Volume v.s numbers – What to look out for during Black Week.
We have seen this a thousand times over. Black week is closing in, and you have prepared for months. “How much will we sell? How many new customers will we get? Is this going to be our big break?”
While the allure of increased sales is undeniable, success during this bustling period demands more than just a focus on the numbers; it calls for a deeper understanding of the challenges and strategies that can make or break your venture. While a surge in sales is great, your profitability might stay unaffected.
Can your business uphold customer promises amidst increased volumes? If not, evaluate your processes and technology to ensure seamless operations, even during peak times. Here we dig into our pool of experience and present some key numbers to keep an eye on.
The pitfalls of blind growth
Pricing predicament
We know that it is tempting (almost mandatory) to ride the wave of increased sales by offering discounts, but there’s a catch.
Postnord’s E-barometer reveals a noteworthy statistic: while 42% of e-tailers experience an increase in sales during Black Week, only 28% see a corresponding rise in revenue. This underscores the importance of not just chasing sales numbers but ensuring profitability and efficiency by paying attention to the hidden costs.
For example, consider the impact on shipping – a constant cost per unit regardless of the price of your product. Without careful consideration and preparation, you might find yourself in the red.
Global presence, local hassles
We have seen a hundred brands pushing out their Black Week sales to all of their markets, regardless of volume. While this might be a good opportunity for testing the waters, expanding globally without a solid infrastructure plan can lead to dissatisfied customers.
Step into the shoes of a new customer who might be unfamiliar with your brand. They expect quick delivery, clear communication, and a good quality product. So how do you live up to this? Identify your core markets, secure optimal shipping deals, and leverage local carriers. Don’t let global ambitions compromise the quality and timeliness of your deliveries.
Time-starved teams and quality compromises
With increased sales volume comes the risk of overwhelming your team, potentially leading to a decline in quality. Maintaining profitability in the face of stretched resources is a precarious balance. It’s a stark reminder that growth should not come at the expense of customer satisfaction and product quality.
Inventory optimization
Many businesses stock up before Black Friday, tying up capital throughout the year. This approach is costly and may result in suboptimal inventory balances. A smarter strategy involves understanding demand patterns and maintaining an optimized inventory throughout the year.
Additionally, running out of stock during a peak period is a lose-lose situation. Your options here are to either sell products you do not have, resulting in dissatisfied customers – or witness a revenue loss. Sending compensation to appease frustrated customers also drives up costs.
The key is a well-balanced inventory that aligns with demand. If you have achieved the perfect volume – congratulations! You are one of the few.
Tech readiness
Growth is not just about scaling up; it’s about optimizing. It is crucial to ensure your tech stack is ready for the surge. A common issue amongst e-tailers is supply chain visibility and transparency – where what happened and why. This is crucial to be able to anticipate and resolve logistics hiccups before they affect your customers.
Third-party logistics providers (3PLs) can be hard to reach, especially during peak times such as Black Week. Develop strategies to address challenges promptly, and partner up with professionals outside the 3PL space who are ready to step in if needed. You might even need to consider changing your sales platform or integrating an ERP system to streamline operations.
Conclusion
In conclusion, Black Friday is not just a test of your ability to sell; it’s a challenge to optimize every aspect of your business. As you gear up for Black Week, remember that success lies not just in the numbers you achieve but in the strategies you employ to navigate the complexities of eCommerce during this critical period.
If you have experienced any (or all) of these hidden negative factors, you are not alone. Get in touch with Adam, our Head of Logistics, and learn how to make your next Black Week the most profitable one yet. And hey, our advice is free of charge!