Commentary

Should You Flash?

I read somewhere recently that 63% of Americans prefer shopping via online sample sales "because they provide consumers with high quality products at prices they can afford in this economy." I couldn't find the actual research that backed it up, but I did run across a statistic from Kelton Research that said more than three in five Americans prefer to spend their hard-earned dollars on discounted items online than in retail stores.

And when you consider that consumers saved a combined total of around $500 million by shopping via online sales in 2009 and that number was expected to double in 2010, it's not surprising that we're seeing more and more major retailers jumping on the "flash sale" bandwagon.

What's a flash sale? Simply put, it's a time-limited offer for a (typically) higher-than-usual discount. It's the stuff that has made Groupon a nationally recognized word, and it's spawned multiple sites dedicated to selling offers specifically around travel. These sites, like Jetsetter, Sniqueaway, Vacationist, Spire, Youpon and ideeli travel, will soon be joined by Groupon Getaways, what promises to be an interesting venture built on a partnership between Groupon and Expedia.

What's interesting about the evolution of the flash sale in travel is that it's no longer just a mechanism for distressed inventory. At its inception, flash sales were a brilliant way to move such inventory by creating a sense of urgency from a perceived "incredible value" only available for a limited time. For the seller, getting any income from inventory that was likely unsold otherwise was the short-term benefit, and the long-term benefit was the hoped-for conversion from trial to loyalist of a consumer who might not otherwise have sampled your product.

Now, however, the bar is raised. The path laid by luxury goods flash sale sites showed us that there is a strong market for consumers who want to buy luxury but just need to feel like they are getting a better deal than retail. They removed the stigma of the flash sale as simply a warehouse sale/clearinghouse and lit the way for using for the sale of any goods/services we have to offer.

For travel marketers, it means another channel to create trial among an existing, interested and responsive audience. While still a legitimate venue for moving distressed inventory, this has also become an interesting space to safely test different types of packages, offers and price points. The key is creating the perception of a great deal. But the big question is, what's the definition of a "great deal" these days?

Brands using flash sites seem to be experimenting to see what exactly the limits are to what consumers perceive as a great value. Consider an offer on Jetsetter right now for a seven-day surf/yoga retreat in Mexico. The comparison price is $3,319 (as listed on the hotel's website) while the Jetsetter price is $2,795 -- only a 15% savings. A quick look at Travelocity's homepage shows a prominent banner for vacation options at up to 45% off, and Expedia's "Top Deals of the Day" feature nothing less than 20% and go as high as 50%.

Now, the package on Jetsetter is surely a higher-level offering than any of those that are being touted by Expedia or Travelocity. And Jetsetter's user base is likely more affluent than the average user of most OTAs. But the new economy has spawned a new affluent class, one that's willing to spend again, but has a much more keen sense of the value of their money and of the need to be more responsible in its expenditure.

So only time will tell whether the amount of a discount will matter less in a luxury environment: will it simply be the matter of there actually being a discount (not normal in luxury) or will it need to be enough to make something previously seeming unattainable now within reach.

Overall, like any media channel, flash sites need to be evaluated by the audience they deliver, and the packages or offers you test should be targeted appropriately to that audience to ensure your best chance for success. Standing out from other offers may create more interest for yours, so take a look at what's typically on the site and think about how you can differentiate, but in a way still ownable and deliverable by your brand and in a way that creates value for your customer.

And, last but not least, remember that the key to success on these sites is the consumer's perception of high value. Offers you flash should be the most competitive offers you have in your stable.

2 comments about "Should You Flash? ".
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  1. Joe Buhler from buhlerworks, June 27, 2011 at 3:13 p.m.

    For an engaged discussion about the pros and cons of Groupon et. al by travel industry insiders I suggest you visit http://goo.gl/VSvZ1 on Tnooz.

  2. Robert Gilmour from Innfinite Hospitality Ltd, July 11, 2011 at 7:20 a.m.

    'There is a strong market for consumers who want to buy luxury but just need to feel like they are getting a better deal than retail.'

    That's a no-brainer but of itself is no justification for the logic and economic value to suppliers, of these flash selling sites. You are just playing right into their hands.

    There is no pricing or brand protection logic in these sites. Who wouldn't want to buy luxury at a big discount. Luxury product suppliers, don't cave in to this stuff, price for quality ALWAYS, and protect your brand. Exhaust all other channels before your resort to this nonsense.

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