When HauteLook's morning email popped up announcing a sale on Kate Somerville skincare, Casey felt a flutter of excitement. Never mind that she was barely half way through a tube of ExfoliKate and had another waiting under the sink that she'd purchased during a different promotion. Kate Somerville on sale! Within minutes Casey had added $125 to her credit card balance for a new jumbo tube of a product she won't need for at least nine months. She wasn't alone ExfoliKate sold out in 90 minutes. Says Casey, "I knew it would sell out fast, I'm glad I got mine!"
Flash sale sites like HauteLook, Gilt Groupe, Rue La La and Ideeli are part of a new breed of retail that's busting budgets and rekindling a shopping frenzy in an otherwise more sedate consumer culture. In 2010 these four sites alone generated more than $900 million in revenue. This year the concept has exploded. Consumers can now find everything from wine to luxury vacations offered flash sale style on sites ranging from retail giants like Amazon and Orbitz to boutiques on Facebook.
On the surface these sites seem like an opportunity to buy a coveted item with a discount. But in reality, shoppers are often buying things they don't truly want or even need and spending money they'd rather have saved.
Flash sale sites require preregistration. Emails are sent to registrants about an hour before the start time of the sale announcing that day's deals on a limited supply of high-end merchandise. Once the sale begins, shoppers can see items selling out as they browse. On most sites, once you put something in your cart you have a limited amount of time to purchase before it's returned to inventory and made available to other shoppers.
Pam strategizes with a partner -- each starts on a different part of the website so that they can snap up popular items before other shoppers have the chance. Pam admits that she has several items in her wardrobe that she hasn't worn yet and a credit card balance she can't pay in full each month -- and yet she's hooked. "I really look forward to the email to see what's on sale, and I've gotten some fantastic bargains."
Flash sale sites are designed to tap into the most vulnerable aspects of our shopping psychology. Here's how:
Ally, who has recently sworn off flash sales said, "I found myself hunting for something to buy instead of buying something I needed." Ally's nailed it. Shoppers on these site are often overly focused on the hunt and bargain, and under-focused on their need for the product.
Products are vaulted into the purchase consideration part of the brain. While many shoppers are avoiding the temptation of malls, flash sales are exposing shoppers to products they often didn't know they wanted. They're then forced into a hasty purchase decision through shotgun starts and immediate purchase requirements. This is far more dangerous than malls. It isn't browsing, it's a constant requirement to mentally evaluate whether or not to buy.
Competition with other shoppers inspires a sense of urgency and excitement that's often accompanied by autonomic nervous system arousal which clouds thinking. Amber remarked, "Sometimes when the boxes come I can't even remember what I've ordered! I think I get pretty frenzied when I'm shopping." It takes 20 minutes to regain full mental control once your brain has gone into excitement mode. No wonder there is a 15 minute requirement to buy on most of these sites.
Amber also says that she often returns items that aren't quite right and acknowledges that she's lost money on shipping charges. It's not just shipping charges that are costing flash site enthusiasts money. Most flash sales have a return policy of issuing only store credit rather than a refund. Shoppers spend store credit more freely than new money.
Flash sales have awakened the animal spirits of competitive shopping in a bargain-hungry nation. If you're among those who can't resist the allure of the flash sale there are a few of things you can do to at least minimize potential damage:
- Make a list of what you really need or want and don't buy anything that's not on that list. Beware the psychological landmine of competition and urgency
- Give yourself as much time as you can before you hit the buy button
- Consider the possibility that you are flash sale shopping because you're bored, anxious or lonely and address that problem
- Keep your credit card balance taped to your computer screen as a reminder to stay focused on the spending part of the equation -- not just the hunt and the bargain