This past week, Fab.com made news once again after its co-founder Bradford Shellhammer stepped down. The departure is a bookend to the ecommerce store’s pivot away from flash sales and into the territory of standard online retail, a la Amazon. In its flash sale heyday, the company raised over $150 million in funding and was valued at around $1 billion dollars. Since the beginning of the year, Fab.com has been going through some rapid downscaling in an effort to be profitable.
Flash sales used to be the next big thing in ecommerce, but somewhere along the line, the business model’s wheels started to fall off. Surprisingly enough, Zulily, an ecommerce flash sale store for apparel designed for kids and mothers, is trying to launch an IPO north of $200 million total value. This seems to be an outlier though, as there’s a lesson to be learned from the Groupons, Fab.coms, Totsys, and the others out there. How did the flash sale business model fall apart?
