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Black Friday & Cyber Monday 2014
eCommerce Report

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Over the past couple of years, we’ve seen Canadians sort of embrace the concept of Black Friday. Traditionally, at least in my life time, Boxing Day was the big holiday shopping day (the one where we waited outside in the wee hours of the morning for those elusive deals). But anyone that has been out to a mall this year, would probably disagree. Furthermore, it seems that Black Friday has now turned into Black Week. That being said, November is still a smaller chunk of total consumer spend when compared to December.

From our own merchant perspective we had a great shopping week. To help prove why, and more importantly how, I’ve put together this post (with a free downloadable Post-Black Friday and Cyber Monday Report) to help merchants gain an inside look into our clients’ performance, and share some lessons for better planning and performance in 2015.

Promotions for Black Friday and Cyber Monday

In terms of promotions, it’s been a tough retail environment for the last couple of years. We’ve recovered quite well since 2008, but retailers have to be more aggressive with their pricing strategies. Merchants that have had huge success, usually have had a very popular brand, ie. Mackage, Hershel, but with a combination of a rich offer to move product. That being said, across the board we saw sweeping success. Across our partner sites, we saw about 22.5% growth YoY, Monday-to-Monday, which is the Monday before Black Friday (Nov 28th 2014) to Cyber Monday (Dec 1st 2014) inclusive.

Cyber Monday was not as hot as Black Friday this year. You’ll see reports from Bloomberg and Reuters talking about how Black Friday is the new Cyber Monday. This is true even with our partners, as most hot deals were offered on Friday instead of the Monday. Part of this is because most of our partners are Brick and Mortar retailers with an eCommerce site. So they try to match their offer in-store from Friday and carry it over to their eCommerce site for Cyber Monday. Overall however, Black Friday is the new hot shopping day.

ebbs and flows within the industry

From a broad industry standpoint, it sounds like the US had an ok shopping season. Black Friday was overall down for them, but the eCommerce portion of that number had grown substantially. If you look at the data in terms of the seasonality of shopping, it ebbs and flows. Consumers get tired of going to malls, but then it goes back up in popularity. On a monthly level, November being a popular month, is cyclical. Understanding people’s preferences and the ebb and flow throughout the year is important. I think right now with the mall, retailers are offering the same online as in store, so there’s really no advantage to shopping in-store.

We’ve seen eCommerce grow in terms of portion to holiday send. There are people who will love the madness of the holidays and its shopping experience, but there are a cohort of people who want to get their products quickly and easily. This is a growing cohort. The mall experience is a challenge, based on just the sheer volume of people. It takes a certain type of person to weather the storm in the malls during the holiday shopping season, especially on key dates like Black Friday and Cyber Monday.

For the next shopping season, we’re going to continue to see a migration of in-store sales to online sales. We have to wait and see how the rest of the holiday season turns out, but looks like retail sales are in line with last year, maybe with slight growth – and that’s geographically specific – the US looks like it will be flat if not down YoY. But we’ll see what 2015 has in store.

Black Friday Success by category

A quick look by category – it looks like clothing across our clients is very strong for Monday to Monday, up about 50%. The variance within that is big. We had some retailers that blew it out of the water this year, and then we had some that didn’t do so well. Part of the challenge for retailers is 1) finding what’s going to be seasonly relevant, we work with a lot of partners to figure that out, and 2) it’s also just understanding the impact of promotions. One of the trends we saw this year was pulling Black Friday and starting it on Black Monday/Tuesday. We had one retailer call it Grey Thursday. Although starting promotions early can seem like a good idea, it’s important to understand what the impact of this is, in terms of aggregate consumer spending. So you look at the share of wallet, and consumer spending as zero sum, people only have so much money to spend each year. The incentive of the retailer is to be first mover, so you capture a larger portion of that spend. The challenge is that, people who are set on a specific product or brand they are probably going to buy that anyways – so ultimately you need to understand the impact of shifting sales vs growing sales.

So on Black Friday, there’s a very strong CTA and the one day only, however when it’s a week or two weeks, as we’ve seen, then merchants are just pulling sales from Black Friday to other days. Retailers therefore may see their Black Friday under perform but the rest of the week will over perform, because the sales that would have happened on one day, have just been spread out. It’s a direct result of not having a strong call to action.

Another other element to consider: the cost element to your promotional endeavours. If merchants are offering free shipping on all orders, and they do it for a week, there’s a material cost to this. Understanding from a planning perspective, if retailers are getting more aggressive with their promotions and don’t understand the net revenue impact from a higher level perspective for the month or holiday season, they could be paying more for their sales than they should be. This is obviously determined on a case by case basis, but it is important to recognize the seasonality of consumer spend. There is an interplay that things are just more heavily promoted in the holiday season, but also consumers just naturally spend more money. A merchants’ base of customers, and their base spending behaviour is not the same year round.

For example, if I’m a makeup retailer, and for most of the year my average basket is $100, during the holidays it’s possible that with more consumers buying gifts my average basket could be $150. So if I have free shipping, I might want to consider upping that threshold so I’m not subsidizing people that money anyways. The whole idea of free shipping above $100, is to incentivize you to stretch your spend, and have consumers add incremental items. If consumers aren’t doing that, based on natural spending phenomenon with the holiday season, then you’re subsidizing customers’ orders, and not effectively planning your promotions. Understanding the interplay with cost, the length of your promotions, what the incremental impact of those promotions are to your business is critical not only during the holidays but the entire year.

Email Marketing the Strongest Sales Channel

We also saw many retailers embrace email. It was the hot channel. Did it work? The nice thing about email, is that consumers who express interest in a brand have a higher propensity to convert. We’ll continue to see email be a strong channel. We haven’t seen consumer fatigue. Most retailers we work with don’t have net attrition with their database. Meaning, new subscribers outweigh people who unsubscribe. Most retailers are growing their databases.

Email will continue to be a good sales driver. As retailers get better at this, we’ll start to see more targeted offerings. We’ve seen it with the sophisticated companies like Hudson’s Bay Company, Shoppers Drug Mart etc., they have the analytic capabilities to predict and know what you buy and start and continue to buy. More personalization and targeted promotions, moving away from batch and blast, will be and should be a priority as well as a big trend moving forward.

Learnings for 2015

Notebook on wooden desk
In general there are a lot of favourable things for eCommerce going forward. We’re going to reap the benefits of low crude prices, and therefore shipping costs will come down. The economics of eCommerce will definitely improve, especially for those retailers with both a Brick and Mortar and eCommerce presence. As we start to see the impacts of lower crude pricing on transportation costs, this will influence transit costs for shipping, and will ultimately have an effect on Brick and Mortar retailers as well as eCommerce merchants.

When it comes to merchants starting their promotions early, we’re still on the fence. We’ve seen some examples of it being wildly successful. The underlying thing for those is still retaining the exclusivity, for example a merchant doing an early sign up, where you have to give your email to get access. It’s not just a “hey we’re selling everything early”, there’s an element of a special promotion “just for you”. On the other hand, we’ve seen some retailers who have literally just didn’t see their month going their way so they released their Black Friday promotion on the Monday, but then when you look at the week, their Black Friday looked like it under performed, but the rest of the week, in aggregate, looks about consistent, and the merchant has managed to see small growth. So understanding starting promotions early doesn’t necessarily mean net incremental (higher) sales.

A piece of advice for retailers: understand the dynamic of starting your promotions early. Consider the length of your promotions and how that impacts incremental sales day to day. Start to think about that when you plan promotions for next year. Remember – what works for Retailer A might not work for you or Retailer B, C, D etc.

For more insight and statistics on what we saw here in Canada for our retailers on Black Friday and Cyber Monday – click the button below to download our free report.

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