Are Black Friday and Cyber Monday detrimental to your eCommerce business?

23 September 2021

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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. It found its way to the UK in 2010, but without the emotional attachment to Black Friday as their US counterparts do. Within four years Black Friday had become the biggest pre-Christmas online sales day.

Online retail sales growth on Black Friday was strong in 2020, coming in at +38%, with the full Black Friday week (defined as an eight-day period, Mon 23 – Mon 30 November) seeing growth of +30%. That figure is based on the daily online sales performance of 102 UK retailers.

Small online businesses turning over less than £38,0000 a month, saw a 150% surge in business on Black Friday, according to analysis of more than 20,000 companies on eCommerce investment company Clearbanc’s platform. Companies with turnovers above this topped out at 20%.

Black Friday Sale

Where does Cyber Monday fit in?

Cyber Monday is usually the Monday following Black Friday.  It started when eCommerce was new and wanted to cash in on Black Friday sales.

According to retail news site Charged, Cyber Monday 2020 was the most successful digital sales day ever to have taken place. It has since been beaten by Amazon Prime Day 2021.

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.

Black Friday and Cyber Monday

Black Friday and Cyber Monday – a race to the bottom or a sales bonanza for eCommerce?

There is enormous pressure on eCommerce businesses to promote during these online events. In 2020, 90% of UK retailers offered a promotion across the Black Friday weekend.

And 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.

Fair finance that fits

Don’t forget our customisable finance can be used to get creative with your offers during Black Friday. In fact, anytime.
For example, try aligning our finance solution with your brand to optimise your customer experience.
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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:

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.

Ikea's  2019 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:

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!

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