Black Friday Online: The Opportunity for Ecommerce Retailers
Black Friday online sales hit $9.03 billion last year—a 21.6% increase over 2019—making it the second-largest online spending day in U.S. history behind Cyber Monday 2020.
The coronavirus pandemic certainly impacted spending behavior on Black Friday, just as it had throughout 2020. However, many analysts believe these consumer behavior shifts are permanent, which has retailers offering holiday promotions earlier than ever.
Are you prepared to take advantage of the enormous opportunity that Black Friday presents for ecommerce retailers?
Let’s take a quick look at what makes Black Friday so important, why dropshipping should be a part of your strategy, and how you can start to prepare now.
What’s the Deal With Black Friday, Anyway?
In the 19th century, President Lincoln designated the last Thursday in November as the Thanksgiving holiday. Then, in 1941, Congress passed a law to make it the fourth Thursday of November.
During the 1950s, it became common for people to call in sick the day after Thanksgiving to give themselves a long weekend. Before long, many businesses began adding this day as a paid holiday instead of determining who was really sick and who’s pay to cut.
In 1966, a story appeared in The American Philatelist. The Philadelphia Police Department used the name Black Friday to describe the crowdedness in stores and the traffic jams in the city due to holiday shopping promotions.
Today, Black Friday deals begin earlier and last much longer than one day. Many retailers offer significant discounts starting two or three days—even weeks—earlier than Black Friday.
For more retailers, the holiday season accounts for a considerable chunk of their annual sales. Now more than ever, people rely on digital transactions to purchase goods, thanks to the world still recovering from the coronavirus pandemic. From 2019 to 2020, the ecommerce industry’s share of global retail trade rose from 14 to 17%.
Over the last decade, Black Friday sales have been regularly increasing by 4%. In a SaleCycle survey, 89% of respondents say they will make a purchase during Black Friday—and most, if not all, intend to buy online. In fact, only 13% of shoppers plan to visit a physical store. Similarly, most consumers will spend over $100 on Black Friday, with 28% intending to spend at least $300.
All of this is to say that the sheer popularity of Black Friday shopping means that, as a retailer, you can’t afford to ignore it.
Supply Chain Issues
The COVID-19 pandemic has thrown many problems our way, but there’s one challenge that’s super significant to online retailers: supply chain issues.
Most issues stem from the highly contagious Delta coronavirus variant. A lot of the world’s products are manufactured in countries like Vietnam and Indonesia. Unfortunately, these are countries being overwhelmed by COVID-19 surges, which negatively impacts the function of factories. The virus has completely shut down some factories over the last few weeks.
Let’s not forget that COVID-related factory closures and subsequent shipping delays have been occurring worldwide for over a year and a half, so it’s no wonder that the retail supply chain is grappling with the consequences.
The fact is, no one—and no industry—is immune from the shortages that are occurring right now. Many overseas suppliers are experiencing trucking and container shortages, in addition to higher rates. The best thing you can do to offset these issues is to bolster your planning and forecasting efforts and strive to make your vendor relationships and workflows more efficient.
There is no “one size fits all” approach to these shortages, but developing stronger relationships with vendors has helped the supply chain anticipate challenges and get ahead to some degree.
Another way retailers can curtail potential supply chain concerns is by adding a 20% inventory increase and ensuring inventory arrives at their warehouses or fulfillment centers weeks in advance.
It’s vital to understand the correlation between pricing, inventory, and advertising as you prepare for an optimal holiday performance. It’s only by understanding the relationship between these metrics that you can make the most informed strategic decisions for your business—and take profitable actions during this selling season.
The demand for items like appliances and furniture will continue to surge as the holiday season approaches and consumers continue home improvement projects.
While replenishment has been slow in many industries, more products will become available, and there will be a steady rise in higher ticket purchases through the end of 2021. As a result, experts recommend adding filters to your website to allow customers to check product availability.
To prepare for success, you must keep essential products and alternatives in stock while offering enticing promotions and managing orders alongside persistent shipping issues due to popular carriers’ surcharges and capacity constraints.
Why You Should Include Dropshipping in Your Black Friday Strategy
If you’re not already dropshipping, now is the time to start. Dropshipping provides retailers with a low-effort, high returns business model—whether you’re new to online retail or you’re an experienced ecommerce entrepreneur.
Dropshipping solves the inventory distortion problem for retailers, where suppliers and retailers lose trillions of dollars each year due to incorrect sales projections. Sure, not holding onto inventory is a significant improvement, but that’s not the only issue dropshipping solves for ecommerce retailers.
Expand Your Catalog
Dropshipping is a low-cost, low-effort way to add new products to your retail catalog—especially when it comes to seasonal gifts like Christmas stocking-stuffers. It doesn’t make sense to carry these items and stock them year-round, and it’s challenging to predict how many you may sell in one season.
When you add dropshipping to your business model, you can give customers access to as many products as they’re willing to buy. And when the holidays are over, you’re not holding onto dead stock and inventory that you didn’t sell.
When done right, dropshipping can help online retailers scale when expanding their product offerings and operations cost-effectively.
Dropshipping as a Product Tester
Dropshipping also allows you to dabble in product testing when you’re looking to expand your product catalog. You only want to add products that your customers are eager to buy to your regular catalog, but finding said products could be challenging.
While you may expect all of your products to fly off the shelf, not all of them are winners. It becomes a continual trial and error for all retailers—no matter their size. Expanding your business only to sell a few products isn’t effective product management, where dropshipping can assist.
Through dropshipping, you can offer new products to your customer base without purchasing new inventory or committing precious warehouse space to a product you’re unsure about. The dropshipping model reduces the monetary risk of testing new products so that you can spend more on marketing to gauge customers’ interest. And if the products you’re testing sell well over the holidays, maybe you can consider purchasing inventory to help increase your overall business revenue.
Since you don’t know what to expect this holiday season, the last thing you want to do is put all of your eggs in one basket with a single supplier. It’s a good idea to partner with additional suppliers during times of high demand so that you have options when sourcing products for your online store.
Flxpoint allows you to integrate with multiple suppliers and then create rules to prioritize when sourcing from various suppliers. This will enable you to source products from suppliers with cheaper shipping rates, who are closer to your customer, and more. Take advantage of features like these and always have backup suppliers in place—especially for Black Friday.
Solve Shipping Problems
When you ship from only one warehouse, reaching customers in states and countries outside of your own can be challenging. Dropshipping can broaden your customer base to reach outside your comfort zone while also keeping shipping rates and times steady.
Most people are unwilling to wait more than a week for something they order online to arrive. By using suppliers located in your target audience’s country, you can offer quick domestic shipping options. Offering fast shipping to customers who live in different countries is impossible unless that customer is willing to pay exorbitant amounts for expedited shipping.
Dropshipping lets you pair up with the right suppliers in ideal countries to expand your business and create a global brand.
Why Invest in Automation Now
As you now know, preparing for Black Friday takes advance planning. Now is the time to advance in automation software solutions if you don’t already have one in place.
Use Automation to Decrease Uncertainty and Errors
No one knows how this Black Friday will unfold, so you must do everything you can to eliminate any uncertainty in your ecommerce operations. The easiest way to do this is to empower your business and employees with automation tools that can assess what’s happening in real-time and tell your employees exactly how to handle the situation at hand.
During the holiday shopping season, there’s no room for error. As people frantically shop for gifts for their family, loved ones, and friends, they don’t have patience for incorrect orders or those that don’t arrive on time. Providing an unsatisfactory experience now may cause you to lose potentially loyal customers in the future.
Errors can stem from mis-picking or packing in the warehouse, manual processes that allow for human error, wrong information being entered into systems, and having disparate information that your team can’t easily access.
It’s essential to implement new systems now because you’ll need time to test your technology and fine-tune your processes before an onslaught of new orders.
Execute Your Biggest Black Friday Ever With Flxpoint
Flxpoint allows you to look at your ecommerce operations from a central dashboard so that you can make informed decisions for your business. Stay on top of optimized product data, inventory availability, supplier communication, profitability, and more with a robust platform that brings all your important data together.
Want to learn more about how Flxpoint can help you execute your best Black Friday yet? Talk with an expert today!
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