Lately the hottest thing in e-commerce is “ClassPass for X,” a trend that combines monthly subscription fees with experiences. (Millennials love experiences, I’m told.) It follows the success of ClassPass, a well-funded startup that sells unlimited fitness classes at participating studios for about $100 a month. There is already a ClassPass for hair blowouts (Vive; $65 per month), massages (Zeel’s Zeelot program; cost varies), and live music (Jukely; $25 per month). It’s too soon to call this new model a fad, but if past e-commerce innovations are any indication, it may not be long for this world.
All of these recent e-commerce models are descendants of the mother of all retail fads: flash sales. With the January acquisition of Gilt Groupe at a painfully low price—it raised $280 million but sold for just $250 million—the model has finally croaked. Flash sales (and its cousin, daily deals) suffered from oversaturation. Copycats drove up the price of acquiring customers, which accelerated startups’ burn rates, and prompted shopper “deal fatigue.” When it became clear in 2012 that Groupon GRPN -1.30% and Gilt would not live up to their soaring expectations, copycats pivoted away from the model. But instead of focusing on the fundamentals (supply-chain management, say, or customer service), many of them simply latched onto the next hot strategy.
With such carnage, it’s puzzling that so many e-commerce entrepreneurs continue to chase buzzy new business models. But the explanation is simple: As long as there’s an Amazon, there will be e-commerce fads. The Jeff Bezos–led behemoth has already won on price, selection, and service. All that leaves is novelty.