You can’t escape them - spend some time online and you’re more than likely going to encounter flash sales and daily (or weekly) specials in some form. They can can come in the form of an ‘app of the week’, Kindle daily deals, or any of the hundreds of offerings from dedicated deal sites like Groupon or Living Social. They can even infiltrate your Newsfeed or Google searches (indeed, Google offer the appropriately named Google Offers). Deals encompass everything from discounted e-books to cheap vouchers for hotel stays.
A recent report from the New York Times examines how effective daily specials on Amazon e-books are. Gone Baby Gone, for example, leapt from 23 digital copies sold one day to over 13,000 sales the next as a result of a ‘flash’ sale at €1.50 - less than a third of the usual price.
Publishers suggest both positive & negative effects to such a surge in sales, alongside the obvious one-off revenue boost and front page promotion. Critics suggest sale prices could make consumers more reluctant to purchase ‘standard’ priced goods. The profit margin on a flash sale is tiny, even in the low-cost digital sphere. In some ways a deal should be seen as a form of marketing for a company’s wider range of products.
Indeed, some book publishers report a long-term increase in sales as a result of the increased attention garnered by a rapid uptake. An author’s other works could also see a surge in popularity. Deals can even be used for charitable purposes too: gaming Humble Bundles see earnings split between developers and charity through an adjustable 'pay-what-you-want' sales model.
Many Irish retailers have embraced the opportunities afforded by deal sites. The Irish Times report Xtravision sold over 13,000 €1 rentals, while Cineworld managed 3,000 ‘two-for-one’ tickets. The fact that so many businesses continue to offer their discounted wares suggests that it remains an effective approach.
Too good to be true?
However, the business model is by no means a guarantee of financial success, and there have been accusations of oversaturation. Boards Deals, a sister-site to the popular boards.ie and adverts.ie, shut down with the claim that “both deal quality and interest in deals has deteriorated across the board”. They maintained the site was still profitable but were finding it more difficult to arrange quality offerings. Even with the most reputable sites misleadingly advertised or low-quality products can slip through the cracks. That’s not to mention the risk of fake or scam sites & offers.
In the worst case scenario, a deal could even destroy a business if they’re unable to successfully meet demand. One Australian seller told the Sydney Morning Herald “the deal sellers are always pushing for a really big deal, but that can be financially crippling to the vendor. There needs to be strict rules regarding the uptake of the deal.” Last year saw reports of one American spa struggling to cope as they waited for funds to be released from Groupon.
A business considering offering a deal should be certain they can meet demand, and set strict controls and limits to ensure they’re not overwhelmed or left in the financial lurch as a result of selling too few or too many discounted products. They should be fully aware of the rules of the chosen deal site. Customers, meanwhile, are well advised to research the products and companies involved - don’t let the ticking clock pressure you.
Businesses and customer beware, so - the benefits of a flash sale don’t come without a range of risks. But every customer loves a bargain, and retailers & service providers are increasingly keen to stand out from the crowd (if only for 24 hours). No doubt that for the foreseeable future the deals will very much be on.
