Shopping sprees, big sales, and huge discounts. Welcome to the frenzy of Black Friday and Cyber Monday.
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.
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%.
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.
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.
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.
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.
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…
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