Here is how Flash Sales Help Companies?

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What do stores do with excess stocks when the demand for the same product declines in market A ?

Or what do companies do with products which are slow moving ?

Yes you guessed it right , they turn to a tactic which has been working since ages when the charlatans used to sell ( they still do but now they are called brand ambassadors) all those health tonics and what not from the road side stalls.

Tactics are same as were centuries ago, the only thing that changed is the venue of sales. Road side stalls have transformed into flashy showrooms or online markets.

Just as old time charlatans used to ascribe unique slogan to sell their ware like "xyz herb is in it or a snake oil is put into it" to sell their wares, now the marketers use phrases like "Exclusive" "small time offer" or aha "Limited Edition product" or a product on the "occasion of blah blah jubilee of the company we are selling these products".

And guess what customers come like sitting ducks to partake of such mouth watering , wallet emptying offers giving little thought to whether they need the product in question at all.

One of objectives of any sales, irrespective of nomenclature used, is to sell excess stocks lying at company warehouses.

Other objective of flash is aimed at getting new customers. Existing customers can be persuaded to buy more or upmarket products in future, thus increasing the customer life time value.

Image:freepik

 Realizing very well that customers buy more during ‘sales events', companies now mark up MRP of their products. They only reduce prices of their products during sales by only% by which products have been marked up.

This tactic help companies not loose much during sales events. In fact the flash sales events just enable companies to earn less profits. That's it.

The other objective of flash sales is to utilize the purchasing power of the customers by inducing them to buy their products , thus lowering the chances of the customers shifting to or buying the competitor products. It is master stroke of companies to block competitor from gaining market share.

Flash sales help companies to release working capital held in inventories.The working capital, thus released us used to produce more goods.It does make sense to optimize working capital held up in stocks to fund production of products for next upcoming season.

Raising working capital at excess rates from financial institution is never a good idea when companies can release  working capital held in excess stocks of salable or unsalable products.

 Are you aware of any other reason why companies resort to flash sales, then please share your thoughts in the comments.

© 2019 All rights reserved.
Disclaimer: Opinions expressed are my own and not the views or opinions of my employer .

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