This news definitely indicates the increasing popularity of the flash sales phenomenon. Retail chain Nordstrom has made a new, very high-profile acquisition. The chain has bought over flash sales website HauteLook. The price is a cool $180 million in Nordstrom stock and a three-year earn-out amounting to about $90 million. Flash sales site HauteLook has raised a decent $41 million by way of funding.
HauteLook had launched as a flash sales site in 2007. Since then the site has grown considerably, expanding its member base to some 4 million members. That in itself is testament to the rising demand for members only, online sample sales. HauteLook organises sales that offer massive discounts across the broad segments of fashion, accessories, toys, travel, home and beauty.
It is a simple business module. What happens is that designers and retailers offload their excess inventories to these sites over several days. The discounts on these items range between 50 and 70 percent. Just the news a shopaholic would love to hear. However, the catch is that these sales are only open to members who get notified via email. The only ways to wrangle a membership are by getting invites from members or by putting in a request through the flash sales site.
Flash sales sites have become major money-spinners in the recent past, which explains the sum Nordstrom paid for HauteLook. RueLaLa had been purchased two years ago for $350 million, while Gilt Groupe had been valued at $400 million not too long ago. It is a competitive area, and one that is attracting interest from the likes of Saks and eBay.