Doing flash sales is good for profit (low inventory, good for sales b/c it's going away etc.) - but limited their overall topline revenue.

The article implies it was because of delivery time. My marginally informed $0.02:

They wanted to become an ecomm giant. But every sale they ran originally was fairly small-batch. One step up from an etsy store. You can't really scale that up. They decided they wanted to go big, and to do so meant holding inventory and selling more mass-produced things.

coz it took average of 16 days for customers to get the item from 3rd party designers, so they figured if they held the inventory themselves they could cut that down. They did, but in that process lost the originality of the small boutique items, and became a commodity shop.

Because they felt their third-party sellers were too slow.