The time between 11 a.m. and noon has become the new witching hour for the latest generation of stylish shoppers. At their desks, in the backs of cabs or waiting in line at the airport, they eagerly watch their emails for the telltale call to spend. One day, the message reads "Fall’s look of luxe! Up to 70% off this season’s staple pieces. Plus, check out what’s just in today!" Another e-blast tempts them with promises like, "Up to 65% off T by Alexander Wang!
Plus, just in: Matthew Williamson, Marni and more." A day later and they up the shopping ante further by offering, "Emanuel Ungaro! Up to 80% off bold, beautiful style."
These are just a sampling of the hard-to-resist almost-daily offerings from TheOutnet.com, Net-A-Porter.com’s flash-sale website that sells discount designer fashions. But the most dedicated online shoppers don’t rely on only one source when it comes to getting their retail fix; aside from The Outnet, they’re trolling RueLaLa.com, HauteLook.com, Gilt.com and BeyondtheRack.com in search of their next great steal.
Fashion’s once-exclusive sample sale has moved from the warehouse(for insiders only) to the Web (for anyone with a credit card and a desire to spend). Any initial resistance to buying online is clearly on the wane. In Canada, online spending is expected to reach $18.5 billion in 2011-a 12-percent increase from 2010-and by 2015 it will nearly double to $30.9 billion, according to Emarketer.com.
Recent figures from Statistics Canada indicate that the most common types of online purchases are travel services; entertainment products (such as concert tickets and books); and clothing, jewellery and accessories.
But the business opportunity that is generating all the buzz is the flash sale. South of the border, Nordstrom Inc. recently acquired the top flashsale site HauteLook.com, while Amazon’s MyHabit.com is going head-to-head with eBay’s Fashion Vault (fashionvault.ebay.com).
More on flash-sale sites on the next page…
Meanwhile, Saks Fifth Avenue has just launched its own flash-sale site, SaksFashionFix.com, and American Express is bringing Vente Privee.com-the billion-dollar-a-year French website that pioneered the flash-sale concept-to the U.S. market before the end of the year.
Shoppers who want to avoid the shipping fees and extra duty costs associated with these flashy south-of-the-border offerings head to BeyondtheRack.com. The Montreal-based flash-sale site-which was launched in 2009 as a four-person startup-now has 240 employees, 4.5 million shopper members and $100 million in annual sales. It also earned the top spot on Internet Retailer‘s 2011 list of the continent’s 500 largest e-tailers. But it’s not the only e-shop in town; over the past six months, other flash-shopping sites, like Dealuxe.ca and ThePeacockParade.com, have joined the race to cater to online Canadian customers.
One potential downside to flash sales for retailers is that they have made the concept of full price "very fuzzy," says Paco Underhill, author of What Women Want and Why We Buy. "We get so addicted to the sale that it’s hard to understand why a blouse that costs $250 in September is being discounted for $100 in January," he says. "What’s it worth in the first place?" Case in point: At a recent flash sale on ThePeacockParade.com, BCBGeneration sandals that normally sell for $125 a pair were on offer for $29, and a $2,250 Gucci bag was only $599. On Beyond theRack.com, a pair of $385 Rock & Republic crystal-studded pumps were discounted to $99.
"The excitement of getting a time-sensitive deal has massive appeal across virtually every market category, whether it’s a coupon for a can of beans or a designer outfit," says Bridget Brennan, CEO of the Chicago-based strategy firm Female Factor and author of Why She Buys. "Getting a deal has become like a game for many people. Can you win by being one of the first few people to seize the deal? Can you tell your friends about it later? There’s a lot of adrenaline that comes from feeling like you’ve beaten the system."
More about online shopping and compulsive spending on the next page…
For some, however, that adrenaline rush blossoms into compulsive online
shopping. "Research suggests that the Internet is a strong trigger for compulsive buyers-even more than stores," says April Benson, a New York-based psychologist who treats shopping addicts. "The variety of products offered by flash sales, the ability to buy unobserved and the emotional rush this generates on any given day is the hook. The limited time offer-and the fear that they may miss out on something-also triggers them to buy."
Results from a 2009 survey of more than 300 online shoppers, conducted at Virginia’s University of Richmond, found that compulsive buyers spent 50 percent more on fashion online than they did at traditional retail stores, whereas noncompulsive shoppers reported no difference in the amount they spent on clothing between online and physical retail environments.
The results-which were published in a study in the Journal of Retailing-concluded that the online environment is the trigger for consumers with compulsive buying tendencies. Being able to shop anonymously 24-7 and quickly buy whatever they want at the one-click express checkout leads to instant gratification.
This year, the researchers published additional data that shows that it’s not just the ability to buy online that lures the compulsive shopper but also the prospect of buying well-known brands on sale and the pleasure of being able to take advantage of a promotion or get a great deal. They also found that compulsive buyers place more emphasis on buying prestigious and national-brand products and report experiencing significantly more pleasure from getting a deal than non-compulsive buyers do.
Benson believes-and hopes-it’s only a matter of time before shopping websites begin to feature information about shopping responsibly.
"I know it might seem like a conflict of interest, but we do it with tobacco and liquor and I think we need to do it with shopping sites where people are prone to overdoing it."
Tips on getting a good online deal on the next page…
But, says Underhill, when it comes right down to it, we are responsible for our own
shopping behaviour. "We can’t look at merchants and blame them for our shopping habits," he says. "We don’t blame the Domino Sugar Company for obesity. We don’t blame Labatt for alcoholism. If you spend more money than you can afford, it’s your problem."
Discounted name-brand products
Usually of-the-season brand-name items at discounts of anywhere from 30 to 90 percent off, but, increasingly, sites are also offering out-of-season merchandise and products created specifically for flash sales.
Private membership and viral invitations
Most flash-sale sites offer membership by invite only, but they typically offer incentives to current members to sign up their friends. BeyondtheRack.com (where anyone can sign up online) and ThePeacockParade.com offer a $10 incentive to members for each person they invite to join who goes on to make a purchase.
Timing is everything
Flash sales typically start at the same time every day and run for a limited time, which increases the speed at which people react to deals and spread the word about sales virally to their friends. During these sales, some sites, like BeyondtheRack.com, use a reservation time buffer, so an item placed in your cart won’t sell out by the time you complete your order. Other sites, like TheOutnet.com, don’t have a time buffer, which encourages shoppers to complete a transaction immediately.
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