#WednesdayOneThing is a weekly opportunity for Clearbanc employees to share their knowledge of exciting trends in the retail and e-commerce space. Stay tuned to our Facebook page every Wednesday morning for the newest edition.
November was a crazy month at Clearbanc HQ in the lead up to Black Friday / Cyber Monday (BFCM). Now that we’re on the other side, how did BFCM 2019 play out?
Traditionally, retail stores took center stage for Black Friday and we’d see headlines of people getting trampled and ripping shirts in half. And Cyber Monday was reserved for e-commerce and online business would get their day in the sun. In 2019, the pendulum seems to be shifting in favor of e-commerce and direct to consumer and away from more traditional channels. Specifically, I noticed this one headline in a Bloomberg report:
Black Friday Becomes Blasé Friday as One-Time Frenzy Calms Down
The article describes the typical frenzy that once spawned human stampedes, anxiety, and even a carnival-like atmosphere in shopping malls. This year, that didn’t really happen, even in some of America’s busiest shopping districts.
40% of brick and mortar stores had fewer visitors this year. According to a report by CNBC, Black Friday traffic declined by 6% since last year, leading to some calling it a “civilized Friday.” (which, under any other circumstances wouldn’t be a bad thing, but for Black Friday not so much.)
Let’s dive in to why this happened and what the implications are for retail vendors.
E-commerce shopping is on the rise
It’s no surprise that online shopping is on a constant upward swing. It’s simply more convenient and sometimes even cheaper to shop from the comfort of your own couch.
In addition to that, the deep discounting we traditionally saw over one weekend, is now being offered for longer periods of time—sometimes as long as the entire month. So buyers don’t have to concentrate their shopping on one Friday in November and don’t feel the same sense of urgency they once did.
In fact, Americans spent almost 7.4 billion dollars online during Black Friday this year, the biggest sale day ever—16% more than last year to be exact.
There’s a generational shift of consumers
Not surprisingly, this year we saw the 20 and 30 somethings more inclined to shop online. They are digital natives who are far more comfortable purchasing things online that they’ve never tried out than their older counterparts.
Direct-to-consumer brings more transparency to the shopping experience
How annoying is it when you trek all the way down to the mall for a certain item only to find out it’s not in stock?
DTC offers inventory transparency for shoppers to avoid that kind of frustration. Sometimes even tell you how many units are left in stock! Or even when you can expect the item to be in stock again. Many online retailers also allow you to purchase something that is out of stock with the ability to have it shipped later, as soon as they have them back in.
DTC brands taking advantage of channel diversification
Online shopping has become so incredibly seamless because savvy online retailers are taking advantage of multiple marketing channels.
I know I’ve gotten a lot more text messages this year than I have in the past. And it’s because forward thinking brands know I live on my smartphone so that’s where they are going to try to engage with me.
So, which channel was king/queen among all? The biggest source of sales this Black Friday was from paid search, accounting for 25% of all online sales.
Channel diversification is also a powerful tool to drive more traffic to the website, which is obviously where the magic happens. And it’s also probably the biggest leg up online direct-to-consumer brands have over traditional brick and mortar.
The process is so smooth and frictionless. You see an ad, you click on the ad, and you can buy something in checkout and even have it delivered to your doorstep in two or three days.
Snow rained on Black Friday 2019’s parade
On a more practical note, one reason this year’s Black Friday was a flop was due to inclement weather.
Apparently two inches of the white stuff correlated with a 7% bump in online sales.
And so, because of some cold weather, especially around the Midwest, many consumers opted to stay inside rather than make the trip to the store.
And the retail runner ups are…
I will take a moment to say that DTC brands weren’t the only big winners this Black Friday, Target and Walmart definitely deserve an honorable mention as they came out on top as well.
An obvious reason for this is they prime locations to attract foot traffic. But another huge reason for this is they are becoming very good at catering to their online consumers as well.
Target and Walmart are two examples of traditionally brick and mortar stores that are noticing the trends of consumer behavior and expanding their online e-commerce offerings as a result. This allows them to tap into the online market while remaining a stronghold for potential foot traffic on Black Friday.
Let’s not forget about Black Friday’s millennial cousin, Cyber Monday
Ok so we’ve covered Black Friday, but what did Cyber Monday 2019 look like? Many people often ask me which one is the bigger day for our founders. Seeing as we invest in e-commerce businesses one might think the obvious answer would be Cyber Monday.
And you would be right!
Black Friday saw $7.4 billion in online sales and Cyber Monday saw $9.4 billion. More money was spent online on Cyber Monday than on Black Friday through all channels last year.
This year, $3 billion dollars was spent on smartphones on Cyber Monday, which is about a third of all the money spent on that day and a 46% increase from last year.
And sales don’t look like they are slowing down. Since December 1, the holiday season overall has generated $72.1 billion online, representing growth of more than 16%. So there is still time to make a huge splash before the end of Q4.
So this year it became exceedingly obvious that November is a huge month for online brands as the revenue share of the holiday season shifts more toward DTC and online brands. These brands have a leg up due to their ability to be flexible in how they plan their inventory, how they market, and how granular they can get in their marketing and their advertising.