But losses mount for the home furnishings e-retailer that went public in October.
Modnique.com is the latest web-only retailer rethinking the flash sale model.
Apparel and accessories e-retailer Modnique.com built its success on flash sales, selling a small number of branded products through 36- to 72-hour-long events, says CEO Einaras von Gravrock. Since its founding in 2010, the merchant has grown more than 90% per year and it now operates five offices in four countries, and employs 300 people.
But the merchant is shifting its business strategy away from the flash-sale model as it prepares for its next stage of growth, he says. In addition to limited-time sales of select brand-name items, which it calls its “Events” business, a new “Shops” section of Modnique.com offers a larger permanent selection of products. Shops include Women’s Shoes, Men’s Apparel and The Dress Shop. Shops purchases ship within 72 hours to more than 150 countries, whereas items from the flash-sale side can take several weeks, depending on the supplier, von Gravrock says. Modnique usually takes ownership of items it sells through flash sales, but the supplier has to ship items to Modnique first, then Modnique ships orders to the customer.
“We saw a need from our customers to buy in a more traditional way,” he adds. “When you shop our limited-time events, it’s inspiration shopping. We push out deals via e-mail and shoppers come to buy. With Shops, it’s more of a pull-style experience. Whenever our customers need a necklace, heels, a bag or a watch, we want them to know we have those things too.”
The results thus far are encouraging, Modnique says. Sales from the Shops portion of the site are growing quickly, though von Gravrock wouldn’t disclose specifics. Customers shopping this area spend 15% to 20% more than on flash-sale purchases, he adds.
Modnique is the latest in a string of retailers moving away from the flash-sale business model. In August, flash-sale e-retailer and social shopping merchant Sneakpeeq Inc. shut down in order to work with suppliers to offer more products and faster shipping times. Sneakpeeq says the shut-down is temporary, but offers no details on a plan for reopening.
Fab.com Inc., which grew to a $150 million a year company in two years using the flash-sale model, has been steadily abandoning the strategy as well in favor of selling products for a longer time Fab has laid off workers in Europe and expanded its fulfillment capacity so it can own more inventory and ship to customers faster.
In June of this year, Modnique acquired the assets of Totsy.com, a struggling flash-sale merchant of baby and mom products, for an undisclosed amount. Modnique now sells kids’ apparel and accessories in its Shops section and Events section. Modnique says it was already planning to get into the baby category when it heard in June about Totsy’s plans to lay off its employees.
“We reached out to them and were able to come to a deal,” he says. “We would have built it ourselves, but that particular opportunity came about and we’ve been pretty successful with it. We’ve been able to convert quite a few of their customers and we are continuing with educating Totsy customers about Modnique.”