February 27, 2014, 11:02 AM

Flash seller NoMoreRack.com aims to keep explosive holiday momentum alive

The Top 500 e-retailer grew online sales 300% during the holidays compared with 2012. Now NoMoreRack has to make sure it survives in a challenging limited-time sale industry.

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Sales soared for NoMoreRack.com Inc. during the recent holiday season, but CEO Deepak Agarwal tells Internet Retailer he plans to carefully control spending in check in 2014 as he seeks to remain among the surviving online flash-sale retailers at a time when some rivals are falling by the wayside.

The web-only flash sale retailer of electronics, jewelry, clothing and other discounted products is coming off an impressive holiday season. The fourth quarter of 2013 brought in “explosive” revenue of some $160 million, Agarwal says, nearly three times the revenue for the same period in 2012, and 60% more than the $100 million it brought it in all of 2012. December alone accounted for some $75 million worth of sales, he says, again about three times higher than the same month in the previous year. He adds that some 30% of the e-retailer’s revenue, in total, is coming through the mobile channel.

Part of that growth came from increased investments in paid search and television commercials, which helped NoMoreRack acquire new buyers. “We really ramped up marketing,” he says. “Television during the holidays was a big driver.”

Not only was it a strong holiday season for NoMoreRack.com, but it’s been a busy couple of years, as the merchant has grown to a $350 million business in less than three years, according to Agarwal. In fact, since its founding in 2010, the merchant has grown on average 1,573.7% per year, the highest compound annual growth rate of all flash-sale and daily-deal operators in the Internet Retailer Top 500 Guide. NoMoreRack’s 1023.6% year-over-year sales growth in 2012 trails only the 2086.06% growth posted by Groupon Goods, the direct-to-consumer retail sales arm of the online voucher operator, according to web-only merchant data from Top500Guide.com. 2013 figures for Top 500 retailers will be released in late April.

But 2014 promises to be a year of intense competition for NoMoreRack, as some rivals raise large sums to finance expansion while others are falling by the wayside. Among those retreating from the flash-sale model of offering consumers deep discounts on limited-time sales are Totsy.com, which went out of business last year, and Fab.com, which has laid off large numbers of workers and shifted away from short-term sales to a more conventional online shopping model.

Among the survivors with money to spend is Zulily Inc., No. 77 in the Internet Retailer Top 500 Guide and which sells apparel, toys and other products for women and children. The retailer in late 2013 raised $235 million in an initial public offering. The company just reported net sales of $695.7 million for 2013, 110% growth over the prior year.

Meanwhile, One Kings Lane, a web-only flash-sale retailer of home furnishings that is No. 120, earlier this year raised $112 million in private investment. That brought its fundraising total to $229 million since the company launched in 2009.

And some others are still getting in the game. In November 2013, for example, Overstock.com Inc., the mass merchant that is No. 31 in the Top 500 Guide, launched its own flash sales. Overstock.com’s “Flash Deals” start at noon Eastern and last 24 hours, and feature a variety of products including watches, luggage and bedding supplies.  

The key for NoMoreRack.com in 2014 will be in keeping overhead low, he says. “In the next 12 to 14 months, only a few will survive. Our goal is to always deliver the best value.  The only way to do that is to keep overhead low, so we can pass on maximum savings on to the consumer. “

One way NoMore Rack keeps cost low is by limiting headcount, Agarwal says. NoMoreRack employs about 65 workers, far less than some of its competitors. By contrast, zulily had 950 employees as of late 2013. And Fab.com last year laid off 100 employees worldwide—that includes 84 in New York City—leaving it with about 440 full-time workers at the time.

Agarwal doesn’t rule out a public offering a stock but doesn’t say one is looming, either. “We want to keep our options open,” he says.

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