The truth behind online sales

Call them flash sales, secret sales or private sales, they all mean one thing: deals that promise heavy discounts for a limited period of time. A concept that is extremely popular abroad, online flash sales have now found their way into India.

But how is an online flash sale different from a store sale that luxury brands and designers often hold? Vehbi Sinan Tunalioglu, CEO, Brandmile.com, an Indian flash sale portal, explains the difference: "While both processes help suppliers liquidate their excess inventory, our main difference (when compared with brick and mortar stores) is the reach that we provide as our customers can buy the merchandise from any part of the country."

But are these 'super-saver deals' as great as the online sellers make them sound? Let's take a look at what lies beneath.

The lure of discounts It's hard not to reach for your wallet instantly when you come across a deal promising a 50% discount. Such heavy discounts are par for online sellers, who even claim to offer up to 70% discounts. But it's tough to determine the genuineness of these. As most sceptical buyers will tell you, sellers often hike the mark-up price and then offer a heavy discount. For instance, a flash sale portal was offering a designer handbag from Coach on 23 February at a discounted rate of Rs 16,999, claiming the original shelf price as Rs 33,525.

Evidently, the rate has been slashed by about 50%. However, when cross-checked on the US retail website for Coach, the same bag was priced at $298 (Rs 14,602). Amazon too had a similar bag which it can ship to India for a total delivery charge of $47 (Rs 2,303). Obviously, your total expenditure would be Rs 16,905. So, would you actually end up saving money if you buy from the sale?

The tag of exclusivity
Indian luxury flash sale portals claim to offer exclusive memberships. However, this is just an illusion. You don't strictly need to be 'invited-in'. Anyone can become a member by registering directly on the portal and then inviting anybody they want. In fact, some websites reward you with credit points each time one of your referrals makes their first purchase on the portal. So, if 99labels.com boasts about four lakh registered users, it would make your 'exclusive access' seem like a pin in the haystack.

Another hitch is that though you'll get trendy designer wear, it's going to be, unfortunately, last season's trends. Most of these sites, such as Fetise.com, mention clearly that they sell previous seasons' garments which have not deteriorated in quality. Other sites, such as Exclusively.in, will offer products from up-and-coming designers like Namrata Joshipura, Anaikka, and Raakesh Agarvwal, who would like to liquidate their unsold and excess inventory through these sites. Abdul Halder, a Bangalore-based fashion designer, says, "Usually, the products offered on flash sale sites are from a designer's existing collection. They often include products that haven't been showcased previously but are included to widen the product range, and, to an extent, make the deal more viable economically." So, if you are coveting a designer dress for less, be prepared to compromise a bit on the 'current season's trends.'

There is no race
Flash sales cash in on the urgency factor. They last for a day or two, or a week at the maximum. The deals are available for a limited time, but, you must ignore the ticking clock before you buy. Says Naina Singh, a 30-year-old advertising executive: "I came across a so-called exclusive deal on a sale portal, which was offering a six-piece Giordano travel combo set for about Rs 7,000, for only three days. I was still trying to make up my mind when the deal got over. After almost a month, I saw the deal again on the same website. What's more, the same set was also being offered under my credit card reward point scheme."

Though most websites feature only a handful of deals at a time, they need to constantly bring out new deals every week. There's no guarantee that their inventory will be sold, which is why the old deals get repeated after some time.

Check whether the product being sold for a limited period is also available on other sites. For instance, at a perfume sale for four days on FashionandYou.com, a 100 ml bottle of Hugo Boss No. 6 eau de toilette was available for Rs 2,975, while the online retailer Perfume2order.com is offering the same product for Rs 2,790. The more interesting part: While the former claims the original price to be Rs 3,800, the latter says it's Rs 4,900. No wonder, buyers are wary of the claims made by most online sellers.

Should you go with the crowd?
Flash sales on a group deal site, such as Crazeal.com and Mydala.com offer discounts on restaurants, trips and events only if a certain minimum number of buyers opt for the deal. So, the first thing you need to check is whether the booking amount will be refunded to you if the deal is cancelled due to a lack of buyers. Some consumer forums have complaints lodged by buyers of how the travel vouchers they had bought from deal sites were not honoured by the hotel or tour organiser, which claimed that they had no vacancies.

This led to the vouchers expiring and a loss for the buyers. However, sale portals are taking measures to resolve these issues. Says Ankur Warikoo, CEO, Crazeal.com: "We have proactively taken steps to review our customer policy which has led to a 90% drop in complaints. For travel deals, the merchant contact is always visible and we have put in place a 100% refund policy on travel deals within 14 days of purchase."

So, check the fine print carefully before opting for a travel deal from any flash sale portal. For how long is the travel voucher valid? Is it inclusive of everything or only the room rate? Will you have to pay a penalty if you cancel after booking?

Flash sales work best for discerning shoppers who can trawl the Net or those who are well aware of the retail store prices. For the newbie who wants to indulge in retail therapy online, it might be better to visit lots of similar sites and compare the prices of the deals before zeroing in on one.

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What You Should Know About Twitter's Data Sales

Twitter users are about to become major marketing fodder, as two research companies get set to release information to clients who will pay for the privilege of mining the data.

Boulder, Colorado-based Gnip and DataSift, based in the U.K. and San Francisco, are licensed by Twitter to analyze archived tweets and basic information about users, like geographic location. DataSift announced this week that it will release Twitter data in packages that will encompass the last two years of activity for its customers to mine, while Gnip can go back only 30 days.

"Harvesting what someone said a year or more ago is game-changing," said Paul Stephens, director of policy and advocacy for the Privacy Rights Clearinghouse in San Diego. As details emerge on the kind of information being mined, he and other privacy rights experts are concerned about the implications of user information being released to businesses waiting to pore through it with a fine-tooth comb.

"As we see Twitter grow and social media evolve, this will become a bigger and bigger issue," said Graham Cluley, senior technology consultant for British-based Internet security company Sophos Ltd. "Online companies know which websites we click on, which adverts catch our eye, and what we buy ... increasingly, they're also learning what we're thinking. And that's quite a spooky thought."

Twitter opted not to comment on the sale and deferred questions to DataSift. In 2010, Twitter agreed to share all of its tweets with the U.S. Library of Congress. Details of how that information will be shared publicly are still in development, but there are some stated restrictions, including a six-month delay and a prohibition against using the information for commercial purposes.

That's where DataSift comes in. More than 700 companies are on a waiting list to try out its offering, DataSift CEO Rob Bailey said in an interview with Reuters. Those who buy the data will be able to see tweets on specific topics and even isolate those views based on geography. Bailey, who is based in San Francisco, said the effect is something like holding a huge number of sporadic focus groups on brands or products.

For instance, Coca-Cola [COKE  Loading...      ()   ] could look at what people in Massachusetts are saying about its Coke Zero, or Starbucks [SBUX  Loading...      ()   ] could find out what people in Florida are saying about caramel lattes. Companies can also look at how they have responded to consumer complaints.

Gnip, which offers the short-term data package, said the information collected — which involves real-time viewing — can also be used during natural disasters to help rescuers, to monitor illnesses such as a flu outbreak and to analyze stock market sentiment.

No private conversations or deleted tweets can be accessed, Bailey said. Companies want aggregated data, not to try to figure out who said what to whom. "The only information that we make available is what's public," Bailey added. "We do not sell data for targeted advertising. I don't even know how that would work."

A digital analytics expert said the biggest impact will be for marketers. "The only privacy risk is marketers being able to do more with the data, faster," said Thomas Bosilevac, director of analytics for the digital marketing company Digitaria.

That doesn't mean everyone has to be happy about this. "It's frustrating, and telling, that now marketers have greater access to my old tweets than I do," said Rebecca Jeschke, digital rights analyst and spokeswoman for the non-profit Electronic Frontier Foundation. "However, this is perfectly legal, if creepy. If you publish your tweets publicly, that allows all sorts of folks to do all sorts of things with them."

For people concerned that something they said will come back to haunt them, it's not too late to go back and delete old tweets. DataSift is required to regularly update its files to remove comments that have since been deleted. Unlike when you're looking for someone else's tweets, users can always see their own simply by clicking on the word "tweets."

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Strong Sales for Some Retailers, for Wal-Mart a Dividend

Another "comp" day has come and gone, but unlike most monthly retail sales days we saw beats across the board.

David Paul Morris | Getty ImagesRetailers posted strong sales on Thursday, helped by mild weather, which encouraged shoppers to buy spring clothing.

Well, with the exception of Kohl's [KSS  Loading...      ()   ] . There is always one in the crowd.

In any case cheers to the weather, which helped February's results.

The biggest news of the day was Gap. (Who doesn’t love an underdog sales story?)

Gap [GPS  Loading...      ()   ] proved all those naysayers wrong with positive comparable store sales, or comps, a key metric that measures sales at stores open at least 12 months. Gap's sales not just had a plus sign in front, but it was a gain of 4 percent.

Yes, that color in the stores and the better fabrics in its clothing are driving its business. And I am sure weather did not hurt. Not to mention, a little cat-and-mouse game it played by not revealing how well things were going on last week's fourth-quarter conference call. While I have been touting the response to Gap's new products during my store tours, Gap faked me out on the magnitude of this one.

And now onto other good news, although not as shocking to the system as Gap's.

Nordstrom [JWN  Loading...      ()   ] and Ross Stores [ROST  Loading...      ()   ] both put estimates to shame and came in almost two-times the Street's forecasts.

The high-end consumer still has plenty of steam, while the off-price players are capturing share from the middle players. Some are lost in transition — J.C. Penney [JCP  Loading...      ()   ] — and some just lost — Kohl's.

The Middle Ground

But Macy's is an exception. The department store chain [M  Loading...      ()   ] beat with a 4.6 percent same-store sales increase versus a 3.5-percent estimate from the Street. This comes after a disappointing January. However, even a light January did not keep the company from raising numbers.

Let's face it Macy's is the outlier of the mid-tier players. Training, localization of product and a focus on the omnichannel approach has paid off with consistent comps.

On the other end of the spectrum there is Kohl’s. The company's comps fell 0.8 percent in February versus an estimate of breakeven results. But to be fair, the company did tell us the February comp would be worse than first-quarter guidance of 1 percent. Analysts may not have taken the cue far enough.

Going forward, this is a back-half weighted comp story with renewed pricing efforts. I am not worried for Macy’s quite yet.

Wal-Mart vs. Target

Target [TGT  Loading...      ()   ] put up a 7 percent comp for February with food, apparel  and accessories above company average (cheers to the weather), and household essentials, home and hardlines all increasing. Target no doubt had a little help from the weather, but that is not the whole story. Exclusive product, including the Jason Wu intro in February, as well as momentum in its effort to remodel stores are internal drivers.

But if you can’t give investors favorable comps,  give them dividend growth.

Wal-Mart [WMT  Loading...      ()   ] reported U.S. same-store sales of 1.5 percent for fourth quarter (We do not know how February fared because the company no longer reports its sales on a monthly basis). The fourth-quarter sales were disappointing and raised questions about when its investment in keeping prices low was having the desired effect. While traffic turned positive, last quarter's results were simply not enough.

On Thursday, Wal-Mart suggested its U.S. business is “back on track” and raised its dividend by 9 percent. (WMT raises every year). While returning cash to shareholders is always a welcome move, consistent comps are the key — especially with the backdrop of strength reported today.

Stacey Widlitz is the President of SW Retail Advisors Inc. She has worked at UBS, SG Cowen, Fulcrum Partners and in 2005 was one of three analysts to launch the Research Department at Pali Capital, where she covered Retail and Home Video for 5 years.

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Detroit automakers race to keep up with sales

DETROIT (AP) -- Auto sales are growing so fast that Detroit can barely keep up.

Three years after the U.S. auto industry nearly collapsed, sales of cars and trucks are surging. Sales could exceed 14 million this year, above last year's 12.8 million.

The result: Carmakers are adding shifts and hiring thousands of workers around the country. Carmakers and parts companies added more than 38,000 jobs last year, with industry employment averaging 717,000 for 2011. And automakers have announced plans to add another 13,000 this year, mostly on night shifts.

But there's a downside. The newfound success is straining the factory network of the Detroit automakers, as well as the companies that make the thousands of parts that go into each vehicle. This could lead to shortages that drive up prices.

And it also has auto executives in a quandary. They got into trouble in the first place largely because their costs were too high. Now, they fear adding too many workers.

Ford, for instance, is "squeezing every last component, transmission, engine out of the existing brick and mortar," says Jim Tetreault, vice president of North America manufacturing.

Still, the hiring surge bolsters the argument of those who supported the federal bailout of General Motors and Chrysler in 2008 and 2009. The bailout has been a major issue in the days leading up to Tuesday's Michigan Republican primary.

And the hiring is good news for communities around the country that saw hundreds of thousands of manufacturing jobs disappear. Starting in 2005, GM, Ford and Chrysler closed 28 factories and eliminated 88,000 jobs. Parts companies cut another 234,000.

Now, if sales hit 15 million by 2015, as some experts predict, the three Detroit automakers could hire another 20,000 people, predicts Sean McAlinden, chief economist for the Center for Automotive Research in Ann Arbor, Mich.

"You can only squeeze so much out of the same amount of people," says Itay Michaeli, an auto analyst at Citi Investment Research.

Laurie Schmald Moncrieff, president of a small parts-manufacturing company near Flint, Mich., says when demand for auto parts collapsed, she shifted production to parts for companies in green energy, aerospace and defense.

Now, automakers and other parts suppliers have her on speed dial, trying to line up everything from fuel pump parts to tools that make hoses. She just added six workers and may hire another five. "I see tremendous growth coming in the near-term," she says.

Like many parts suppliers, she's having trouble finding people with the skills to run machinery in her plant.

The hiring binge couldn't have happened at a better time for Michigan. Many of the new auto jobs came around the Great Lakes where the Detroit Three have most of their factories.

The bailout that helped bring the jobs could be a deciding factor in who wins the Republican presidential nomination. Both front-runners, Rick Santorum and Mitt Romney, opposed the bailout, and Tuesday's Michigan primary will show whether Romney damaged his chances in his native state.

Romney stuck to his stance on Monday, saying in an appearance on Fox News that President Obama favored the United Auto Workers union in the bailout. The president "was paying off the people that supported him and that, by the way, are trying to get him re-elected," Romney said.

But in a state where unemployment was above 14 percent just three years ago, any jobs are welcome. And Michigan is not the only region to benefit. Ford is adding positions in Louisville, Ky., Chicago and near Kansas City, Mo. Chrysler is adding jobs in Belvidere, Ill., and General Motors is hiring at plants in Tennessee, Kentucky, Texas and New York.

New jobs with auto companies don't pay as well as the old ones. Under union contracts, companies can pay new hires around $16 per hour, a little more than half the pay of longtime workers.

Foreign carmakers are also shifting production to the U.S. because of higher sales and the weak dollar, which cuts the profits they get from selling vehicles exported to America. Nissan is adding workers in Tennessee. Toyota just hired staff at a new plant in Blue Springs, Miss. Honda is hiring in Alabama and Ohio. Hyundai and Kia plants in Alabama and Georgia are running flat-out but can't meet demand for some models such as the Hyundai Sonata and Elantra.

The sales rebound comes with risks that are familiar to Detroit. Crank up production too much and carmakers have to sell vehicles at deep discounts. Boost production too little, and companies could run short of vehicles such as pickup trucks. And even if they find the right balance now, automakers are leery of raising long-term costs by adding plants and workers.

Six years ago, Detroit's automakers were losing billions, in part because they had too many plants and workers. And union contracts forced them to pay workers even if plants were shut down. So automakers kept the factories running regardless of whether vehicles would sell in order to cover expenses. They built too many cars and trucks and sold them cheap, sometimes at a loss.

Now, they're doing everything they can to keep costs under control.

Growth is putting the squeeze on Hyundai and Kia factories. But the affiliated companies will build as many vehicles as possible at two U.S. plants before constructing a new factory. John Krafcik, Hyundai's U.S. CEO, says the first choice is to find areas inside the plants that are slowing the assembly lines and fix them, "because plants are expensive."

GM also will try to handle growth by stretching factories, says North American President Mark Reuss. But he thinks the company will have to hire more workers if sales this year reach 13.5 million or beyond.

Auto factories in North America will reach 90 percent of their capacity if sales hit 14 million, says Michael Robinet, managing director of IHS Automotive Consulting, which forecasts auto production.

The lack of factories, though, could cause automakers to run short of pickup trucks this year, says McAlinden.

Detroit automakers, which dominate truck sales, had far too many pickup factories just seven years ago. They have closed eight truck plants since 2005, removing the ability to build 2.25 million pickups a year. With only nine North American pickup plants left, they may have cut too much, McAlinden says.

Last year Americans bought 1.8 million pickups, an 11 percent increase over 2010, as the economy improved and small and large businesses began replacing their aging vehicles. Pent-up demand is fueling the sales. The average age of a truck on U.S. roads has reached a record 11 years.

If sales increase as projected, companies also could run short of compact cars and small SUVs.

It adds up to what could be a challenging but profitable year for the industry, says Schmald Moncrieff, who runs the Michigan parts factory.

"A lot of things are going to start breaking loose all at once," she says.

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Chinese Firm Seeks Halt of iPad Sales in Shanghai

A Chinese technology firm sought to halt the sale of Apple's iPads across the affluent city of Shanghai, arguing at a local court hearing on Wednesday that the U.S. firm had infringed on its trademark.

Previous court rulings in favour of Proview Technology (Shenzhen) have covered specific retailers in smaller cities, but a Shanghai order, if imposed, would eat into one of Apple's biggest markets in China.

Proview lawyers argued, at times emotionally, that an immediate halt of iPad sales be implemented in China's commercial hub, which is the home to three of the country's five Apple [AAPL  Loading...      ()   ] stores.

Apple defended its right to use the trademark in China and said Proview had no ability to produce or sell its own device under the same name.

"Proview has no product, no markets, no customers and no suppliers. It has nothing," Hu Jinnan, a partner at Guangdong Shendadi law firm, which is representing Apple in the case, told the court.

"Apple has huge sales in China. Its fans line up to buy Apple products. The ban, if executed, would not only hurt Apple sales but it would also hurt China's national interest."

The Shanghai Pudong New Area People's Court has not said when it will issue its decision, but Roger Xie, a partner at Grandall Legal Group representing Proview, said it was likely to be soon. Apple would in any case have the option to appeal should it lose.

Highlighting the strong interest in the case, some 100 reporters gathered around the court building while the hearing was taking place. Some local residents took the opportunity of the media attention to voice their own grievances over local authorities, holding up banners in front of the assembled TV cameras.

Series of Court Battles

Proview says it owns the iPad trademark in China and a Shenzhen court ruled in its favour last December.

Apple disputes Proview's ownership of the trademark, saying it bought the rights to the name in China from Proview in 2009. The firm has appealed against the Shenzhen judgment, with a higher court hearing set for Feb. 29 in China's southern province of Guangdong.

Following the Shenzhen case, Proview has launched a multi-pronged approach to get Apple's iPads off the shelves in the world's second-biggest economy, with mixed success.

Xie reiterated that Proview is open to settle the case out of court with Apple.

"Both sides have willingness to negotiate," Xie told reporters outside the court.

"Official negotiation hasn't started yet, and both sides will submit their plans before the talks. A settlement outside the court is quite possible."

Apple's iPad has a huge lead over rival tablet PCs in China, with a 76 percent market share. It has three Apple retail stores in Shanghai, with the two other flagship stores in Beijing.

But it is not only the consumer market in China that is important for Apple because the country is also a major production base for the iPad and other Apple products.

Proview, a financially troubled technology company, has already petitioned Chinese customs to stop shipments of the iPad in and out of China, although authorities have indicated such a ban would be difficult to impose.

Over the past week, Proview's efforts have borne fruit as local media reported that some cities have started enforcing Proview's request to remove iPad.

Proview's lawyers said last week it had won a lawsuit in the southern city of Huizhou against a retailer selling Apple's iPads, possibly boding well for its case in Shanghai. Proview's parent, Hong Kong-listed Proview International [0334.HK  Loading...      ()   ] , was the first Taiwanese technology company to list in Hong Kong and by the end of the 1990s numbered itself among the top five computer monitormakers.

In 1999 it partnered with U.S. chip maker National Semiconductor to launch the I-PAD, a stripped-down desktop computer whose main selling points were itsInternet connectivity and ease of use.

Proview continued to grow, shifting from computer monitors to become the world's third-largest OEM manufacturer of flat panel TVs. But by August 2009, when Apple began trademark talks through a proxy, Proview had been badly hammered by the financial crisis.

Trading of its stock was suspended in Hong Kong in August 2010 after creditors in China went to court to recover assets. The company faces delisting in June if it cannot provide the Hong Kong Stock Exchange with a viable rescue plan.

Copyright 2012 Thomson Reuters. Click for restrictions.

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