2,100-word blog for Hive: Black Friday 2023: Pros and cons
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As Black Friday approaches, the question on every e-commerce merchant's mind is whether they should participate or not. What started in the US has now become a significant part of the European e-commerce calendar.
July 31, 2023
Black Friday proves to be a lucrative revenue day for many e-commerce brands. However, it is essential to recognize that not all e-commerce brands are the same; each has its unique business model, and Black Friday might not be suitable for every Direct-to-Consumer (D2C) brand.
In this blog, we'll explore the benefits and drawbacks of participating in Black Friday. By understanding these aspects, you'll be better equipped to make the right decision for your e-commerce brand as the big day approaches rapidly.
5 reasons why Black Friday is a great opportunity for your e-commerce brand
According to Fly High Media, more than $40 billion was spent online during Black Friday 2022. It was more than any expert had predicted. The big spending on discounted items has largely been attributed to the worldwide cost of living crisis as shoppers tried to bag bargains and save money.
For many e-commerce brands, Black Friday 2022 boosted average order spending. This is backed up by a Fly High Media survey, which found that the average spend on Black Friday deals in 2022 was up by €20.03 compared to 2021. As reasons to participate in Black Friday go, this is a huge incentive for many e-commerce retailers. Here are a few more:
1. New customer acquisition
The high volume of shoppers looking for bargains on Black Friday and Cyber Monday creates a great opportunity for your e-commerce brand to attract new customers. People are ready and willing to shop, and will actively seek out new products and deals on the day.
Offering irresistible deals with eye-catching advertising can lead to an influx of first-time buyers that potentially convert to repeat customers. Black Friday is an opportunity to attract deal seekers, drive impulse purchases, and build brand awareness.
Even if a potential new customer doesn't purchase during your Black Friday event, they might think about your brand in the future.
2. Give people a chance to try your products for less
To win new customers, you have to give them a reason to buy from you. Reducing the price of certain products during Black Friday, which would otherwise be out of reach for some shoppers, gives people a great incentive to try them. Not only do they get a bargain, they get to experience your brand and the quality of your products.
Think of Black Friday as giving customers a taste of your products at discounted rates, shoppers recognizing their quality, and then going on to pay full price at other times throughout the year. You can offer deep discounts, product bundles or even doorbuster samples that enable customers to indulge in items they've been eyeing for a while.
3. Boost your revenue after the summer slump
Black Friday is a great way to get your revenue back on track if you've experienced a summer slump in sales. According to Digioh, e-commerce brands can see gross sales drop by as much as 30% during the summer months.
In fact, more e-commerce brands are actually bringing forward their Black Friday deals to combat slow summer sales, while trying to tempt shoppers to bring forward their Christmas spending. Why? Because for many shoppers, Black Friday marks the beginning of the holiday shopping season, and they use the event to buy Christmas gifts.
You can take advantage of this to quickly boost your revenue following the summer dip.
For 2023 in particular, Black Friday carries greater significance for your e-commerce brand because shoppers are holding out for bigger discounts to save money before Christmas - certainly as the cost of living continues to rise.
Equally, you can leverage Black Friday to cross-sell or upsell items at discounted rates, potentially encouraging customers to buy higher-priced products. This can lead to increased average transaction values.
4. Clear your summer and autumn inventory
According to a CBC News broadcast, many e-commerce retailers offer bigger and longer Black Friday sales to shift excess inventory. If you want to clear out the last of your summer and autumn stock before Christmas, an extended Black Friday event is an ideal way to shift more items. Extending your sales event gives shoppers an extended buying period to bag a bargain.
Whether it's excess inventory or outdated products, you can offer discounts and run promotions to clear items that customers might have hesitated to buy at full price. This will allow you to introduce new stock in time for Christmas.
5. Boost brand loyalty
Black Friday is a great way to reward your loyal customers with early access to exclusive deals. This helps to strengthen brand loyalty while creating a sense of urgency, because if there's one thing that tempts shoppers to buy more than anything, it's FOMO - Fear Of Missing Out.
According to a study by Compare Metrics, 73% of shoppers express FOMO when searching for products online. You can leverage FOMO to good effect. For example, you could send out early access links to exclusive offers via email campaigns or apply an extra discount for customers who already subscribe to your emails.
Shoppers won't want to miss out on the discount, so they will buy more to get access to whatever deal you're offering.
Perhaps you've got a new product that you're launching. Black Friday is an excellent opportunity to offer new items exclusively to loyal customers first, at a discounted price. This can create excitement, while increasing the likelihood of a purchase.
These are just some of the reasons why it's worth your e-commerce brand participating in Black Friday. However, you might be thinking that these reasons don't fit your company's ethos and values.
While Black Friday offers many opportunities for e-commerce retailers, it's not without its challenges.
5 reasons why your brand might choose not to take part in Black Friday
1. Sustainability
Unfortunately, Black Friday doesn't have the best reputation when it comes to sustainability. Over consumption, excessive packaging and increased shipping movements and waste, have called into question Black Friday's sustainability.
Shoppers are increasingly buying from brands that prioritize sustainability. None more so than luxury shoppers. According to a Retail Times survey, 93% of luxury shoppers consider sustainability when making a purchase.
However, according to Forbes, while shoppers demand more sustainable products and shipping formats, senior retailers seemingly don't see sustainability as a priority.
Nevertheless, the tide is slowly turning when it comes to Black Friday and sustainability with major e-commerce brands leading the way to bring change. For example, during Black Friday 2022, eBay announced that it would only be promoting pre-owned and refurbished items, and that stockists looking to discount new stock will need to look elsewhere.
Ebay's approach is all about brand positioning and image. If you're positioning your e-commerce brand as a sustainable alternative to other companies, you need to hold true to those values.
Your existing customers and community are watching, looking to your brand to uphold the sustainability promises you've made. This means they might be against Black Friday, and could consider it unethical if you take part.
2. It may not fit with luxury brand positioning
If you're a luxury e-commerce brand, you might be loath to discount your products for the sake of Black Friday for fear of looking less high end. You're not alone. There's a fine line that you must walk when running a sales event, and it's not just when Black Friday rolls round.
However, with an uncertain economy to contend with, even wealthier shoppers are being cautious with their money. But Black Friday doesn't mean you have to drop your dignity or status. Affluent shoppers tend to make purchases based on relationships and value personal attention when it comes to their shopping experience.
You could offer a personalized, online or in-store shopping experience to your customers as part of a Black Friday extravaganza.
3. You have a high CAC or low margins
If you have a high Customer Acquisition Cost (CAC) or low profit margins, you might question how discounting your items to participate in Black Friday will benefit your business. It is a risk to reduce the cost of a product, especially if your first time buyers don't come back for more, because this means you could actually make a loss overall.
However, you're caught in a rock and a hard place. While you might generate more sales, it doesn't necessarily equate to higher profits because of the level of discount you've had to apply. You need to decide how much you can realistically discount.
Equally, if you don't discount, but your competitors do, you risk losing sales to your rivals. It's a classic risk vs reward conundrum.
If you'd rather not offer outright discounts, try including a free gift once shoppers spend a certain amount. This means you can still encourage buying without having to discount high ticket items.
4. You've got a high return rate
Black Friday sees a higher return rate than any other time during the retail calendar year. According to Motesque, 1 in 3 shoppers will return a product that they bought on Black Friday. This means that an estimated 30 million items are sent back to stores.
Your returns process can actually cost you more, making Black Friday more of a hindrance than a help to your e-commerce store. The problem is made worse if you don't have a reverse logistics setup. This leads to high waste and can be immensely time consuming.
Returns are inevitable. However, if you get your returns strategy right, you can still win Black Friday. Flexible return options, such as refunds to gift cards or live exchanges are a great way to try and save a sale, while offering customers convenience and choice.
5. Inventory balancing
There's no guarantee that your Black Friday deals will lead to products flying off the shelves. This creates a problem… too much inventory. This becomes a bigger issue as you approach Christmas.
The Black Friday event is unpredictable when it comes to sales. You need to manage your inventory very carefully because you could be left lumbered with less popular products that are difficult to shift.
Then there's the other end of the spectrum. A product you have discounted is so popular that you run out fast. If you don't have the infrastructure to replenish stock quickly, you risk losing Black Friday customers completely, and that can be bad for business. Not only will shoppers leave empty handed, you could be on the receiving end of an unhappy customer review.
Make the right decision for your e-commerce brand
As the busiest shopping day of the year for many, it's hard to ignore the benefits that Black Friday brings. However, you have to weigh up the benefits against the pressures that the event brings.
Customers expect bargains, which means you're under pressure to discount if you take part in Black Friday. If you don't, loyal customers could go elsewhere, and you'll struggle to attract new ones.
Then there's the logistical challenges. Black Friday can result in a surge in orders, straining your capabilities as you try to cope with increased demand, managing inventory and ensuring timely deliveries. This kind of pressure can result in errors and delays, which has a knock-on effect when it comes to your reputation.
It's a difficult balance, so how you approach the event will be key.
Maybe you run one sale on the day itself, or perhaps it suits your business better to offer deals all throughout peak season. It really depends on your product and your infrastructure.
Partner with Hive - a proven Black Friday logistics company
The good news is, you don't have to do Black Friday alone. There's real value in partnering with a logistics company that has proven experience in helping companies navigate the demands of Black Friday.
The event gives you so much to think about, and needs a lot of preparation, planning and a partner that can help you to cope with the additional demand that's coming your way.
Working with Hive gives you the complete end-to-end support that you need to make Black Friday a success for your e-commerce business, offering easy to use solutions that add real value to your operation now and in the future. We integrate seamlessly with your e-commerce channels to give you everything you need to build your brand.
Offering proactive restocking through forecasting, sustainable packaging and delivery solutions, flexible fulfillment, an interactive customer app to help you manage your marketing and more, plus extra capacity during Q4, Hive is an all-in-one solution that equips you for Black Friday, holiday seasons and beyond.
Join hundreds of e-commerce companies who have partnered with Hive to scale their operation, streamline their processes, and navigate Black Friday with success every year.
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Posted Aug 19, 2023
A 2,100-word, ghost written SEO blog for Hive highlighting the pros and cons of taking part in Black Friday 2023 for e-commerce merchants.
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