The economy has opened up and we are expecting a bumper Black Friday in line with 2018 and 2019 - and a bonus for your return rates, customers buying categories with lower return rates is one of the reasons why Black Friday works so well!
To help you get ready for peak, we have analysed the Black Friday numbers from the last 3 years, found out what your customers are buying and what promotions you need to give to ensure profitable relationships with them.
Plus, our top tips to make the period as successful as possible - you’ll be pleased to know that net net, for most retailers, Black Friday is a profitable exercise!
2021 to be as Successful as Pre-Covid
Due to lockdowns and more discounted periods throughout 2020, Black Friday in 2018 and 2019 were more successful than the same period in 2020:
- In 2018 & 2019, the 2 weeks over the Black Friday period contributed an average of 9% of the annual revenue for a retailer with a revenue growth of 85% and 81% respectively on the previous 2 weeks.
- Whereas, in 2020, the same Black Friday period contributed an average of 7.8% of the annual revenue for a retailer, 13% less than the previous year. Revenue growth was only up 65% on the previous 2 weeks.
Due to lower promotional activity and the opening up of the economy, we anticipate 2021 to be in line with 2018 and 2019, with a revenue boost back up to 9% of overall sales.
The Impact On Return Rates
With the increase in spontaneous purchases to not miss out on the best deals, there could be a fear of increased return rates. However, this is not the case.
Pre-pandemic, we actually saw an average decrease in return rates of 11% over Black Friday and the rest of the Christmas period. This lower return rate could be due to gifting but also due to people purchasing products with a lower average return rate. Products purchased the most (see next section) included bags and boots which have return rates of 5.1% and 14.6% respectively, compared to dresses with an average of 44.7%.
Read our recent analysis on Return Rates, where our analysts looked back at the fascinating data over COVID and the correlations between customer demand, purchasing behaviour and return rates.
What to Recommend to Visitors
For most retailers over the Black Friday period, the biggest % increase in purchased items is from the more expensive in the range, with a cap of up to about £250-£300.
Categories purchased by new and existing customers are typically different on a day to day basis. This is also reflected during the Black Friday period with new customers purchasing bags and returning customers purchasing jeans at a much higher rate, showing that retailers need to push different categories to their different customer groups. Taking data from 2019 (pre-Covid):
- For new customers, sales of bags, coats and boots were up 582% vs normal sales behaviour.
- For returning customers, sales of jeans were up 432% vs normal sales behaviour.
What to Recommend to Visitors
Promotion Type for New and Returning Customers
Evidence suggests that customers that come to the site for Black Friday are less valuable than those that visit during other periods with new customers who first purchase during Black Friday 10% less likely to buy again. On average they take longer to come back, the median yearly revenue generated by these customers is 4.8% lower, and the percentage of people who make a repeat purchase within a year is 14% lower.
To ensure a profitable relationship with these customers, new customer promotions should be geared towards higher-margin products. Whereas, existing customers should be given broader promotions to increase order frequency.
Top Tips for a Successful Black Friday
1) Personalised Recommendations: In the lead up to Black Friday, push different categories to different customers depending on their preferences. Delve into your data, are your new customers also buying bags, coats and boots like the rest of the nation?
2) Smarter Discounting: Use your data to deliver smarter solutions for discounting rather than blanket sales and release maximum cash into your business.
3) Post-Purchase Emails: Turn those less valuable Black Friday visitors into loyal customers by making them come back and buy again. Increase that 1st to 2nd purchase % by sending those customers relevant communications, with the right product at the right time.