The Black Friday buzz is impossible to ignore. It’s that time of the year when big and small DTC brands on Amazon stand at a crossroads: join the high-stakes rush for skyrocketing sales or chart a more measured course? At Recontour, we’ve felt the electric anticipation for November 24th, a date circled in red as the make-or-break moment for annual sales targets for a lot of companies. But here’s the kicker: the importance of these days might just be the most overstated play in the game.
As our Head of Growth, Alberto Pintus, remarks: “Black Friday and, in general, Turkey 5 is a period that is not indicated for all types of brands or products. It depends on your brand’s objectives based on seasonality, financials, relative competitive positioning, and stock.”
Everyone’s gearing up to create a memorable performance on Black Friday but it seems for us that it is a kind of a follower’s mentality that reverberates through the marketplace. As everybody talks about it, my brand should play the game. But it is dangerous to get in the trap. This is precisely why at Recontour, we’re choosing this year to do things differently. Last year, participating in Black Friday was lot of effort for not so much return.
Don’t misunderstand our position. If your brand nails Black Friday, you’re setting sail on prosperous seas for the holiday season. It’s the ripple effect in action — better search rankings, more sales, and customers willing to pay top dollar post-discount days. But, as we mentioned before, for sellers, the fight for volume often comes hand-in-hand with slashing prices, which, while driving volume, might set a precarious tone for the holiday margins.
We’ve embraced Black Friday as a strategic play to destock inventory, not just as a discount derby. Remember, every slashed price is still a win for Amazon, retaining its 15% cut no matter the sale tag. Amazon has masterminded a scenario where it always wins the day.
So, what’s a small brand to do in Black Friday?
To answer this question, we have prepared this post for you. Black Friday success on Amazon revolves around preparation, understanding your customer, strategic pricing, ensuring product availability, and effective promotions. With these points in focus, brands can maximize their potential during this peak sales period.
In 2022, Black Friday has become a global phenomenon, with a huge success in geographies like Canada or UK, showcasing the event’s expanding magnitude. For example, online sales hit an astonishing $9.2 billion in the U.S. alone, up 2.3% compared to 2021, which was a year that benefited for incredible Covid boost. (source: https://www.digitalcommerce360.com/article/black-friday-ecommerce-sales/).
As Alberto Pintus, highlights: “for us, the whole Q4 is the most relevant part of the year and therefore included in the yearly plan at the beginning of the year.” Therefore, the detailed strategy for Q4 was finalized by the end of August (3 months in advance).
Data aren’t just numbers, it’s the voice of your customers. Employing Amazon’s Brand Analytics empowers sellers with real-time insights into search frequencies, click metrics, and conversion analytics. Past trends are not mere history, they’re predictors. By extrapolating from previous years, brands can be better poised to forecast upcoming trends and make informed stocking decisions.
Rethinking inventory management strategy
Remember that a surge in sales means nothing if you can’t fulfill the orders. Stockouts can harm your brand reputation and lead to missed revenue opportunities, especially on Black Friday. To avoid these negative impacts, Amazon sellers should focus on maintaining proper inventory management, monitoring their stock levels and having processes in place to avoid running out of stock.
Besides the more obvious consequences of having a stock-out, that is the lost revenue, which is especially detrimental during high-volume periods as Black Friday when demand is really high, there are other significant ones such as the loss of trust from your customers. Stock-outs also impact on the ranking of your products in Amazon search results, because the ranking algorithm penalizes products that are not available. Because that loss of that organic rank, if you want to keep up your sales, then you need to spend more money on advertising in order to catch up.
As you can see, there is a spiral of negative effects provoked by being not able to efficiently manage the inventory. As Recontour’s Senior Operations Manager, Shrenik Karbhari, highlights, “inventory management for Black Friday takes months of planning in order to execute properly: you should start early and build buffers for the unexpected, because unexpected things will happen.”
In your inventory strategy, try to anticipate higher demand and synchronize with your suppliers and ensure your inventory, especially if you’re using Fulfillment by Amazon (FBA), is stocked well in advance.
Your product listing is your storefront on Amazon. Consider changing the images of your listing for optimizing them for the holiday season, like adding a winter or holiday themed photos or adding gift-related keywords that are more relevant and heavily used during the holidays.
For example, for our amazing Shaka Ball game we have used an image of the game being played on the snow, as you can see here.
Furthermore, take into account, as Pintus highlights, that “different aspects need to be considered: some keywords may acquire relevancy (gifting) or new keywords may have appeared.”
Pricing and Promotions
When it comes to pricing and promotions, the decisions are as strategic as they are complex. Do you drop prices or limit supply? Each has its merits. Lowering prices can significantly boost volume, driving your products up the search rankings and bringing in a flood of customers. However, this could also slash your margins unless the volume compensates for the discount. Conversely, limiting supply might allow for higher price points and better margins, but it runs the risk of losing visibility and falling behind in the fiercely competitive race of Black Friday sales.
At Recontour, “we try to identify the sweet spot of the price that helps us build up our ranking in the weeks before the event and then the shifted sweet spot, playing on the reduced elasticity and the gifting behavior, to maximize profits in December,” remarks Pintus.
The art of pricing demands that you stay informed. The final quarter, with its surge in consumer spending, means that pricing is no longer static; it’s a dynamic, pulsating force that requires constant attention. The key lies in understanding the competitive dynamics of your niche—knowing not only your inventory but also how your competitors are positioning themselves. Are they slashing prices, or are they playing the long game with value-added promotions? To stay ahead of the game, consider employing a repricing tool. This isn’t just about responding to competitors but anticipating changes, ensuring your brand remains competitive and profitable throughout the industry’s most crucial sales period.
As we mentioned before, Black Friday is a very powerful tool for gaining competitive positioning and for destocking in case of overstock, not for profitability, at least not short term.
Therefore, Pintus adds that at Recontour “we carefully plan pricing, PPC, and promotions to ensure a sustainable build-up toward the event, to make the most of the increased demand of December, and to profit from the ranking we gained during Black Friday.”
In order to plan and track, Pintus gives some practical points: “we rely on our internal reports (sales, PPC, stock, and P&L), which are integrated through API with the marketplaces to get real-time data and fine-tune our actions. On top of that, we use Helium 10 and Keepa to track ranking and competitors’ behavior.”
Marketing and Advertising
Remember, every advertising dollar matters. You need to maximize your advertising spend to reach and convert as many consumers as possible. By leveraging platforms like Amazon’s Sponsored Products, Brands, and potent social media platforms like Instagram, brands can get the best bang for their buck.
At Recontour, we ensure that our products stand out and reach our target audience effectively, says Pintus, “by analyzing each specific niche and making sure that our products stay on top of the specific ‘competitive arenas’ (i.e., keywords or groups of keywords) when it matters.”
For example, a good practice is to keep your PPC at high levels during the weeks before the event starts. This is because, even when conversion is low in absolute terms, people browse and pin products they will eventually buy during Black Friday, you want them to see your products then.
The final recommendation is clear for Pintus: “When looking at Black Friday you need to apply a strategic approach to your Q4. By doing so, you need to set your budget based on your objectives and never forget the overall profit equation of your mix.”
Our Head of Growth also remarks that “if you have decided to participate in Black Friday, you need to go all in, otherwise better to sit one out.”
He suggests that the sellers “need to make sure their brands can take the added investment needed in terms of promotional fees, added PPC costs, and lower margins, without compromising its financials.”
And don’t forget, as Pintus says, to “shape your overall Q4 taking into account the higher margins in December to finance your efforts in November.”
With this checklist in mind, time has come to redefine your brand boundaries on Black Friday.