It seems that everyone and their brother is starting a flash sale website - why can't you?
Well, there's the issue - there are SO many flash sale websites out there, how can you get another one off the ground? It's not so hard mechanically to build one, it's hard to get mindshare, and even harder to do it profitably. The mega flash sale company The Gilt Group (as well as Rue La La and Lot18) just did a round of layoffs as they aren't achieving profitability like they thought - even with a ton of sales throughput. In this business, margins matter, and the margins on discounts are razor thin.
I speak to flash sale subscribers every day and more and more of them are telling me they are unsubscribing from their daily emails - essentially forgetting about the service - because they're inundated with too many mails, too many sales, too many products to buy.
When there are only a few flash sale sites, it's easier to navigate the landscape. All the products seem good, there aren't too many emails, and the quality is high. We've gone so far off the deep end with shop, shop shop all the time, and it's starting to reach it's overhyped peak. How many discount massages or workouts do you really need each week?
And now, even the national media companies are offering their own "local" deals, too, thinking they can get their media consumers to sign up to buy from them, rather than buy directly from the vendors advertising with them. Why go through a media-company-middleman who has no experience in this arena? Anyway, I digress. If you feel you really need to jump on the flash sale bandwagon, you can make some money, or at least get your site and audience to the point where it's a nice acquisition target for Groupon or LivingSocial, who love to purchase smaller companies to grow.
#1. The first step to starting a flash sale site is: have an angle. Don't do what everyone else is doing - if it's not interesting and unique, don't bother. Find a niche that has a big enough audience and is underserved by the current players. It could be a geographical niche, demographic niche, product niche or something else, but you can't expect to win without something that's a little different in this crowded market. You need to give people a reason to sign up for your service over everyone else out there.
#2 Your website. People have to buy from somewhere - your website is where they will they manage their email subscription, keep their credit card on file, see their shipping status, and make those purchases. The flash sale website is your central communications tool, so make sure it's customer-centric and customer-friendly. My advice is find a great product manager with proven e-commence experience to design it to be simple, easy to navigate, and easy to check out with the goods. Even though it's a single-product system per purchase, the basics of landing page optimization, user pathing and checkout optimization.
#3 Which comes first, the product sources or the audience? Definitely the audience. You need to start somewhere - with an opt-in email list so you have a base to start selling to. The right lists can be hard or expensive to come by. You could pay on a per name basis through email co-registration programs, market directly to other peoples's lists and try to gather responses, run a contest or two that you promote through social media, buy a list on the black market - there are a quite a few options. You need a few thousand subscribers to start, at a bare minimum, assuming that you know that those people are really interested in what you plan to sell them.
#4 Decide on frequency. You need to determine out how many deals per day or per week you're going to offer at the start, so you can align your sales team (you?) to schedule at least 2 weeks in advance of the sale. You could go with one per week - that's not too few. Quality is the most important factor, in the beginning, middle and end. Volume is important when you're established, but quality is your first priority. People won't buy things they aren't interested in and aren't a good deal. It's bad when they don't buy once, but not performing two or three times in a row will cause you will lose your captive audience - they will unsubscribe.
#5 Products. Getting vendors to supply products for your flash sale is a true sales job - it's especially tricky when you don't have a (large) audience. When you go to your first set of vendors with the pitch of 'We don't know how many we'll sell because we haven't tried yet.' you won't get a lot of takers. Talk it up, give them great terms - don't expect to make money on any of the deals until you have a rhythm going. Make sure there's something in it for the vendors - give them a reason to play.
#6 There's more... but that's it for now - check back for more details on staring your own flash sale website.