lack Friday is a real festival of shopping that takes place on the last Friday of November and marks the unofficial start of the Christmas shopping season. For customers, it's a great opportunity to buy products at discounted prices, and for retailers, it's a chance to increase sales and gain new customers. But is Black Friday all about the benefits? Hoping for increased revenue, many businesses fail to take into account some of the hidden costs that come with preparing a shop for this event. In this article, we will outline the key challenges of Black Friday in e-commerce.
Black Friday in Poland
According to data collected by Tpay, during Black Friday in 2023, sales at shops working with this payment operator increased by an average of 116% compared to the other days of the month, a slight 2% decrease on the previous year and 44% on 2021. While it is true that the average number of transactions increased by 30%, this represents a decrease on previous years. On Black Friday, consumers shopped the most in the categories: Fashion & Accessories, Home Appliances/RTV & Electronics and Health & Beauty.
On the basis of these figures, it can be concluded that the economic situation and the mood associated with it have significantly affected the annual online shopping holiday. Compared to previous years, fewer consumers took advantage of promotions, which may indicate that Poles are limiting their purchases, even during sales. In an era of rising inflation and economic decline, it is worth considering what shape this year's and next Black Friday will take.
Does Black Friday still make sense?
Black Friday was originally intended as an opportunity for retailers to empty their warehouses of backlogged products. This time of year, November, is the ideal time to sell off items from previous seasons and prepare the shop for the pre-Christmas shopping rush. Backlogged merchandise is a frozen asset - better to sell it at a lower price than to keep it on the shelf where it generates no profit. This is a valid strategy, but over time Black Friday has evolved into a global phenomenon, driving consumerism and leading to impulsive, ill-considered purchases.
On the one hand, brands are able to attract new customers and increase sales in this way, while on the other hand, they face challenges that can significantly affect business profitability and shop image.
Challenges of organising Black Friday
The introduction of Black Friday in an online shop requires adequate preparation, both in terms of technical, personnel and logistical resources. It also entails certain risks that, in the long run, may result in greater losses than potential benefits.
1. Downward pressure on margins
In 2023, the average discount given on Black Friday in the eastern part of Europe was 31%, according to Salesforce data. Promotions offered during Black Friday often involve large discounts, which can significantly reduce product margins. As a result, while the increase in orders may increase revenue, net profits may not be as satisfactory. In some cases, discounts may result in products being sold below cost, resulting in financial losses for the shop. Retailers should therefore carefully review their pricing policies to ensure that the promotions offered are cost-effective.
Large e-commerce platforms, can afford high discounts and massive promotions due to their large scale of operation and better negotiating conditions with suppliers. Small shops do not have this advantage and offering large discounts can jeopardise their profitability.
In order to increase their profits, some companies have until recently resorted to unfair practices of artificially inflating prices before the start of promotions. Thanks to the Omnibus Directive, as of 1 January 2023, retailers are obliged to indicate next to the products under promotion what the lowest price of the item or service was in the last 30 days before the launch of the promotion. In this way, the communication of the promotion is fully transparent.
2. Increased order processing
During Black Friday, the number of orders may increase many times that of a standard day, which can lead to fulfilment problems. Warehouses may not be able to keep up with picking and shipping products, which increases delivery times and can lead to dissatisfied customers.
An increase in the number of orders also means an increased workload for the customer service department - more questions, complaints, and payment or delivery issues. To cope with these challenges, many companies decide, for example, to temporarily increase the number of employees, which entails additional costs for hiring and training them.
It is also worth remembering that the traffic generated in-store during Black Friday is usually one-off - promotions tend to attract customers who are not regular brand customers. Investing in attracting new traffic is not only costly, but can also negatively impact relationships with loyal customers who shop regardless of promotions. Focusing solely on new audiences may be less effective in the long run than strengthening relationships with existing customers who provide the brand with stable revenue.
It is also important to remember that increased shopping traffic requires high-performance servers, as well as a stable and scaled shop insfratructure. It is worth verifying the current capabilities of your e-commerce by carrying out load tests or a platform audit. As a result, if your shop is not well prepared to handle the increased traffic, Black Friday can be counterproductive - lowering the quality of customer service, damaging your company's image and increasing potential costs.
3. Increased competition
Black Friday is a time of intense competition for customers' attention. All competitors offer promotions, so it is challenging to stand out among them. During promotions, customers focus their attention mainly on price. They may then choose a particular product or brand only because of the greater discount, rather than factors such as quality of service or brand loyalty. Therefore, reaching customers during sales peaks requires retailers to have the right promotional strategy, personalised communication with customers and investment in marketing technology (MarTech). The sum of these activities will allow to reach potential customers more effectively and increase conversions.
4. Customer expectations of discounts
The annual sales during Black Friday, can significantly influence consumer behaviour, forming a habit of waiting for big promotions. Many customers begin to hold off on their regular purchases, expecting significant price reductions just during promotional events. This trend can lead to lower sales at other times of the year when consumers are less willing to pay full price for products.
This attitude can also affect the way a brand is perceived - if customers become accustomed to regular large discounts, they may start to perceive normal prices as too high.
Consumer expectations of large discounts can also lead to problems in the future. If a shop is unable to maintain high levels of promotion, consumer satisfaction and brand loyalty may be negatively affected. This phenomenon can particularly affect smaller shops that do not have the resources to consistently offer large discounts. In the long term, brands may lose their value in the eyes of customers if they are only seen through the lens of price bargains rather than product quality or unique offerings.
To avoid such problems, brands are opting for alternative strategies, such as creating loyalty programmes, offering unique products or services, and focusing on customer experience instead of price.
5. Risk of returns
During Black Friday, customers often make impulsive purchases, which increases the risk of returns after the promotion ends. Sale purchases are less thoughtful and customers, tempted by the low price, may buy products they do not really need. As a result, some of the merchandise is returned to the warehouse, incurring additional costs for handling returns, re-sales and possible price reductions on these products. This can also generate logistical problems and delays in processing orders and refunds. The environment is not unaffected either - according to a report by Ben-Gurion University, in Europe as much as 44% of returned clothing is not re-sold due to the costs associated with sorting, cleaning and packaging. As a result, many of these items are destroyed or discarded and never reach the next customer.
In addition, for consumers, the complicated return process or delays in refunds are frustrating and reduce the desire to buy from a brand again. Shops, wishing to maintain the trust and loyalty of their customers, should have a proper returns policy in place. In our ebook, you will learn step-by-step how to create an ideal returns procedure in e-commerce.
6. Sustainability
With the climate crisis intensifying, some companies are choosing not to take part in Black Friday and build their brand image around sustainability. More and more shops are aware of the negative effects of mass sales, such as the production of excessive merchandise, increased waste and CO2 emissions.
Some brands are replacing Black Friday with initiatives that encourage sustainable shopping or support eco-friendly measures. For example, Patagonia, instead of cutting prices, launched the ‘Don't Buy This Jacket’ campaign to draw attention to the problem of overconsumption.
Swedish brand ASKET, on the other hand, has completely stopped Black Friday sales, ignoring the trend of huge discounts and offers on Black Friday. The company is completely shutting down its shop and not running any sales on Black Friday, in an effort to draw shoppers' attention to the negative effects that buying during massive promotions leads to. Similarly, like Patagonia, the company promotes the longevity of garments by providing care guides and encouraging customers to repair, recycle garments rather than throw them away.
On the Polish market, we can also observe such movements. One example is the clothing brand Balagan, which in the week that is known to consumers as Black Week, donates a certain percentage of income from the sale of its products to a foundation that supports education about sustainable consumption. Mydlarnia Cztery Szpaki, which produces natural soaps and cosmetics, has also decided to take a similar step. Instead of offering its customers discounts, 15 per cent of its Black Friday sales are donated to a selected foundation.
According to PwC's Voice of the Customer Survey 2024, 80 per cent of consumers surveyed are willing to pay more for sustainably produced or sourced goods. Perhaps, giving up or reducing brands' participation in Black Friday, is now a way to stand out from the competition and gain the trust of new customers, without harming the environment.
Is it worth participating in Black Friday?
In conclusion, it is difficult to answer unequivocally whether it is profitable for every shop to participate in Black Friday. The decision should be dictated by the individual needs and specifics of the business in question, its scale and resources. For some businesses, Black Friday may represent a great opportunity to get products out of stock, increase sales and attract new customers, while for others - especially smaller shops - it may involve excessive pressure on margins and risk losing profitability.
The target group of a brand is also an important factor to consider. Consumers increasingly value sustainability, leading some brands to abandon participation in mass sales in favour of alternative strategies. It is therefore important to get to know your consumers' needs well and adapt your strategy to their expectations.
If you don't want to engage in Black Friday, but are looking for ways to increase conversions in your online shop - it's worth taking care of the basics - the customer shopping experience. Here are some elements that, if implemented, will benefit your business in the long run:
- Free delivery or delivery within 1-2 days
- Real-time order tracking
- Simple shopping cart, minimised number of steps to finalise an order and one-click payment options (e.g. PayPal, Google Pay, Apple Pay)
- Flexible payment methods, such as ‘Buy now, Pay Later’ (BNPL) deferred payment, or ‘Buy Online, Pick Up in Store’ (BOPIS) online purchase and pick-up options
- Personalisation of customer communication through marketing automation
- Friendly return policy (simple online return form, free returns, fast refunds, flexible return methods, long return periods)