Is Black Friday Worth the Time and Effort? Yes … With Some Caveats
With Amazon Prime Day, the second such self-created “shopping holiday,” over for another year, it’s a good time to turn our attention to another big sales opportunity for retailers: Black Friday. Over the years, Black Friday has gained the reputation of a major in-store and online shopping bonanza that every retailer has to participate in or suffer the fate of lost revenues and, even worse, loss of customer loyalty from those shoppers expecting to score a deal. Qubit decided to investigate trends across the spectrum and various types of retailers to determine whether Black Friday truly is a “must do” or whether the cost of participating outweighs the benefits. We found some surprising results which indicate that certain types of retailers fare far better than others on Black Friday.
In analyzing the data from Black Friday 2015, we found that luxury retailers actually do the best on Black Friday when compared to retailers specializing in gifting, fast fashion, entertainment and electronics, and home and garden.
- Luxury saw the highest percentage increase in conversion rate, with 114 percent overall, when compared to the industry’s rest-of-year average. This is perhaps due to the scarcity of high-level discounts within this industry in general.
- Those retailers in the “Gifting” market, which includes jewelry, confectionery and accessories, saw a 100 percent boost in conversion rate compared to the rest of the year.
- Fast fashion saw an impressive 68 percent increase in conversions, especially surprising given not every retailer in our research sample ran Black Friday promotions. These retailers benefitted from the substantial increase of people online searching for just the right gifts. According to one source, a whopping 103 million consumers shopped online over Thanksgiving weekend in 2015, 1 million more than those shopping in-store.
- With a 50 percent increase in conversions, performance in the entertainment and electronics category was lower than expected since Black Friday is so often classified as the “gadget Christmas.” However, it’s definitely still worth it for these types of retailers to take part in Black Friday as purchases are often big and one-off. From our data, we saw the peak in traffic and conversions kicked off by Black Friday was maintained throughout the season, right up to Christmas Eve.
- Home and garden saw the lowest increase in conversions (27 percent) of the five categories we researched. This is mainly due to the fact that this segment is very closely tied to seasonal need-type products. While some furniture retailers might find Black Friday worth participating in, gardening retailers might consider focusing their efforts and marketing budgets on spring when the weather is more conducive to sprucing up the patio and garden.
Do New Visitors on Black Friday Purchase Again?
Interestingly, the repeat purchase rate for luxury and home and garden from new visitors on Black Friday was higher than the rest of year average. It’s clear these customers are very valuable in the long term and great candidates to target with loyalty strategies.
Fast fashion and entertainment and electronics retailers saw fewer new customers that purchased products on Black Friday return again, compared to the rest of year average. Capturing customer data such as email addresses on Black Friday and employing abandonment recovery tactics could help re-engage these new customers that cost money to acquire.
Gifting was the only category that saw new visitors on Black Friday just as likely to repurchase throughout the rest of the year. However, repurchase rate was low, so these types of retailers could also benefit from using customer data to create personalized emails to entice them to come back. Try offering product recommendations and incentives the next time these customers hit your site to increase average order values (AOV).
Which Visitors Drive Revenue on Black Friday?
Luxury retailers saw the highest proportion of revenue driven by returning visitors. This may suggest that consumers are visiting these sites in anticipation of discounts ahead of Black Friday. Tying this in with the data on repurchase rates, it appears that Black Friday has the potential to act as the gateway to additional high-price purchases. Or it could be that these visitors are serial bargain hunters, coming back to look for deals time and again.
Pushing these customers toward building wish lists and then emailing them when the products they want go on sale means they won’t go looking elsewhere.
By contrast, gifting saw the most revenue from new visitors, suggesting that purchases from gifting retailers required less consideration and were more opportunistic based on the deals available on Black Friday. Retailers should look to increase AOV from new customers, especially considering the low repurchase rates seen across the year.
Fast fashion also saw one of the higher percentages of returning shoppers on Black Friday. With fairly low consideration, low-priced products, retailers in this vertical should use strategies to keep customers coming back for more. While urgency messaging can be useful, it should be evaluated on how it impacts product returns since, on average, one in five fashion items ordered online are returned. Extending discounts over the holiday period, only discounting particular stock or using countdown timers are tactics that have seen success in previous years.
While electronics and entertainment retailers can expect droves of new visitors on Black Friday, it’s important to surface your unique selling points to make sure you stand out from the competition. Differences in returns policy or delivery could be a key reason someone chooses to purchase from you. Making sure relevant product ratings and reviews are surfaced can go a long way to secure a sale for consumers who are in a big rush to finish their shopping on Black Friday.
Although some will do better than others, it’s clear that for many retailers, Black Friday is worth the time, effort and resources. By analyzing the data from Black Friday 2015, we can confidently claim that there's no one-size-fits-all approach to Black Friday. However, even those retailers not putting a large investment into Black Friday campaigns, like fast-fashion brands, will see a sales boost from the large number of consumers going online in search of deals. By leveraging the sheer increase in the number of people online during Black Friday and throughout Thanksgiving weekend, most retailers will see an uplift in conversions and sales, with the potential of gaining new repeat customers.
Cat Millar is retail product marketing manager at Qubit, a digital experience delivery platform that helps retailers understand visitor behavior and personalize the customer journey across all digital channels.
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