Lessons Learned from Black Friday/Cyber Monday

The numbers are in, and once again Black Friday and Cyber Monday sales beat expectations, both online and in-store. Black Friday online sales reached a record $9.8 billion, according to Adobe Analytics, up 7.5% from 2022. Cyber Monday online sales were even stronger at $12.4 billion, a 9.6% increase from 2022. Total sales for the 5-day weekend (in-store and online) showed 2.5% YoY growth. None of these numbers are adjusted for inflation, but more on that later. For now, let’s focus on the positives.

What We’re Watching

Sales figures and shopping behavior for the “Cyber Five” (Thanksgiving through Cyber Monday) are always carefully watched because they’re an important barometer of consumer attitudes and, therefore, economic health. The numbers from 2023 were particularly important for a few reasons.

Because the Covid pandemic caused such a huge ripple in the economy, questions remain about the future of brick-and-mortar retail vs. online shopping. Will the huge growth in ecommerce sales continue, or will the numbers fall back to “normal” pre-pandemic levels?
Much ado has been made about inflation, and its probable effect on consumer spending. Will inflation put a damper on holiday sales?
Interest rates have not been this high since 2007. Will consumers be reluctant to use credit cards for holiday purchases?

What We Learned So Far

With the numbers in, we gathered findings from multiple sources to suss out the shiniest nuggets of wisdom. Keep in mind there are still several big shopping days remaining between now and Christmas, so the picture could change. That said, here’s what the BFCM weekend taught us.

US Consumers are Surprisingly Resilient

Despite the skepticism from financial pundits predicting a weak holiday season due to inflation and high interest rates, BFCM sales continued to grow:

Back to Reality

Total spending (online and in stores) on Black Friday rose 2.5% year over year, but that is a steep slowdown from Black Friday 2022 when YoY sales showed 12% growth over Black Friday 2021. This year’s expected growth of 3%-4% over the entire holiday season is more in line with pre-pandemic levels.

Online Shopping Gains More Ground

Online shopping is growing at a faster rate than in-store shopping, but still only accounts for approximately 16% of total retail sales (through 2023).

Mobile Takes the Lead

Of the $9.8 billion in online sales on Black Friday, 54% of those sales took place on a mobile device. On Thanksgiving Day, 59% of online sales were on mobile. For the first time, mobile purchases have overtaken desktop purchases.

Discounts

According to Adobe, discounts peaked at 31% in the electronics category, toys (27%), computers (24%), and apparel (23%).

Extended Weekend

Discounts are appearing earlier and earlier in November, and consumers are okay with that. According to the NRF, 55% of consumers took advantage of early Black Friday deals, and 35% shopped the week before Thanksgiving.

It’s Gone Global

Black Friday/Cyber Monday is now a global event. Shopify reports that sales were up 24% compared to last year, with 61 million consumers shopping globally this year. The top countries were the US, UK, Australia, Canada, and Germany. Cross-border orders represented 15% of all global orders.

Social Influence

PYMNTS Intelligence found that 30% of consumers acknowledged social media as a factor in their Black Friday buying decisions.

Credit? Not a Problem

The use of interest-free Buy Now Pay Later (BNPY) apps was up 47% YoY according to Adobe Analytics.

That’s it for broad overall learnings about the economy and the state of retail in general. What is far more important are the lessons your particular business learned.

**What Have You Learned?**

Over 17,500 entrepreneurs made their first sale on Shopify this past cyber weekend. Young businesses of the world, we salute you! We also hope you’re paying close attention to the data coming in because this will become your baseline for many BFCM seasons to come.

Mature ecommerce businesses use every source of data they can get their hands on, from shopping platform analytics to inventory and fulfillment platforms. Robust data analytics programs help them turn raw data into usable insights that will inform planning for next year. We’ve covered ecommerce KPIs in detail in recent blogs, and no doubt you already know whether you’ve hit your BFCM numbers. Here are a few other questions you should be asking once the dust settles.

What were your best-selling products? Were they discounted and by how much? How did your pricing compare to your closest competitor’s pricing?
Which items were frequently purchased together? This info can help you upsell, cross-sell, or bundle items in the future.
Did you run out of inventory? Sell far less than you thought you would? Perhaps this will be the year to invest in more powerful data analytics tools.
What was your ROAS (return on ad spend)? It can be very difficult (and expensive) to stand out in all the noise leading up to BFCM, so it’s important to understand what worked and what didn’t. Which channels brought in the most traffic? Which channels brought in the most sales? And which channels brought in the highest number of new customers?
Should you offer global shipping? How would it impact your business?
Are you accurately tracking the cost of goods sold (COGS)? With inflation driving up the cost of everything from raw materials to shipping, it’s important to know the exact value assigned to each unit you sell. Only then can you establish ideal pricing strategies and discounts. A robust warehouse management system can track storage and inventory costs by unit, numbers that can be difficult to determine without the technology.
Did you make money or lose money? This isn’t as obvious as it seems. Many businesses and investors track Gross Merchandise Value (GMV) as their main indicator of YoY growth, but that can be deceptive. GMV is the gross value of the merchandise sold, before deductions such as discounts, shipping fees, platform referral fees, and returns. Until you subtract these post-purchase deductions, you won’t know if you actually made a profit on each unit sold.
What devices were customers using to shop? As the above learnings show, if your website isn’t optimized for mobile, you’re missing a huge audience.
Do you offer fast payment apps such as Apple Pay, Shop Pay or PayPal? Do you offer a BNPL option? Again, if you don’t, you’re missing out. Along those lines, what was your abandoned cart rate? A high rate may indicate disappointment with shipping costs, discounts, or payment options.
What were the most frequent issues cited by customers contacting customer service, and how can you reduce contacts next year? Did your chatbot actually solve anything?
Did you experience any supply chain issues, fulfillment problems or shipping delays? If so, what can you do better next year to alleviate these problems? Could outsourcing to a third party logistics (3PL) provider help?

Proceed With Caution

We realize that the holiday shopping season isn’t over and there’s a lot more analysis to be done. When it comes to the economy, there will always be optimists and pessimists, but the truth is usually somewhere in the middle. The financial analysts who are currently wringing their hands are worried about three things:

Numbers Are Not Adjusted for Inflation

Why does this matter? Essentially it means that while consumers are spending record amounts, they may not be getting more for their money. Opinions on this vary. According to Adobe Analytics, ecommerce prices of 18 specific categories they track have fallen steadily for over a year now. As a result, Adobe claims that strong BFCM spending has been driven by net-new demand, not simply higher prices. According to Statista, however, the entire increase in retail sales over the past two years can be attributed to higher prices and that sales are essentially flat when adjusted for inflation. What does this mean for your ecommerce business? Simply that you should not automatically assume you’re making more money or that your business is more profitable because sales figures are higher than last year. Do the math.

Deals Are the Only Draw

The worry here is that we’re back to pre-pandemic patterns, where consumers are strictly shopping for deals, not because they have tons of pent-up desires and lots of discretionary income. If your sales were weak up until BFCM, there may be some truth to this. If people are willing to pay full price for your goods, there’s absolutely no truth to this. And if you gained thousands of new customers and turned a profit, you probably may not care if they came for the deals. Some retail businesses (like toys and games) do 34% of their business from November to December, and there’s nothing wrong with that.

Sales Are Down from Last Year

As we noted above, double-digit increases experienced in 2022 were a result of pent-up demand and stimulus checks during the pandemic. These were abnormal conditions, meaning we are back to seeing more modest gains from year to year. If your business saw 3-4% growth, it does not mean your business is failing. On the other hand, if you saw more than 4% growth, congratulations. You’re ahead of the curve!

Cheers to Many More Black Fridays and Cyber Mondays!

As always, ShipMonk is here to help. Once you’ve analyzed this year’s sales numbers, you may want to learn more about operations KPIs, demo our industry-leading software platform, learn how to set accurate reorder points, optimize your supply chain, or elevate your customer experience with custom packaging. Of course, you can always contact us to learn how we can help your ecommerce business scale faster with services such as:

Until then, we wish you great success this holiday season!