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Black Friday for small businesses – is it worth it?

How can small businesses compete with the retail giants on this day of commercial frenzy, and is it worth their time and effort?

Mindless consumer frenzy, or a chance to build customer loyalty and shift loads of stock?

It’s only in the last decade that Black Friday has become a fixture of the UK’s seasonal shopping calendar.

This distinctly US event was first brought to our shores by Amazon in 2010. The online retail giant managed to leverage this first-mover advantage into 26% of all Black Friday sales last year (nearest rival eBay only managed 5.8%.

At first we were sceptical; too British, too reserved, too fond of queuing.

However, we’ve now become accustomed to scenes of shoppers willing to throw dignity to the wind in pursuit of a good deal on a 55’’ inch Panasonic, and all the major retailers gear up for this bargains bonanza weeks in advance.

But how can small businesses hope to compete with these larger rivals, who can afford to slash prices significantly, and reach more people via marketing than any startup ever could. And should you even bother? Is it just a rip off?

We’ve been asking small businesses and experts across the UK whether Black Friday is worth the trouble and, if they do join in, how to make the most of it.

First of all…

What is Black Friday?

Taking place on the Friday following Thanksgiving, Black Friday is regarded as the official start of the Christmas shopping season.

It’s often described as the busiest shopping day of the year, as desperate shoppers battle it out and retailers compete to sell heavily-discounted goods.

It’s also gained a reputation for inciting ludicrous and violent customer behaviour. According to The Hustle, the US has seen 11 deaths and 108 injuries since 2006. And nobody wants that…


Black Friday pros

Despite the slightly cynical tone of the article so far, get your Black Friday strategy right and it can present an abundance of advantages including:

  • Increased sales – even when focused into one day, a major spike in sales can ease cashflow and improve the balance sheet
  • Shifting stock – clear old inventory to make space for shiny new Christmas stock including hard to move items that have been lingering on the shelves for a bit too long
  • Building customer loyalty – you may be competing with rivals for the loyalty of your customers (don’t let them go elsewhere)
  • Acquire new customers – ramping up marketing and offering sales will undoubtedly bring new custom, which you can leverage to drive repeat sales
  • Increased traffic to your site – all this awareness will boost the number of visitors to your website

For Black Friday

Sangeetha Narasimhan – marketing director, SMB Online, Europe, Ingenico ePayments – says small businesses shouldn’t try to compete directly with their larger rivals. In this David & Goliath battle, think of what you can offer that they can’t.

“Although these bigger players may be able to offer greater discounts, and have the budgets to advertise this, our 2018 pan-European Black Friday report found that discounts aren’t necessarily the only thing motivating buyers.

“Rather than focusing on discounts, the most successful small businesses leverage what unique value they can offer customers. Last year over a quarter (27%) of UK consumers stated that rather than discounts, they would prefer other incentives such as unique products, loyalty and referral bonuses, extended returns or free next-day shipping.

“Growing businesses can use Black Friday as an opportunity to offer exclusive ‘Peak Sales-only’ items and perks such as a personalised one-on-one experience, rather than the usual short-lived discounts in a blanket campaign – this will enhance customer engagement and create a point of difference with larger rivals.”

And marketing tech company Beamly agrees that a personalised approach can yield results for growing startups:

“When Black Friday first launched in the UK, our insights show that shoppers were largely motivated primarily by finding the most dramatic discounts. But we’re starting to see a major shift in the way consumers are approaching it. Shoppers are instead looking for retailers that can provide them with tailored deals and a seamless shopping experience.

“This makes Black Friday the perfect climate for growing brands. By developing a strong omni-channel approach to marketing in the run-up to Black Friday, small businesses can create personalised offers to rival their larger competitors.

“Retailers should interrogate data and insights into their respective target audiences to fully grasp what kind of things they will be searching for, the mediums they’ll shop through, and what types of deals are really going to capture their attention. Making understanding your audience a priority is the key to success on Black Friday for smaller brands.”

There are plenty of opportunities for growing startups if they use the right strategy and prepare well in advance. If you want to stand out, a focused approach that targets your customers, rather than trying to appeal to everyone, is the best approach.


Black Friday cons

However, not everyone thinks making a few extra sales is worth the madness. Here are the cons:

  • Pressure to discount – smaller businesses can’t afford to discount as heavily as larger ones but are forced to by customer expectation
  • Reduced margins – those that do cut costs risk a major impact to their profit margins
  • Increase in customer returns – the frenzy can cause many shoppers to buy things they then regret, which often aren’t returned in time to be sold at Christmas
  • Training customers to wait for discounts – if customers are expecting offers, you’re likely to see your sales decline in the weeks leading up to Black Friday as they wait for a better deal
  • Sustainability – in an age of heightened awareness around sustainability, Black Friday seems to be at odds with the times
  • Workers rights – someone has to fulfill all these orders, are you aware of the conditions of the warehouses where all these goods are being stored

Against Black Friday

The following contributors’ views range from skeptical to downright anti. Craig Wills, co-founder of brand growth agency Big Blue, assesses the relevance of Black Friday in relation to the rapidly changing retail landscape in the UK :

“It’s a fair-trade right? Stock gets shifted, punters get a deal – money flows. But does it really deliver against the ‘into the black’ promise? With many UK High Street brands in freefall, rapid shapeshifting; monoliths collapsing by the week reported profit slumps and the offloading of bricks and mortar it seems that Black Friday is far from the ultimate saviour.

“People LOVE a deal. Deal wins over everything. Price is king. Brand is dead. Commodity rules. See you at the bottom. ‘Ta ra’

“Well, not necessarily. The last few years have seen a Francis of Assisi style ‘bringing of light’ – where a growing group of businesses are fervently embracing all that is right and good and loved about their brand and allowing this to guide their [alternative] Black Friday antics, serving to create a more meaningful expression of loyalty underpinned by powerful customer insight.

“Inspired by the maverick Patagonia ‘Don’t buy this jacket’ counter-Black Friday campaign in 2011, a raft of brands continue to emerge bold and brave. Not ‘anti’ but as alternatives – a bit of ‘turn off, tune out, go do something else’ spirit’ to reconcile rampant consumerism and brand goodness. One bold player in the US gives its entire 12,000 staff the day off and encourages staff and customers to enjoy the holiday and the outdoors.

“It’s a curious conundrum; contrary to the popular view that there is a binary win/lose outcome around Black Friday – pure cut price sales are seemingly not the only option open to the brand wanting in on the action and the customer up for a bit of something.

“Of course where margin can prop up a 50% price slash, free delivery and more costly giveaways then great, go fill your basket. But when the day is done, the most potent lever to loyalty is rarely pure price; a demonstration of values, humanity, creativity and an eye on the long game always pays dividends – isn’t that right High Street?”

This anti-Black Friday sentiment is finding growing support in the UK as well. Rachel Fortune, founder of the Sustainable Lifestyle Awards, is even holding an event this week to highlight the importance of conscious consumerism and encourage sustainability.

“Everyone loves a bargain, of course they do, but the issue I take with enormous shopping events like Black Friday / Cyber Monday is that it fosters a kind of frantic, mindless consumerism that sees impulsive purchases made for the sake of products largely being  discounted rather than actually being needed.

“It’s very easy for ourselves to make purchasing decisions in amidst the Black Friday hype, giving little regard for how particular purchases collude not only with unethical supply chain practices that affect the vulnerable, but on the environment too – and all for the sake of a bargain.

“Small business and independent brands are not as adequately equipped to compete effectively with large retailers when it comes to Black Friday; the business model doesn’t allow for the pile-them-up-high-sell-them-cheap strategy; nor do I feel that they should feel obligated to conform. Their strength is in their individuality as a brand, in the service they provide, in the small scale products they produce, in the impact they have on local communities. These elements can trump the lure of a bargain.

“But because the sustainability movement is gaining more traction, I think people are starting to ‘vote' with their money too – supporting brands and businesses that have a social impact. Imagine being able to make a positive change to society and the global community just by making careful and mindful purchases; just simply by shopping better. It’s quite a compelling thing if you frame it that way.

“Sustainable Lifestyle Awards. It’s the first awards of its kind to verify and celebrate brands that hold both style and substance in equal measure, genuinely helping consumers to live a more sustainable lifestyle and shining a spotlight on the conscientious creators who are dedicated to making beautiful products with a positive social and environmental impact. Its very existence is to champion daily change.

“The event we’re hosting with the online ethical concept store, Lone Design Club  is deliberately held during Black Friday week to underline conscious consumerism, profile the most sustainable, eco and ethically run business in the UK as selected by us and some of the most prominent figures within the retail and sustainability space, and put a positive voice on the sustainability movement.”

Another potential pitfall is highlighted by Rachel Jones, founder of SnapDragon Monitoring,  which monitors, reports and removes infringing goods from the world’s most busy marketplaces.

In 2016 alone, SnapDragon prevented the sale of $10bn worth of counterfeits and successfully removed over 600 links to counterfeit items. Jones knows first hand the damage that can be done to small businesses by online scams. Her own small business, Totseat, was victim to an online counterfeiting scam. And Black Friday presents perils of its own.

“While many shoppers are simply keen to get their Christmas shopping in early, an increasing number of internet-savvy buyers go after fast-moving consumer goods (FMCGs) at knock-down rates only to resell, almost immediately, at a profit, throwing what was a relatively organised online distribution chain into chaos.

“Many of the brands we work with suffer specifically from this phenomenon, and have identified Black Friday and Cyber Monday sales as the chink in their otherwise well-protected brand armour.

“Unauthorised sellers are a nuisance. They might not be selling low-cost counterfeit goods (or they may be!) but their products are generally still sold at a lower RRP, causing a headache for those who do adhere to the minimum advertised pricing (MAP). So, what can be done?

“While registering for Brand Registry and Transparency should help the cause, brands cannot force Amazon to enforce their distribution policy, nor can they force the platform to stop sellers from listing their products. Brands face the same issues on other major marketplaces, including eBay and across the Alibaba platforms.

“It is worth considering publishing information about your authorised sellers on your website or social media platforms. This way, potential customers will know where to go and who to trust. Buying from an unauthorised seller can have consequences. Safety concerns aside, reselling a product often invalidates its warranty, causing serious headaches for customers if something goes wrong further down the line. Be vigilant, and make sure that your customers know this.

“Getting to know your supply chain and distribution network is crucial. How are you supposed to help your customers buy safely if you don’t know where to direct them? Monitor online platforms and keep in touch with authorised sellers regularly. There are online brand monitoring tools out there that can simplify this task, but education is key.”

Beamly urges businesses to create their own Black Friday moments:

“A year-round robust omni-channel approach – that monitors and identifies culturally relevant consumer trends – lets smaller brands create their own key trading moments on days other than the 29th November.

“Take the Wimbledon Championships, for example. If you run a beauty start-up, push your strawberries and cream scented products over these two weeks, while the prestigious tournament lingers in the public psyche. Recognising culturally relevant events such as these allow challenger brands to compete, and this is most easily achieved through a strategic omni-channel approach.”


How to make the most of Black Friday as a small business

If you’re joining in, there are steps you can take to make Black Friday work for you.

We spoke to Tim Hyde, founder and director of social media marketing agency TWH Media, about his top Black Friday tips.

Having commenced his career in leading the Facebook strategy for Lad Bible, Hyde boasts an impressive track record of helping businesses and brands scale online through effective social media marketing strategies. He founded TWH Media in September 2017 and now works with large brands globally ranging from Adidas to Apple Music.

Frontload investment in content and media

Hyde says one of the best strategies is to frontload the investment in your content and media to prime your customer-base before Black Friday, “because key performance channels such as Google and Facebook are considered biddable media (which is the process of buying advertising space) meaning that they have a limit on their advertising inventory and the more competition the more they can inflate the price.”

Understand your objectives

You need to understand what your objective is for the BlackFriday period. For some businesses this will be their sales volume, others will be aiming to increase profit or to capitalize on new user action.

“This involves nurturing customers over a long period and increasing the LTV (loan-to-value ratio). Prepare well in advance and establish your objectives as soon as possible so you can align offers, messaging and marketing collateral across all of your social and digital communication channels.”

Upsell existing customers

One of the key strategies for success is upselling existing customers and focussing media spend on lower funnel audiences who are already aware of the brand and product proposition.

“This combined with a time sensitive offer can be extremely effective and can help to generate record sales numbers for your e-commerce clients. Customers like to think that they are ‘special’ and that the brand they support is giving them something back by way of a thank you. It makes the brand more personal to them as they feel as if they are being dealt with directly and this encourages loyalty, support and then sales.”

Remain true to your brand

You have created a brand that you are proud of so don’t sell your soul and go off brand during Black Friday / Cyber Monday in the hope for quick sales. Remaining true to your brand is critical and shouldn’t be compromised. Offering a sale or discount code during this period doesn’t make your brand any less premium, but it's how you go about it.

“It is imperative that you run this activation in a way that maintains your brand values and communicates with the audience in a way that they resonate with. As an example, a brand like Burberry saying ‘It's our biggest sale ever! 50% Everything SHOP SHOP SHOP!’ is very much off-brand and therefore won’t resonate with their customer base and ultimately, won’t work!”


Conclusion

Whatever you decide to do this Black Friday, make sure it’s right for your business.

Consumers now more than ever choose brands that reflect their values and beliefs. Making a few quick sales on one day of the year could be nothing compared to losing credibility with your loyal customers, which can take a long time to build back up.

Happy Black Friday!

Henry Williams
Henry Williams

Henry has been writing for Startups.co.uk since 2015, covering everything from business finance and web builders to tax and red tape. He’s also contributed to many of our industry-renowned annual indexes, including Startups 100 and Young Guns, and created a number of the site’s popular how to guides. Before joining the team, he reviewed films for a culture website, and still harbours ambitions of being a screenwriter.