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Yesterday, former flash-sale site Fab laid off an addition 101 workers in an attempt to shed its former deal-oriented identity and to help position itself on the path to profitability. It's clear that consumers are tiring of the flash sale model because what used to feel special no longer does and the sales these sites offer are starting to feel fishy. As one Gawker commenter points out, plenty of "deals" are nothing of the sort. Take, for example, the gray chair above. It retailed on Fab for $545. You'll pay just $205 for it on Overstock.com.
Do a little digging and you'll find price discrepancies all over the site. This ring, for instance, retails for $24 on Fab (marked down from $28, they trumpet). Yet the manufacturer has the same ring in black for $22. Not only is the Fab ring marked up a bit, it was never on sale in the first place. Here's a bigger price gouge: this a silver wire bowl by Alessi costs $108 on Fab but goes for a mere $84 on All Modern and Amazon.
Occasionally, though, you'll come across a deal. This leather tote by Rib & Hull goes for $245 on Fab while the retailer is selling it for $300. It seems harder to up prices on women's items (perhaps because women comparison shop online, or maybe due to market saturation). But price jumps in home goods are easier to spot, and Fab's not the only one guilty of the practice. Gilt, for example, is selling this nuLoom overdyed hand-knotted rug for more than $1,500 while Overstock offers an almost identical rug from the same brand for $709.99. At least in Gilt's case the manufacturers have given them what appears to be exclusive patterns and colors that make it harder to Google search for cheaper options.
In an article in this week's New York Magazine, One Kings Lane founders Alison Pincus and Susan Feldman revealed one of the secret's behind their site's success. Their home goods are hard to trace—often the brand name isn't even provided—so comparison shopping isn't an issue.
Sites like Overstock and Amazon have bargain-basement prices for a number of reasons—market clout being one of them—but also because they have a different business model than the Fabs of the world. Instead of trying to make a lot of money off each transaction, they're volume-based operations that try to keep items as close to wholesale cost as possible. To that end, maybe it's not fair to expect sites like Fab to be able to keep up on the pricing angle. What they're offering is a point of view, and if they are able to shrug off the discounter cloak completely, it won't feel like they're trying to trick customers.
· Flash Sale Sites Sell The Same Crap for Lots of Money [Kinja]
· Fab's Flash Sale Workers Got the Pink Slip Today [Racked]