Online sales figures from November and December 2014 show that Black Friday has finally taken hold in the UK.
Data taken from the IMRG’s E-Retail Sales Index shows that overall online Christmas sales (defined as 02/11/14 to 21/12/14) were up 13% year-on-year.
However the impact of Black Friday meant that the December index was down 4% compared to November.
Other useful stats taken from the IMRG/Capgemini index show that:
- UK shoppers spent £21.6bn over the Christmas period.
- 17% of total online Christmas sales were made in the week commencing 23rd November compared to 15% in 2013.
- Mobile commerce sales increased by 55% to £7.99bn in December 2014 compared to £5.19bn in 2013.
- Mobile commerce now accounts for 37% of online retail sales, or 8.9% of total retail sales.
Separate data taken from affiliate marketing company Affilinet supports this trend. Its network saw 144% more sales on Black Friday than on Boxing Day.
But while the volume of Black Friday sales struck a hugely positive note for retailers, some sites fell over under the weight of traffic.
And there were some well publicized failures when it came to fulfilling those orders. Tesco failed to deliver loads of click and collect orders on time and had to stop promising next day deliveries.
M&S was also forced to withdraw its next-day in-store delivery service and deliveries to customers’ homes were delayed by up to two weeks.
But the logistics problems experienced over the festive period weren’t attributable to just one party, according to the IMRG the fault lies with both the carriers and the retailers.
The retail industry has higher capacity than ever before and was well prepared for the spike in order, but the volume of sales was 30% above what was expected.
As a result of the Black Friday rush the quality of service was impacted for 10 days after the event, but most retailers were then in a position to deal with the traditional increase in sales at Christmas.
Is it worth doing Black Friday in 2015?
Bearing in mind the level of disruption caused by Black Friday, is the event more trouble than it’s worth?
Is it worth shifting loads of stock if deep discounting squeezes profit margins and logistics failures ruin the customer experience?
In a word, yes.
The stock sold on Black Friday would have been earmarked for sales well in advance, so margins weren’t under any unexpected strain.
And Craig Wheeler, ecommerce and retail operations director at FeelUnique.com, said at an IMRG event today that suppliers were generally willing to work with their retail partners to give better prices.
In fact those suppliers that didn’t offer lower cost prices had already been in touch to discuss what discounts might be available for Black Friday in 2015.
It’s also hard to ignore the sales volume generated by Black Friday. Very.co.uk’s online sales increased 130% year-on-year, while FeelUnique.com saw sales triple compared to 2013.
More importantly, around half of FeelUnique’s sales came from new customers, which is a huge incentive to host a Black Friday sale again this year.
Ultimately retailers love events. Before we’ve even taken the Christmas decorations down retailers are gearing up for Valentine’s Day, followed by Mother’s Day, then potentially a big summer sports event like the Olympics or a World Cup.
Black Friday is just another event in the retail calendar, and one that drives sales like no other.
But what lessons can be learnt from 2014 to ensure the fulfilment networks stand up to the pressure in 2015? Here are some of the suggestions made by retailers at the IMRG event:
Begin setting expectations
The appeal of Black Friday is that shoppers get large discounts, so do you need to guarantee next day delivery as well?
Several attendees felt that as long as retailers are up front about delivery times it doesn’t make a huge difference if fulfillment takes two days or three days.
It was also suggested that some shoppers opt for next day delivery simply because they want a guaranteed delivery date, so retailers could ease the pressure on their logistics network by guaranteeing delivery on a specific date a few days later.
Spread the discounting
To ease the burden retailers might choose to spread their discounts and offers out over a few days, rather than focusing it all on Black Friday.
This tactic is already employed by some retailers, most notably Amazon, but it could become more common this year.
Brands might also choose to give their existing customers exclusive access to sale items a few days early, which both rewards them for their loyalty and means there’s less of a bottleneck.
It sounds obvious, and it is, but retailers need to plan ahead and increase their logistics capacity for Black Friday in 2015.
The spike in online sales last year was unprecedented, but now retailers know what to expect and can prepare for it.