Should you harness the power of the Flash Sale?
A flash sale is a restricted sale of products or services, usually limited by either time or stock availability – 24-48 hours only, or ‘when they’re gone, they’re gone’! Most flash sales involve big price cuts on single items, but some also utilise strategies such as Buy-One-Get-One-Free (BOGOF), free insurance, extended warranties, or free credit.
The most famous examples of flash sales are Black Friday and Cyber Monday, which many of the larger high street and online retailers get involved with. However it is possible for you to organise your own individual flash sale to suit your own business needs and your customers’ spending patterns.
Businesses can use flash sales to achieve a variety of different results. Perhaps you are carrying too much old stock and want to make place for new stock? Perhaps you need to increase your cashflow at a certain point in the year? Maybe you’re just looking to increase brand awareness, and know that offering big discounts will get everybody talking?
In a flash sale scenario you will be selling at below your normal market price, but if handled correctly you can end up making more money overall, as well as achieving your original intended result, as your existing customers buy more items than they would otherwise have done, and new customers are attracted in to make purchases for the first time.
However, a flash sale is not always the answer to every problem, and you should be aware that there are risks involved. As with everything in business, these risks are compounded for SMEs and Micro-Businesses with less loss-absorption capacity than the bigger firms.
Advertising a flash sale costs money, so you need to be confident that the returns will cover these additional costs, as well as bringing in enough revenue overall, and achieving your initial proposed result.
During your flash sale you may need more employees to cope with queries, sales, and distribution, and that of course costs money, which again you need to be confident that you can cover.
For internet-based businesses, a flash sale can cause a website crash of epic proportions as all your customers try to buy from you at once. Before embarking on your flash sale you should be certain how much traffic your website can handle before you advertise your sale, and if necessary stagger it over several hours so that different deals are released at different times.
Customers get caught up in the moment and make impulse purchases during a flash sale – which for us as businesses is kind of the point! But that also means that it’s inevitable that there will be some customer returns, so this is an overhead that you need to prepare for in your pricing structure, particularly if you normally offer free returns through the post.
It’s also worth remembering that while a flash sale can be a great way to increase brand awareness, if you use this strategy too regularly, it can also raise questions about why your product isn’t that cheap all year round. This could lead customers to believe that your product or service is poor quality or overpriced when not on sale. Flash sales are therefore most effective used sparingly to fix short term issues, rather than frequently as a regular part of your sales strategy.