and the mistakes to avoid. You need to know how data analysis, preparation, and automation contribute to running a successful flash sale that preserves not only your margins and profitability, but your reputation and relationship with your new and existing customers.
There are two key areas where retailers, large and small, have effectively used flash selling.
#1 Retail FOMO: This is used to introduce an exclusive, niche product with a limited release not only in quantity but for a limited time, the latter of which is a key feature within a flash sales model. This can be used to create excitement for your product line and for your brand, as customers clammer to get their hands on your highly-coveted merchandise.
One retailer, Palace Skateboards, has achieved great success utilizing flash selling. They’re able to attract new customers and create hype while staying profitable; building demand for their products by controlling the supply and maintaining exclusivity.
#2 Clearing Stock: You have a few high-value products that have been in inventory longer than you desire. Because they may be seasonal or speciality products, moving them out may also be challenging. Using flash selling along with a coordinated promotion is a great way to clear out that stock and make room for the products your customers need and want.
Today, you have many more tools at your fingertips to help you make strategic decisions about your business and operate more efficiently with fewer resources.
Retail automation has freed you from many of the manual back office processes. It has enabled the design and fine-tuning of custom workflows to manage sales order processing, update inventory in real time, assign shipping, and provide order status updates to the customer.
With automation, human error and processing latencies are reduced, as are human labor costs. Resources can then be allocated towards developing marketing and sales strategies to grow the business.
Or to dedicate time to designing a winning flash sales strategy.
Let’s say your goal as a merchant is to use a flash sale to attract new customers, not just for a one-time sale to clear stock, but to increase your loyal following.
Real-time inventory reporting will tell you which products are available for immediate shipment across all locations and their profit margins. Along with the knowledge of your operation and business savvy, this data lets you make the right decision on which products to feature in the sale.
Important to Note: Not having the correct inventory and sales data can be costly, but especially when running a flash sale. If errors in stock levels prevent order fulfillment, customers tend to take out their grievances online and on social media, having the opposite desired effect of attracting new customers and boosting positive brand awareness. This can all be prevented by having the right numbers and process in place.
Once the sale is active and the new orders begin streaming in, automation takes over to expedite each order so they’re quickly processed and shipped. The customer is sent live delivery updates and is thrilled. First impressions are everything. They even tell their friends. So is positive word of mouth, which will again, most likely happen on social media.
Successful flash sales can more than double or triple sales orders in a short amount of time. Automation does the heavy lifting in terms of workflow processing, so your retail business can efficiently manage this spike in business without the need to increase staff, even for a short amount of time.
Going back to the chosen motivation behind using a flash sale to benefit your business; reviewing your sales, inventory, and returns reports pulled from your retail management system provides the data intelligence needed for key decision-making.
You may discover from those reports that a certain store branch isn’t meeting its sales goals. That a specialized product line isn’t turning over as quickly as it did two quarters prior, so it may be time to shift gears and clear out that stock. Or that customer lifetime value ratios (CLTV) are flat. The abandon shopping cart report sparks an opportunity to retarget those sales in limbo.
Tap other data sources, such as Google Analytics, to view how you rank in comparison to your competition on specific product lines. Review their price points and run conversion reporting (purchases divided by product page visits) to determine if a flash sale is the right choice to recapture customers, or if a more long-term sales and pricing adjustment is required.
When was the last time you ran a social media sentiment analysis of your brand and business?
While social media is commonly used for two-way customer service in retail and other industries, some unhappy customers tend to vent on social channels without ever contacting the retailer directly. Aside from being able to address individual customer issues, an analysis will enable a more broad view of how your customers and the market perceives your brand. It may be time to give them a perk to increase brand love or stimulate awareness.
Once you’ve picked the product and price, there are few more elements to a flash sales strategy.
Before you ready your email campaign, conduct a review of your returns data. It’s unfortunately become common for shoppers to deliberately over-purchase and consistently return unwanted items. Filtering those customers with high return ratios from your flash sale email list is wise.
If you choose to promote your sale on social media, keep in mind that it’s open season in terms of who could partake in the campaign.
Which leads me to another critical piece to smart flash sales…
Shoppers have become accustomed to a separate set of store policies for flash sales versus a regular sale, so it’s not a deterrent to establish guidelines and restrictions. You can take steps to protect yourself, such as a no-returns policy, or provide same day delivery but not free shipping. The rules are up to you. Design them for your benefit while keeping the customer in mind.
If you have yet to run a flash sale, as with any new business endeavor, start small. Run a mini-flash sale of just a few products for a short period of time. Then run the numbers: sales revenue, website visits, conversions, along with abandoned cart rates and profitability in the areas of upselling and cross selling.
Flash sales have gotten a bad rep, but when executed properly, with forethought and planning, the end result can benefit both you and your customers. Utilizing your data enables you to design the right flash sales strategy for your business, and automation can turn David into Goliath, easily managing a burst in sales and order shipments without breaking a sweat.
Do you want to know more about how automation can help you? Book a call with us – we’d love to tell you all about it!
This article originally appeared on TotalRetail.