Sold in a flash

Flash-sale sites are hot property right now but the approach they are taking to expand their business and retain customers long-term differs greatly.

The January sales period is a busy time for all retailers, but flash-sale websites such as BrandAlley, Achica and Secret Sales effectively run hundreds of sales every month, so they need an always-on marketing approach to match.

The flash-sale model is simple: the ecommerce sites work with brands to shift their unwanted or surplus stock, which they sell to members for a massive discount, but for a limited time. 

It is a model that has been gaining traction in the UK for the past five years and as a result Achica and Secret Sales have both just been selected as part of Future Fifty, the year-long Government-backed programme for high-growth technology businesses.

And they are in good company, sitting alongside the likes of Just Eat, Hailo and Zoopla, which together represent what Tech City deems the most promising tech-based start-ups in the UK.

“It’s a programme of support from the Government and private enterprise for companies that have the potential to become key tech-based businesses of the future,” says Mark Hodson, chief marketing officer at Achica.

The initiative is designed to support the selected businesses in some of the more strategic decisions they have to make, such as which markets to enter and who to hire at a senior level, as well as everyday tasks like accounting.

“The growth we’ve experienced has been phenomenal,” claims Hodson, who says Achica has invested heavily in its marketing strategy from the outset and now has more than 3 million members. “But at the same time we’re still relatively small, and although we’re growing fast it’s from a small base, so we have some difficult choices to make.”

Secret Sales has also been experiencing rapid growth after realigning its marketing strategy 15 months ago, and chief marketing officer Robert Moss is equally positive about the Future Fifty opportunity too.

He says: “We’ve got a few programmes lined up this month and as the year progresses we’ll be opened up to lots of information-sharing, best practice advice and networks of expertise, which will be immensely valuable.”

We joke about developing an anti-Amazon algorithm because if you buy a product for your pet, it doesn’t mean you only want to buy pet products

Secret Sales has seen a 70 per cent rise in top-line growth since launching its first TV ad at the end of 2012, while its membership base has jumped by 50 per cent, hitting the 3 million mark last year.

“We’ve gone into the market focused on return on investment,” says Moss. “The beautiful thing with a dotcom is that you can monitor performance, so within a few minutes of a TV spot running we can then see how many people have registered and what their subsequent behaviour is over the next week or two. From that set of data we can predict what the potential lifetime value of those customers will be.”

Secret Sales has worked with a number of third parties in addition to building analytics tools and functions internally to enable it to model and understand data. 

BrandAlley has also invested heavily in overhauling its website and the mechanics behind it to provide a clearer view of data, in addition to improving the customer journey and enabling it to start shipping internationally.

Its marketing and PR director Melissa Littler says: “We’ll be adapting our communications strategy based on the data we hold. We’ll still be focused on building our brand and making sure we acquire like-minded members but we’re hoping to get a lot more granular behind the scenes.”

BrandAlley UK, which completed a management buyout last year, has just embarked on its first TV marketing push, the main goal of which is to raise brand awareness, but it has the added bonus of driving acquisition.

In the test period alone, new member registrations doubled compared with the same period the year before, according to Littler.

“We had a broad and wide test strategy,” she says. “We didn’t leave any stone unturned, so we understood everything at a micro level.”

The message in the ad itself is a lot more precise though, and focuses on the BrandAlley ethos of helping consumers “get a designer lifestyle without having to go to extremes”, rather than the brands it sells.

“We could have gone down a product-specific route and constantly changed the content, but the effort and cost involved in doing that would have been quite prohibitive,” Littler concedes.

Hodson agrees that although the technology is there to use real-time feeds and show off specific products it is not very ROI-friendly and does not fit with the company’s business model.

“A lot of the brands we sell want to do it discreetly, so shouting their name and price across a TV ad isn’t really what they are looking for,” he explains. ”They’re happy for us to recruit members, but discretion is an important part of the model.”

brand-alley-ad-2014-460
BrandAlley has overhauled its website and launched its first TV campaign to raise awareness and attract new customers

Achica is much more specific about the brands it sells in other communications however, which it plans to make a lot more personalised over the next 12 months.

“As we mature we are gaining a lot more information about our customers, so even though we’ll be spending a lot of money on TV and seeking to acquire customers we’ll spend an equal amount of time and effort on becoming more targeted,” Hodson adds.

But as Achica’s research shows, that discovery of new products and brands is one of the main attractions for consumers – and it is important to find a balance.

“We’ve joked internally about developing an anti-Amazon algorithm, because if you buy a product for your pet, that doesn’t mean you only ever want to buy products for your pet. We’re going to do a lot more personalisation this year, but we still want to offer that element of inspiration and discovery.”

Secret Sales has focused heavily on personalising its email marketing approach too, and now generates between 7,000 and 9,000 email variations each day, with content based on customers’ behaviour. It will also be further refining its TV model.

“This will partly be around traditional ads and sponsorship, but we will also be doing some more innovative, experimental work,” says Moss. “There is the opportunity to micro-target our audience through digital channels, based on where they are in the UK and what they’re watching, in addition to what we know about them.”

Secret Sales has also invested in editorial content, which it houses in The Secret section of its website, where members can find buying guides, trends and competitions across fashion, beauty, interiors and lifestyle categories.

“It means our retention rate for active customers continues to grow,” says Moss. “We’re also seeing a strong lifetime value for those customers as they keep coming back.”

Achica’s Hodson also realises the value of content and over the next six months will be looking to integrate it further into the main site rather than keeping it in a separate blog.

“If there’s a promotion for Dualit toasters and you want to learn more about the brand, you’ll be able to do that without searching separately,” he says. “We also hope to start including designer interviews and product demonstrations.”

An alternative approach

While Secret Sales, BrandAlley and Achica have all invested heavily in advertising and marketing, French-owned flash sales business Vente-Privee takes a very different approach in terms of its advertising and its business strategy in general.

Rather than being a consumer-facing business, global marketing director Julien Zakoian classes Vente-Privee as a B2B company, so the brands it houses are its number one priority.

“Everything we do is about the brands,” he says. “With every new business [arm] we launch the aim is to provide a new service for the brands. But when we give that service to the brands it also adds something for our members.”

Across Europe, Vente-Privee is the biggest company in the market, having just hit the 20 million-member mark. But in the UK it has just 600,000 members, compared with Secret Sales, BrandAlley and Achica which all have around 3 million.

Zakoian says that Vente-Privee will not be changing its marketing strategy to boost sales in the UK, however.

“We’re not going to run a big TV advertising campaign, that’s for sure,” he says. “Our focus continues to be the offer because we believe there’s no better way to increase membership, drive traffic and make sure people come back in the longer term. If you drive a lot of traffic to your website but people are disappointed by the offer, you will lose everything.”

Vente-Privee’s marketing instead focuses predominantly on word-of-mouth and creating great offers that people want to talk about and share. However, social media is not high on its agenda.

“We don’t think social media is key here,” says Zakoian, “because in general it’s not a place where people really want to engage with brands. People tend to use social media to talk to their friends and share pictures, not to look for promotions. Social media can be great to make our message more viral, but when we embed social media into our strategy people see us coming.”

Vente-Privee is set to launch a new business in the UK, called Rosedeal, in the first half of this year, linking online with offline by driving traffic to brands’ stores.

“Instead of selling products we’ll sell discount vouchers online that can be used in-store, which [helps the] brand deliver traffic to its stores as well as raising brand awareness,” explains Zakoian.

No matter which business model the members-only businesses follow, considering their high growth potential – and backing from the UK Government in Achica and Secret Sales’ cases – it is a retail model that is anything but a flash in the pan.

Total unique visitors per month

UK

Achica – 359,000
BrandAlley – 265,000
Secret Sales – 187,000
Cocosa – 111,000
Vente-Privee – 93,000

Europe

Vente-Privee – 5,865,000
Achica – 430,000
BrandAlley – 268,000
Secret Sales – 201,000
Cocosa – 115,000

Source: comScore

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