Alibaba, the Chinese online retailer, has moved to increase its foothold in the US by building a stake in a website that runs “flash sales”.
What are Flash Sales Sites & How do they work?
Say you have a dozen retailers each with 10 products that went unsold previously. Rather than as a business, having to consider, plan and deal with a new sales operations to offload the excess stock, businesses have instead been finding profitable ways to sell the complete merchandise. Making full use of “Alternative Markets”.
The complete unsold stocks would often be bought at an agreed price to be sold on a different market. For example: Buy discounted merchandise in the US and sell it in Eastern Europe.
Sales Process in short:
Flash sales teams develop a huge targeted potential buyers database, test these potential buyers to find the ideal product mix and then buy unsold inventory for resale a large discounts.
Alternatively, they attract potential customers to several discount offers which become active only once a certain number of buyers is reached.
Alibaba´s holding:
Alibaba now owns 9.2pc of Zulily, according to filings by the US Securities and Exchange Commission.
“We have great respect for the team at Alibaba and all that they have built,” Zulily CEO Darrell Cavens said in a statement. “We are honored to welcome them as shareholders of our company.”
Known for hosting flash sales of products, ranging from home décor to fashion, Zulily Inc., valued at $1.5 billion, has in recent months been suffering, evidenced by a 40% decline in their share value.
Whilst other investors have recently fled from Zulily who became publicly listed since late 2013, Alibaba has chosen to invest.
Zulily shares are down sharply from their height of approximately $70 in February 2014, at which time far stronger growth was reported.
On the 5th May 2015, Zulily reported weaker-than-expected quarterly sales, driving shares below $11. Following a sharp rise to $16 in Mid May, Zulily shares have since settled to $13.62, rising from $13 at the beginning of June.
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