* Gilt holiday sales up about 30 percent - exec
* Rue La La, HauteLook holiday sales growth approached 50
pct - execs
* 'Flash sales' catch on as a way to shop - analysts
By Alistair Barr
SAN FRANCISCO, Jan 9 Holiday business on
e-commerce websites specializing in limited-time or "flash"
sales grew at least twice as fast as for other online merchants,
according to industry executives and analysts.
Sales at Gilt Groupe, the U.S. market leader, grew about 30
percent over Nov. 22 to Dec. 19, compared to the same period in
2011, according to President Andy Page.
Rue La La, part owned by eBay Inc, and HauteLook,
owned by Nordstrom Inc, generated year-over-year sales
growth approaching 50 percent in the fourth quarter, executives
at those businesses said.
That compares with overall e-commerce growth of 14 percent
this holiday, according to comScore Inc. The
web-tracking firm had expected 16 percent growth, but blamed
weakness later in the season on prolonged "fiscal cliff"
negotiations, which sapped consumer confidence.
"The macro conclusion from comScore was that things were
weak after Thanksgiving, but we had our best week ever the week
after Thanksgiving," said Doug Mack, chief executive of One
Kings Lane, a flash sales site specializing in furniture and
other home goods.
Sales doubled to about $200 million in 2012 and
fourth-quarter revenue rose 25 percent from the third quarter,
in a sector not usually considered by holiday shoppers, Mack
These businesses made a splash after the 2008 financial
crisis, led by Gilt, offering high-end fashion brands at big
discounts in limited-time sales events.
After an initial period of searing growth, interest waned as
investors questioned if the business model could run profitably
at larger scale.
But strong sales growth in the latest holiday season - and
profits at some of the larger players - suggest flash sales have
become established in the retail industry, according to
analysts, investors and executives.
"It lost a lot of its glamour and caused people to worry
about the sustainability of the model, but it has managed to
hang on," said Yoni Yadgaran, an analyst at Wedbush Securities.
"It's reached an equilibrium and the largest survivors are
If the sector can maintain its secret sauce - unique
products and a sense of urgency through limited-time sales or
limited availability - it is here to stay, he added.
OVER $2 BILLION
The top U.S. flash sales merchants, including Gilt, Rue La
La, HauteLook and MYHABIT, generated more than $2 billion in
2012 sales, according to IBISWorld estimates.
Total retail e-commerce reached $186.2 billion in the United
States in 2012, comScore estimated.
"Continued growth of the flash sale category has made it
much more mainstream than it was about four years ago when we
all started," said Greg Bettinelli, chief marketing officer at
HauteLook. "It's a much more accepted way to shop, and even the
preferred way for some people to shop."
IBISWorld's estimate includes Beyond the Rack, a
Montreal-based flash sales company that also sells in the United
States. It saw 2012 sales climb more than 50 percent and is
profitable now, according to board member and investor Shahan
Soghikian of Panorama Capital.
Gilt and Rue La La are also generating profits, according to
executives at the companies. Bettinelli said HauteLook is "very
comfortable with where we are on profitability," but declined to
"Rue La La saw a profitable fourth quarter and profit will
continue through 2013," Rue La La CEO Ben Fishman said. "The
space is here to stay, the business model works and it's now
about making sure we are innovating and executing."
Amazon.com Inc, which started MYHABIT in 2011,
declined to comment on the business' performance.
The rise of mobile shoppers, hunting for holiday purchases
with smartphones and tablet computers, fueled much of the rapid
sales growth of flash sales sites.
This holiday, more than half of HauteLook's Internet traffic
and about 40 percent of its sales came from mobile devices -
more than double the same period last year, according to
"Mobile is a wonderful platform for flash sites due to their
time-sensitive sales and limited quantity items," said IBISWorld
senior analyst Nikoleta Panteva. "If a shopper can hop on a site
as soon as sales start, he or she is more likely to snag a
coveted item than if they were to wait to get to a physical
Zulily, a flash sales site focused on products for kids and
mothers, saw unit sales double during its holiday season,
compared to last year. The percentage of mobile orders grew over
50 percent for the season compared to the rest of 2012, the
company added. A spokeswoman declined to disclose more specific
Fab, which specializes in modern design products, said
fourth-quarter revenue surged 400 percent to about $60 million.
One third of sales came from mobile devices, it added.