Black Friday 2020 is going to be a little bit different. Here's everything SMEs need to think about to make it a success.
Businesses working in or supporting the retail industry are gearing up for what should be their busiest period. Yet everyone from logistics companies to retailers themselves are wondering just how busy they will be this year. With Christmas arrangements so up in the air, many are focusing on an earlier promotional moment: Black Friday
But are shoppers planning to make the most of Black Friday and Cyber Monday deals this year? Given the economic gloom and doom of the pandemic, there’s a strong case for discounts to be the main way to get people to part from their cash. When, where and how much shopping are they likely to do? Some retailers are deciding to start Black Friday early this year. Attracting consumers earlier than their competitors by doing this could maintain market share if they can retain these customers. So, what support do retailers need to make the most of this opportunity?
BLACK FRIDAY IS THIS YEAR’S FOCUS
Black Friday is an American phenomenon, so called because the success of the day would pull retailers’ balance sheets back ‘into the black’ (and therefore out of the red). Lots of businesses have historically managed to salvage their profits just from the day’s popularity, which always falls after Thanksgiving (the third Thursday in November).
The discounts used to lure shoppers have in recent years travelled across the pond to shake up the retail scene here in the UK too. With the increasing presence of pre-Christmas discounting, a lot of retailers are considering using the marketing moment to shift unsold stock, recoup lost earnings and bring forward festive spending before their competitors.
IT’S HAPPENING ONLINE
Typically in the US, Black Friday draws newsworthy crowds to shopping centres. But, given the current situation, it’s unlikely that hoards of people will be rushing to stores this year to cash in on discounts. Besides, with social distancing in place, retailers simply aren’t able to let that many people in at once. So, far more sales than usual will be taking place online – which means websites and online transactions have to be able to accommodate that influx of shoppers.
According to the latest ONS statistics, online sales accounted for 28.1% of all retail in August 2020, which is a 51.6% increase on last year. Consumers were forced to shop online during lockdown, with retailers such as Gap seeing their online sales grow by 40% in April and by over 100% in May.
But the surge in online shopping was a trend that predated COVID-19 and was only amplified by national lockdowns. It looks very much set to continue. Consulting firm McKinsey now expect to see online shopping for clothing and footwear reach 40% of retail revenue by 2025 – accelerating this proportion by four years. Online shopping is more popular than ever, so it follows that Black Friday will have an even stronger online focus.
Additionally, many consumers are concerned about shipping times given the hold ups in overburdened delivery services and slower supply chains that we experienced at the start of lockdown. With the busiest time of year coming up, and more people preparing to do their Christmas shopping online, it’s reasonable that consumers will be getting these orders placed earlier rather than risking last minute in December.
IT’S SPREADING OUT
Last week, Amazon Prime Day landed in our inboxes for the fifth year running. We can use the success of this marketing moment as a useful indicator of how retailers will perform over the festive period. Usually it’s held in July but this year it was pushed back until October. The retail giant will no doubt be tempting its customers with more deals over Black Friday and Cyber Monday, but it’s significant that they wanted to group demand around the Autumn and Winter months, rather than spreading it over the year.
Walmart has also recently announced that it will be doing six days of discounts across November, instead of focusing on just one or two main days. With several big retailers pulling their pre-festive discounts up, they’re also able to spread this jump in demand more evenly across a period of potentially intense pressure. Processing orders across a few weeks makes it easier for stock to be monitored and takes the burden off logistics networks.
HOW POPULAR WILL BLACK FRIDAY BE THIS YEAR?
It’s hard to predict but we can take a look at last week’s Amazon Prime Day to see what kind of appetite there is right now amongst consumers around the world. The annual promotion offers massive discounts on many items sold through Amazon to all Prime members for two days only. Key headlines saw brands more than tripling their average 30-day sales. Basket size was down but third-party sellers who use Amazon saw a 60% increase in orders over last year.
Surveys of Prime Day shoppers suggest that the holiday shopping period has just begun. Numerator saw that 80% think they’ll be inputting their card details online once again come Black Friday, jumping to almost 90% looking to scoop up deals on Cyber Monday. Judging by these stats, it looks like we’ll see higher order volume in November’s promotional shopping days.
WHAT PRODUCTS AND SERVICES WILL RETAILERS NEED?
The main challenges retailers face will be around stock, website support and shipping. Businesses that can offer retailers solutions that enable the most seamless online shopping experience possible for their customers will be of huge value this quarter.
Stock issues are a main fear for many, whether that’s in shifting stock they couldn’t sell earlier in the year, or making sure they have enough inventory so there are no customer issues on the day. Crucially, they need to know they have the best systems in place to accurately monitor stock levels. Relying on a handful of days to rescue your profits means retailers can’t afford to mess up. A customer gained on Black Friday won’t be loyal if there are issues with their order.
Websites will need to be slick, offering consumers intimacy, accuracy and ease of experience. If you work in technology then make sure you’re available to the retailers you support. Any glitches will make them reconsider their partnerships, so now’s the time to strengthen those. Social e-commerce and fintech are also seeing a spike in demand and use. Companies like Klarna and Shopify, along with social media sites like Instagram, are helping more small retailers than ever access wider audiences and compete with big household names.
Shipping can be a nightmare (for buyers and sellers alike). Delivery delays can turn customers off a brand, and with a 19% increase predicted in parcel delivery this year, it’s not going to get any easier over the busiest shopping weekend. From logistics and delivery companies to packaging suppliers and temp recruitment agencies, anyone helping retailers realise their e-commerce ambitions post-order will be indispensable.
There’s likely to be a significant spike in online orders over the pre-Christmas discount period, whether that’s on Black Friday itself or across other dates in the surrounding weeks. If you provide any service or product that can help get orders made smoothly, dispatched on time and looking their best, then you’ll be a retailer’s best friend.
DON’T BE LEFT OUT OF POCKET
It’s also easy for businesses to get carried away at moments like Black Friday and Christmas. Retailers and their suppliers need to be conscious of not overspending and putting themselves at risk financially in the new year. Relying on the speedy settling of invoices for your upfront costs of producing or purchasing stock in large quantities isn’t always possible.
In cases like these, it’s useful to have cash reserves or facilities to fall back on. Invoice finance or a CBILS revolving credit facility for example, can act like a safety net for your bottom line. By advancing the cash tied up in these outstanding invoices, businesses can easily and affordably bridge the gap between covering upfront costs and getting paid.
IT’S NOT JUST ABOUT SHIFTING STOCK - RETAILERS NEED TO KEEP THESE CUSTOMERS
Online shoppers can compare everything, which may be an additional obstacle for retailers as shopping days move online. Consumers will shop for the best deals from the companies that offer them the best prices. But they’ll return if service was excellent, and many appreciate the details of considered packaging in this era of personalisation and individual connections to brands. It’s one thing to win a customer once – it’s another to hold onto them. Ultimately the profits a business can make focusing on e-commerce stand to triumph over bricks and mortar retail.
But will this year, with smaller festive celebrations anticipated and many workers out of pocket from the tumult of the year, be a success for Black Friday deals? And can months of impacted performance be turned around to save some businesses? Only time will tell.
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