Popular events like Black Friday and Cyber Monday are forcing shoppers to change tactics. 24-hour flash sales are instead becoming affairs that last weeks. We’re asking what this means for retailers and the fulfilment industry, and how businesses can make the most of these emerging trends.
The discount day phenomenon
Black Friday itself, much like Boxing Day here in the UK, has long been a shopping tradition for US citizens. Held on the day after Thanksgiving since the 1930s, the occasion is regarded as the unofficial beginning of the Christmas shopping season and sees stores nationwide slashing prices amid crowds of frenzied shoppers.
A few years ago, thanks to both online retailer Amazon and US-owned supermarket Asda, Black Friday arrived in the UK with a bang. Scenes of chaos on shop floors around the country were met with enthusiasm from some, but concern from others. Last year alone Brits spent a whopping £3.5 billion over the Black Friday long weekend.
But did you know that Black Friday isn’t actually the biggest discount day in the world? China’s Singles Day, birthed by eastern eCommerce giant Alibaba and held on 11 November each year, saw the equivalent of £9.4bn spent online in one day. In case you were wondering, that’s a staggering 120,000 orders per minute! And this year it’s set to be even bigger, with shoppers able to enjoy a staggering 24 days of deals instead of the usual 24 hours.
So what is it that attracts retailers and consumers alike to deep discounting and flash events like these? And are they really as good for business as they seem?
How and when – Festive shopping is changing
Traditionally December is the month for Christmas shopping – from gifts to food, decorations and even home improvements, consumers are looking to throw the best celebrations possible and get the most bang for their buck.
The rising popularity of Black Friday sales in November however has resulted in many spending earlier in the year, and retailers are competing fiercely to offer the best deals around. As a result the event is now a drawn out affair beginning up to a week before – within our own global network of fulfilment centres, peak order volume was actually reached on the Tuesday leading up to Black Friday itself.
Where stores in the USA used to open up at around 6 or 7 in the morning on Black Friday, many families are now heading out to 24 hour stores at midnight after finishing off Thanksgiving celebrations. And with a large amount of this shopping now done online, bargain hunters need not leave the comfort of their homes to make purchases either.
In the UK last year most of the major retail players focused their efforts online, in a bid to stem the anticipated high-street chaos. It worked, with a noticeable drop in footfall compared to 2014 and a huge influx of traffic to eCommerce sites. In the UK last November, 22.4% of all non-food retail spending was done online. Why queue up in winter weather to view a limited in-store stock when you can get everything you want and more through a website?
Within James and James’s own client data we saw a huge 30% increase in order volume in November 2015 compared to October 2015, again indicating changing spending habits. Consumers are holding off until they can get the best deals, and then heading online to find them.
With the news of Alibaba extending China’s Singles Day event into 24 days of deep discounting, experts are beginning to question whether or not consumers will experience fatigue at the sheer amount of deals out there. Perhaps advertising won’t spur them to make a purchase in the same way a flash sale would, or maybe the Chinese public will have spent all they can afford to during the first few days. It’s a risk Alibaba are willing to take in order to further dominate the Asian eCommerce market, but should other retailers follow suit?
Is Black Friday actually good for retailers?
But with consumers able to get what they want for less even earlier in the calendar, do businesses actual manage to benefit from discount events like Black Friday? Opinion is divided.
Asda, one of the first retailers to introduce Black Friday to the UK, announced last year that it was abandoning the event,providing longer-running offers on food, household items, toys and gifts throughout the season. The company’s Chief Executive Andy Clarke said he didn’t want customers to feel “held hostage” by flash sales on items they may not even need.
John Lewis famously spoke out against Black Friday in 2014 despite recording its best week of sales ever, dominating other online retailers. The UK department store asked if it was sensible for businesses to be concentrating all their efforts on such a short period, which could lead to profitability struggles. The retailer experienced higher sales over the Black Friday and Cyber Monday weekend than it did in the week before Christmas itself in 2014.
While the financial side of Black Friday is the subject of much debate, problems behind the scenes have also come to light as the discounts go online. With such a dramatic peak in order volumes, warehouses and postal services have struggled to keep up. 2014 saw lengthy delays with major carriers, who then limited cut-offs and extended timeframes for 2015.
How online sellers can make the most of the trend
Black Friday seems like it’s here to stay in one form or another for the time being, and while it could pay off to get involved all the extra pressure on infrastructure can leave customers disappointed and see retailers losing out on repeat business. The Asda approach of spreading discounts more thinly throughout the season could reduce impact, while going gung-ho like Alibaba could cripple your operations and leave customers disappointed. Outsourcing to a third party fulfilment provider could relieve the strain altogether as long as their service and technology are up to scratch.
There’s a lot to think about when it comes to fulfilling orders during peak periods like Black Friday and Christmas if you’re doing so in-house. You need enough space, man-power and equipment to get orders out on time, robust enough systems to ensure perfect accuracy, and to be able to handle the inevitable rise in returns.
It goes without saying that the number one piece of advice for seasonal success is to plan, plan and plan some more. Using data to forecast demand, ensuring your stock arrives ahead of time and even getting set up with a third party provider – all are important steps to take as early as possible to ensure your customers aren’t left disappointed.
If you’ve yet to prepare your eCommerce operations for the season then check out our top tips here.
What if I want to outsource?
We’d like to think we’re experts in handling periods of high demand – our award-winning flexible service, real-time reporting and robust processes mean you’ll be streaks ahead of your competitors. And with our accuracy never dipping below 99.998%, your customers will get everything they want exactly when they want it. Plus, with handy ViewPort tracking they can see precisely where their order is at any given moment, meaning far less of those “Where’s my stuff?” enquiries. We even provide them with status updates for returns so that your customers are always in the know.