Flash sale: A limited-time online sales event open only to registered members of a website.
The real-world versions of flash sales—sample sales and invitation-only private sales—aren't new, but the concept came to the Web relatively recently and has been gathering momentum. In February 2008 Forbes magazine wrote about the U.S. pioneer of flash sales, Gilt Groupe, founded in 2007, which borrowed its business model (and possible the spelling of "Groupe") from a French site, vente-privee.com, that had launched in 2001.
Gilt had the territory to itself for a while, but now it's been joined by other "exclusive" sites (a misnomer, because invitations are easy to score) such as RueLaLa (bought in October by e-commerce company GSI Commerce), Totsy, Ideeli, and HauteLook. These sites sell clothing and accessories; others offer home furnishings and even travel packages. All of the sites take advantage of surplus inventory and the retail recession and build demand by limiting "membership" and keeping sales brief—usually two or three days. And they represent a rare bright spot in the retail picture.
From a Dec. 6 article in the New York Times, "Secret's Out: Sample Sales Move Online":
The business model is simple: the sites buy mostly overstocked clothing and accessories from brand-name designers, then discount them deeply. Adrenaline-pumped shoppers rush to get the deals because the items are often gone in a few hours.
The sites try to recreate the rush of a warehouse sample sale, minus the trampling and shoving, but they borrow as much from the Home Shopping Network as they do from Saks Fifth Avenue. After shoppers add an item to their cart at Gilt, for example, they get a 10-minute countdown before they lose the item.
Meanwhile, according to Business Week:
Vente-Privee.com has expanded to Germany, Spain, Italy, and the U.K., and has now worked with more than 600 brands in luxury apparel, wine, home decor, and other areas. In 2007, Boston-based venture capital firm Summit Partners acquired a 20% stake that valued Vente-Privee.com at about $1 billion. Dozens of copycat sites have sprung up in France, fueling a substantial e-commerce industry there.