Many market conditions have changed in the last 12 months. My key takeaways have been:
1. Almost every country has a clear market leader. The number 1 is in average approximately 40%+ stronger in revenues (examples Turkey Markafoni or Russia KupiViP) and 20%+ stronger in traffic. I do not expect major changes in the ranking of the top three players in each country (except Brazil). As the entire Flash Sales segment is growing, all players are growing. Almost everybody in the markets (even a number 6) seems to be happy. This will continue as long the markets are growing.
2. Capacity in warehouse and logistics is still the biggest market entry barrier.
3. All major clubs are engaged in establishing verticals (see sapato in Russia, styletread in Australia or zizigo in Turkey). The combination of a full price retailer with a flash sales site (both using same capacity in warehousing and logistics) seem to be a powerful combination. Furthermore we observe in many countries market entries into verticals from Rocket internet. Australia, Turkey, Brazil, Russia and some other places. This makes the game even more thrilling.
4. Marketing is changing, the targets are moving from new member acquisition to other online and offline areas of marketing. It seems like that across all countries Facebook has a big role in brand awareness but less in transactions or commerce. Of course, this will change but today, other channels are more important.
5. Technology is still key but includes ERP, stock management systems and internal systems. Every Flash Sales company which is crossing a critical mass (lets say 15 k – 20 k packages per day) understands that all dynamics which have been learned, are changing. Technology is key to overcome the challenges.
6. Flash Sales companies will offer more and more own labels.
7. I have spoken to almost a dozen of Flash Sales sites regarding if and how they buy stocks. Except one of them, all others do not buy stocks or on a very limited level. Especially if they are market leader. My observation was that the follower is buying more than 50% of its revenues upfront… What a risk model change.
8. I have got many inspirations from the last three days and Markafoni will start executing these very soon: Marketing, logistics and customer support… Fascinating. I will keep you posted on this.
Last words on India: It was my first trip to India and thanks to the very successful organization of Harish, Pearl and the team from Fashionandyou, our trip was beautiful. I have recognized why India will be one of the leading countries of the World with China and understood some of the dynamics of this fantastic online market. It was not my last trip 🙂