Online flash sales as a concept is an unqualified success. The number of sites on the net is increasing almost every day, yet the venture capitalists are willing to invest in startups following similar business model. One Kings Lane, a flash sale site selling designer furniture and other home goods has raised $40 million from venture-capital and private-equity firms led by Tiger Global Management. Doug Mack, the CEO of the site is excited about the fact that the two year old business has been valued at $440 million.
The business is not profitable as yet despite the expected revenue of $100 million this year. The site has acquired a customer base of over two million subscribers over two years. They keep the customers informed about the discounts being offered on designer furniture. These discounts are normally available for a period of 72 hours. The business model has been perfected by the Gilt Groupe and it has become a trend that is still growing. The concept was launched with fashion but has expanded into practically every product category.
One Kings Lane opened up a new category but now faces competition from Fab Inc. which is new in the market and sells modern furniture. Launched just this summer the site has already attracted over 650,000 subscribers. The competition might intensify further as the Gilt Groupe has plans of launching a platform for home goods this fall. The company which is valued at $1 billion has already raised $138 million for the purpose. With the flash sales space getting over crowded and all of them bombarding the customers with fantastic deals, customer burnout is a distinct possibility. The time is not far when a shakeout will result in the number of sites going down to a reasonable number.
Via: onlne.wsj
