Shopping sprees, big sales, and huge discounts. Welcome to the frenzy of Black Friday and Cyber Monday.
What is Black Friday?
Black Friday, the Friday after Thanksgiving, began as a US holiday tradition, where family and friends would spend the day shopping. Australians do not have this emotional attachment to Black Friday as their US counterparts do. However, it is a big discount sale day in retail and gaining in popularity every year.
Finder.com.au says Australians will spend $3.9 billion on sale days like Black Friday and Cyber Monday.
They also found in 2020 Gen Z are spending the most across every category, particularly on travel, clothes, shoes and food and alcohol, with an average spend of $668.08.
Where does Cyber Monday fit in?
Cyber Monday is usually the Monday following Black Friday. It began when eCommerce was new and wanted to cash in on Black Friday retail sales.
Like Black Friday, Cyber Monday is gaining awareness. In 2017, 45% of Australians had heard of Cyber Monday. In just two years, this figure increased to 74%.
When is Black Friday and Cyber Monday in 2021?
The official date for Black Friday is November 26 and Cyber Monday is November 29. However, these dates have become blurred. These events are kind of mashed together for a week (sometimes more!) of retail and online shopping bonanza. These sale events are seen as serious challengers to Boxing Day, traditionally our biggest shopping event.
Black Friday and Cyber Monday – a race to the bottom or a sales bonanza for eCommerce?
There is no doubt that Black Friday and Cyber Monday can bring in some impressive sales for eCommerce. But shopping carts filled with purchases and increased revenue during a ruthless discounting event for your business may not always mean it's profitable.
Discount pricing strategy in eCommerce
Your pricing strategy directly impacts the amount of profit your business makes. Hence, a discount pricing strategy is going to immediately affect your bottom line.
The online sales environment gives the consumer a whole new level of price transparency, so eCommerce channels need to have a clear pricing strategy. Using a discount pricing strategy can be beneficial to drive traffic to your website and sales in the short-term.
However, as a long-term strategy, it can have harmful consequences on market position and brand loyalty. It can devalue your product not just for this sale but future sales as well. If a brand is not well known, customers can associate low price, with low value and quality.
Larger eCommerce businesses can usually offset the discounting using their buying power by buying in bulk and demanding larger discounts from their suppliers.
Blanket discount promotions such as those commonly used in Black Friday and Cyber Monday, can leave retailers selling out of their most popular products at a lower margin, with unwanted or harder to sell stock still left in the warehouse.
Also, consumers may hold off buying at normal prices and wait for the discounts during these online events.
Before choosing a discount pricing strategy consider your product and brand positioning within the market and against your competitors. If your brand is not well known, customers can associate low price with low quality, so may turn to your competitors who are thought to be better value. Lower prices do not build customer loyalty, as these types of consumers can be easily swayed to cheaper alternatives.
Other discounting strategy options to join the frenzy but minimise the hit on your profitability
There’s no doubt Black Friday and Cyber Monday are great events for your business to attract new customers, ensure loyalty with your existing customers and compete with other businesses.
Here are some pricing strategies you could use instead of offering a blanket discount across your product range, to minimise the hit on your profitability:
- Try a limited price drop
Introduce a limited price discount for buyers who respond quickly ‘for the first 100 customers only’ or ‘discount only available between 9am and 10am’.
- Reward loyal customers
Offering a Black Friday and Cyber Monday discount only to existing customers shows you value and appreciate their patronage. They have already experienced your products and it encourages them to buy from you again.
Personalise these pricing discounts through advertising, promotions and product recommendations based on the customers’ specific interests, needs and previous purchases. The discount offered is not attached to the product per se, but to their loyalty. So does not have the perceived erosion to product value.
Accenture research shows that 57% of customers spend more on brands to which they are loyal. So, your initial discount offering could lead to more purchases and greater profits.
TIP – Everybody loves access to exclusive offers, none more so than Millennials.
- Use your Black Friday and Cyber Monday discounting to move out old stock
Products not selling, products at the end of their lifecycle or superseded, stock near their use by date – use the discount as a ‘buy now before it’s gone’ call to action.
When discounting old stock, do your homework. Due to the pandemic, clearing out inventory may be expensive this time round because of elevated shipping costs and the depreciation of the Australian dollar.
- Upsell, cross sell to maximise margins
Customers can be open to persuasion. They may have their heart set on a particular dining table, but your discounting strategy could direct them to a higher-margin table. Alternatively, they buy the dining table now at full price and you offer a discount on matching dining chairs.
- Offer discounts only on products with accessories or consumables
Introducing the discount on products that come with accessories or consumables such as DSLR cameras, computers or baby products, bedlinen or garden/power tools. You not only draw attention to the products, but also the accessories or consumables attached to them.
Any discounting and hit to profits can potentially be made up from sales in these additional products.
Consumers during Black Friday and Cyber Monday are on high alert for big savings, so make the offers worth their while. Don’t forget to create your post online event marketing strategy - clever campaigns to turn these fresh, new consumers into valued, long-term buyers. Your new customers may have cost you a lot to acquire, so your campaigns should demonstrate and return value back to your products and brand.
Image source: IKEA’s 2019 Black Friday campaign
Are there alternatives to discounting on Black Friday and Cyber Monday?
During these hyped online events, there could be profitable or creative alternatives to discounting to energise your offerings.
Here are a few ideas to get you thinking:
- Use a positive social impact
IKEA’s 2019 Black Friday campaign did not offer one single discount. Its Black Friday (Re)Sale redirected their website visitors to DBA (Denmark’s biggest marketplace) which had more than 16,000 perfectly good, used IKEA products they could buy. This campaign not only preserved the value of IKEA products but also showed its commitment to sustainable consumption. It reached 67% of Danes, redirected 40,000 customers and increased searches on DBA by 877%.
Black Fridye is an Australian movement that piggybacks on Black Friday. It calls on consumers to send in their clothing and they will re-dye it black to give the garment a second life. Consumers get the shopping hit by receiving a ‘new old’ garment at the same time as saving valuable resources.
- Gamify your offering
Gamification in marketing brings a fun experience to your brand and website and helps you stand out from the pack.
Install an interactive widget on your online store that can grant a randomised discount on each product, enticing shoppers to continue to try their luck to maximise their savings. Alternatively, try a spinning wheel for shoppers to win a prize.
- Turn to open-box products
Not sure what to do with those perfectly good, but previously opened items? Black Friday and Cyber Monday may be the time to offer them to your consumers.
Be specific with what they are and what you are offering – consumers may have their own preconceived ideas. Be clear with your returns policy to eliminate any doubt or perceived risk to your buyers.
- Freebies with purchase
Try giving away free product samples, clear up old stock or introduce new or updated products with every sale made during these sales.
With continued pressure on eCommerce businesses to heavily discount during these massive online sale events, there are options for your business to prevent a big hit on your bottom line. Invest in your brand. Set worthy, powerful marketing and pricing strategies that deliver long term value with sustained customer relationships at the heart.
And just because…
Use these popular hashtags for SEO traction and to help consumers find your best deals!