Flash Sales companies are spread around the World and it’s worth to have a look at them how 2011 went. I am focusing only on those types of Flash Sales companies which are active in the Fashion Business (aka Private Shopping Clubs). And I am reducing the analysis on those Flash Sales companies which are active in more than one country and are in the top 10 list according to their monthly visits in December 2011 (all figures are from comscore – many thanks for sharing). The only exception are the US players as they act in the most important eCommerce market, I have included also the US Flash Sales companies which made it into the top 10 (but only act in the US).
Business Insider wrote a big article about the US Flash Sales market and they are very right in saying “Flash sales are one of the fastest-growing e-commerce segments online. The only reason you aren’t reading about it every day is it’s been overshadowed by an even faster-growing e-commerce innovation — daily deals — but flash sales are a real, enormous market”. Yes, they are right, Flash Sales are a real market and not only in the US. Let’s have a global view on Flash Sales:
The undisputed leader is Vente-Privee. They had in December 2011 28.7 M visits. Breathtaking! Vente-Privee is leading in almost any kind of ranking among Flash Sales sites. But beside their leadership in terms of numbers, they have the most focused strategic point of view among all Flash Sales sites among the world. The experience of Vente-Privee with Flash Sales is more than anybody else (VP has invented this format long time ago in 2001) and all others are good or bad locally adapted versions. Their view on the cooperation with their brands, in creating capacity (in-house) and increasing the conversion of their members to buyers is something admired by all others. Vente-Privee is acting in France, Germany, İtaly and now in the United States.
The number two is Markafoni from Turkey, the country of Digital Darwinism. Markafoni had 15.9 M visits in December 2011 (only Turkey, only Flash Sales site. The other countries where Markafoni is active are not taken into the analysis as Turkey is the most important market). Markafoni is also the strongest growing Flash Sales among the top 10 (139% YoY based on Total Unique Visitors). The Total Page Views of Markafoni are worth to mention. In December 2011 Markafoni had 391 M page views which is slightly higher than even Vente-Privee’s page views. This is due to the wide selection range of Markafoni. Markafoni might be the only Shopping Club, beside of Vente-Privee, which is EBİTDA positive.
The number three is Privalia, acting in Spain, Brasil, Mexico and İtaly (numbers for all these countries). Privalia experienced a very strong growth in the last years but it seems that they have slowed down in 2011 in terms of the Unique Visitors growth. But their countries provide them still a big potential for growth.
Number four is KupiVİP, the Russian Tiger. They are acting in a very difficult eCommerce environment (cash on delivery share very high, weak logistic structures in Russia) but they are doing very well. They also have the second highest Unique Visitors number for December 2011 but with a low visits per visitor multiple.
BuyVip (acquired by Amazon) and the US players follow KupiVİP. Remarkable that the Canadian Beyondtherack is catching up so well. The number 10 in the top 10 list is the Brazilian Brandsclub with operations in Latin America.
The top 10 list of Flash Sales players would be different if we would rank everybody by revenues. Vente-Privee would be still undisputed No. 1 with 1 B EUR revenues but I would assume that the US Players would have made the positions after Vente-Privee. But this might change as the economies in Turkey, Russia and Brazil are recovering very fast and strongly.
Flash Sales is a great and real market and it is driven by non-US companies. I believe that we will witness cooperations on a strategic level but also on a sourcing level between the companies among the top 10 list. Furthermore, getting profitable (and stay profitable) will be one of the industry’s main challenges. Even this list is focusing on players with activities in more than one country, there are many others in each country that will also grow and challenge the market leaders.
Some of the Flash Sales companies (not necessarily from the top 10) are turning the risk model from consignment into upfront purchasing. This might make sense if you are active in an area with very difficult sourcing structures (like Arab countries) but I am not a big believer of upfront purchasing as this is changing the dynamics. It doesn’t make sense if you are in a country with strong delivery networks (so all competitors are delivering already very fast). And it causes new problems like the leftover management which is always a big challenge.
Most likely, we will also experience a new area of vertical eCommerce sites, founded by the Flash Sales players as they have the capacities to manage the leftovers from the vertical sites with the benefit of realizing higher margins.
2012 will be a key year for Flash Sales. Profitability, Globalization and Diversification are the key challenges.