Retailers ready for tonight’s online flash-sale Click Frenzy: Does deep discounting win new customers?

Keen Australian shoppers have their fingers poised above the keyboard as retailers go for deep-discounts as part of tonight’s flash-sale Click Frenzy Mayhem, which will kick off at 7:00pm.

Click Frenzy is Australia’s answer to the popular Black Friday/Cyber Monday sales that run during November in the United States, where thousands of retailers provide heavy discounts on items to entice hordes of shoppers in to purchase.

Read more: Alibaba’s Singles’ Day in China racks up $23 billion in sales: Should Australia run its own e-commerce discount fest?

Click Frenzy is an online-only sale, but the premise is similar to the US and its popularity with retailers is increasing. Grant Arnott, chief executive and founder of Click Frenzy, told SmartCompany the sale has landed another 54 participating retailers since last year, taking the total number of brands involved to 216.

The online sale got off to a shaky start in 2012 after the company underestimated the number of shoppers hoping to grab a bargain, with the website crashing and leaving retailers and shoppers in the lurch. At the time, advertisers who spent upwards of $50,000 on campaigns said they were “extremely disappointed” with the sale.

However, retailers have since told SmartCompany they’re not concerned about potential dropouts and are instead focused on what the sale gives to customers.

One brand involved this year is Smart50 alumnus and online fashion store Showpo, and founder Jane Lu tells SmartCompany the flash sale is a chance for the store to expand its market.

“We tend to do very well when we do site-wide sales, up to $250,000 a day, so we don’t want to be on sale that much,” Lu says.

“Click Frenzy gives us a chance to reach a new demographic and a different market, as everyone’s jumping on the hype they might shop at stores they wouldn’t usually shop at.”

It’s a similar story for online vinyl retailer Vinyl Destination, which is participating in its fourth Click Frenzy event this year.

“The reason we do this is we have found it’s a proven way for us to reach out to a new audience. Prior to that, the only way people found out about our online record store is through word of mouth, organic search engine traffic, a modest social media presence and a few Google ads,” manager Mark Mebalds told SmartCompany.

“We only participate in the Click Frenzy events twice a year but find sales very strong on the day and then continue fairly strongly for a week or two afterwards.”

Lu says her business tries to hold back the number of sales it does due to the popularity of events like Click Frenzy. Despite the success of involvement in these events, Lu says they can also cause some challenges.

“We hold back how many sales we do a bit because our sales numbers are getting so high it really impacts our stock levels,” she says.

“Shoppers always want a flash sale, so we figured if we’re going to do it at any time we’d do it now.”

“Fear of missing out” a strength for retailers

Customer behaviour specialist at People Patterns Bri Williams believes flash sales are highly popular because of the age-old concept of “the fear of missing out”.

“They work off the principle of scarcity. If consumers think something’s not going to be around forever then they’re more likely to buy it,” Williams told SmartCompany.

“Retailers typically lead with significant markdowns which attract people to the website, and if they can see how much the item is marked down from the original price it communicates the discount and makes them feel really good about the purchase.”

Williams believes flash sales can bring big benefits for businesses but notes the challenges some can face around holding enough stock, saying retailers should be careful as to avoid an “angry mob” situation.

“With big discount items, consumers care if they miss out, so retailers need to carry enough stock to prevent an angry mob. Customers will be less likely to buy if they feel like they can’t get the deal or they’re wasting their time,” she says.

The approach taken by Lu at Showpo to limit the number of flash-sales is the way to go. believes Williams. Meanwhile, the “everyday low prices” model without big sales tends to work best for habitual purchases.

“People will always like the sense of winning and the good dopamine rush it provides, so that’s where these flash sales are a big benefit.

“The value of a big event like Click Frenzy is that retailers and consumers can go to extremes as they know it’s just a one-day thing,” she says.

“Flash sales are the counterpoint to the rise of convenient retail options like Amazon, as consumers still enjoy the serendipitous ‘hunter-gatherer’ purchase events like these, so they should continue to pick up traction.”

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