The busiest shopping day in the world is getting closer and closer closer… Black Friday happens every year on the last Friday of November. On that day, consumers spend a chunk of money, aiming to save in the long run. For businesses, Black Friday presents an opportunity to make a ton of profit (more sales equals more profits), build brand awareness and secure more customers.
Black Friday is originally an American custom. The day of mass shopping dates back to the early 1960s when police officers used the term ‘Black Friday’ to describe the chaos and rush that resulted from many people coming into the city to do their holiday shopping.
In South Africa, Black Friday began in 2014 when the e-commerce platform Takealot introduced the day to its customers. After the introduction, many other businesses adopted the tradition and began offering huge discounts on this Friday.
In this article, we look at what Black Friday has to offer retailers and business, and we ask if it’s worth it to adopt the tradition for your business.
Pros and Cons of Black Friday for Businesses
Advantages
There are many pros and cons to having a Black Friday sale for your business. Some of the advantages of a Black Friday sale include:
Increase in Sales
For small businesses, the day brings them with an opportunity to increase their sales. Those with websites or e-commerce businesses stand to benefit the most because of how quickly and accessible they are to customers.
You must ensure that your marketing strategy for this event is good because you will still need to market your business to potential customers.
Greater Audience Reach
As mentioned before, Black Friday increases your sales and customer base. Businesses typically start advertising their sales for the day weeks before to build up momentum.
You can reach more audiences by creating a robust marketing strategy and leveraging your social media pages. You can also use e-mail marketing to advertise products to customers in a more personalised way.
If you do proper marketing, not only will you increase sales but also your customer base. These tactics help build trust in your brand and increase your conversion rates.
Move Additional Stock
Black Friday is the perfect day to shift any surplus stock you may have. You can bundle the stock with other products, offer heavy discounts or offer it as a freebie to customers who buy during the day.
Selling any extra stock will help improve your cash flow, give you more space for new inventory and get ahead of your next batch of stock.
Disadvantages
Unsecured Customer Demand and Profits
Although Black Friday is the biggest sales day of the year with increased profits and customers, there is no increase in consumer demand. Your customers are holding out until the prices drop and so are possibly unwilling to pay the full or normal price. Because of this, it can be difficult to move products at their full price throughout the year.
Additionally, if your discounts are too high and prices are too low you will not generate a big enough profit. You need to ensure that your pricing strategy for this quarter also factors in Black Friday.
Uncontrollable Website Traffic
Consumers these days prefer shopping online rather than in stores. Because of this a lot of customers will flock to your website and this will create a lot of website traffic. You have to ensure that your website is optimised and ready for the traffic. If not, your customers will experience slow load times, website errors or unresponsive pages.
Additionally, if your website is not optimised your customers will take their money elsewhere.
Logistics Chaos
Black Friday can be a huge strain on your supply chain process. If you have to ship out goods to many customers in many areas, without a comprehensive logistics plan you will suffer. You need to plan all the various aspects of your supply chain carefully before the day arrives.
You will have to ensure that you have enough stock, a good team to fulfil orders and partner with a reliable delivery partner for shipping of goods.
Is Black Friday a Good Idea for SMEs?
The million-dollar question is about whether participating in Black Friday is good for SMEs in South Africa. The answer is, if done right it can be very profitable for SMEs. With a good strategy and team behind you, you can turn Black Friday into a profit frenzy.
Basically, preparation is key! And remember, if you don’t want to participate in Black Friday, you can still capitalise on consumer spending by participating in Cyber Monday.
Now that you know what Black Friday is all about, you can decide if you will participate or not. If you do, you need to prepare thoroughly to avoid any mistakes that could cost you your profits.
Want to know how your small business can make the most of Black Friday? Check out our article.
