Are Flash Sales Still “Fab”ulous?
Venture capitalists, including Skype co-founder Niklas Zennstrom, have invested another $105 million in Fab.com Inc., a sign investors still see potential in the business of luxury “flash sales” even as growth rates slow and profits remain elusive.
Flash sale sites try to replicate the frenzy of designer sample sales by offering luxury products and other goods at deep discounts in sessions that can last just hours. When they broke onto the Web a few years ago, start-ups such as Gilt Groupe Inc., Rue La La and HauteLook Inc. were hailed as the next big thing.
But some smaller players have since closed and bigger flash sites have laid off workers. And most of these online retailers have yet to turn a profit, leading some observers to see them as a recession-era phenomenon whose time has passed.
