We, online consumers, are now so used to finding deals online all year round: the nature of cross-border trade; the multitude of online retailers and wholesalers; the independent marketplace sellers all mean it’s now very easy to find the same article online sold at different prices and by different vendors.
This is the reason why we spend time browsing online, but also why when in physical stores we continue to research and purchase online (1 out of 5 millennials will browse in-store before purchasing online). 3 out of 4 consumers now start their search online and players like Amazon capture a larger share of consumers researching products than those using search engines.
So what about those key online retail deal events?
Prime Day, Cyber week, Singles’ Day all have become synonyms of shopping sprees and unmissable deals. For brands, they’ve become some of the largest organic revenue drivers of the year. Prime Day has remained confined to a specific period, increasing in 2019 to a 2-day deal event with numbers of promotions increasing within the 2 days and stopping right after. Cyber Week, on the other hand, has grown around Black Friday and Cyber Monday to now span over periods of almost 10 days. Some retailers are starting deals before the actual Black Friday to try and entice consumers before the rest of the competition and some retailers extend specific promotions after Cyber Monday to capture late holiday shoppers.
Alibaba Singles' Day sales figures have continuously grown year on year, making it the highest revenue for a single day. Despite the sales' growth rate having slowed down, more and more brands participate in the event, which has also expanded into offline retail and has become a platform to showcase technological innovations.
Although events like Prime Day still feature millions of product deals on Amazon (1.3M products in 2019) and are run in over 17 countries, they’ve become the perfect marketing tool for other online retailers who are leveraging the amount of online traffic and the buzz generated around it. It’s common and expected to find deals on other retailers too to coincide with the Prime Day event. This makes it all the more challenging for Amazon to secure exclusive deals and leverage their traffic volume to benefit other activities such as new product launches.
For the consumers it means a myriad of deals are available online with the opportunity to shop for the best deal out there. The importance and rise of mobile in the shopping journey ( ~40% of online browsing happens on mobile ) means shoppers can easily monitor and keep up with the best deals throughout their day.
Culturally, it’s not surprising that these key shopping moments, which have become part of our yearly ‘shopping repertoire’, take place when they do. Summer sales have been happening in traditional brick & mortar retail and very often take place mid-July as regulated by country-specific legislations.
Black Friday originated well before the 1950s, when people would take a day off after Thanksgiving to get a head start on their holiday shopping. So much so that it became a national holiday focused around the pre-holiday shopping prep.
Cyber Week is still a fairly recent concept outside of the US, but with the growth of ecommerce and cross-border online trading, it’s been quickly ‘socialised’ globally and now represents one of the biggest trading times in the year for European online retailers as well.
Alibaba Singles' Day, the Goliath’s counterpart to Black Friday and Cyber Monday, beat all records in 2019 achieving $38B in sales on November 11th and hitting the first $1B one minute after the event launched. Similarly to Cyber Week and Prime Day, the most successful categories are in electronics and apparel, but the event operates at a much larger scale, across all of Alibaba’s retail platforms in Asia and through AliExpress internationally. The biggest online trading day in the world has evolved to become a real entertainment showcase: live streaming and celebrities’ hosting are part of the ‘gig’. For the singles out there it is not only about shopping, but about feeling that sense of community and participating into something big where favorite celebrities attend. For Alibaba, the ‘4-singles day (1111)’ event represents an opportunity to venture into and lead with technology innovation. AR and gamification were a few of the technologies adopted by international brands to entice shoppers.
The big question for consumers is: are these retail events providing unmissable deals?
Or are they an entertainment and marketing showcase?
Average discounts on Prime Day range between 25-50%, but not all categories are equally successful and receive the same attention from consumers. Higher margin products like electronics and apparel usually represent the largest share of product deals (~24% in 2019) as opposed to toys & games. Interestingly, some independent sellers saw sales performance rise even without participating in deals during Prime this year. This is because of the high traffic on the platform where shoppers also have a chance to discover new and competitive products.
Many deals, however, don’t even sell on Amazon during Prime Day because the level of competition is so high and the required marketing investments to surface the products aren’t worth it for medium / small vendors and sellers. From a consumer perspective, it is easy to see that not every offer out there will be a truly ‘best deal’. There are plenty of sellers who will take advantage of the traffic available to position their products; some won’t be able to afford massive discounts because of margins’ erosions and the marketing spend required to beat the competition. But, the psychology of ‘having had a good deal’ might still take over. Especially for higher-priced items where even a 25% discount will still feel ‘considerable’. A winning factor for Amazon moving forward will be to leverage exclusive deals to win over the competition and other online retailers offering the same discounts over the Prime period.
Exclusive deals on exclusive products and offers on new product launches could well become the strategy for Amazon Prime Day in the future.
The 2019 Cyber Weekend generated over $550M globally, making it one of the fastest growing online retail promotional slates. Despite deals being available throughout the period, Black Friday remained the top performing day in terms of sales, likely due to consumer’s fatigue by Cyber Monday. Especially since deals are now starting earlier than the actual Cyber Weekend, consumers lose interest by the time they get to Cyber Monday. Interestingly, editorial and social accounted for just over a quarter of global commission payments during Black Friday this year for key advertising publishers. This shows an emerging trend on mobile channels that counteracts more traditional discounting avenues like coupons and cashback mechanisms.
Singles' Day performance has largely been led by categories like electronics and apparel. 90% of sales actually came from mobile devices this year, reinforcing a growing importance of mobile as an ecommerce channel.
Sales figures for this event will likely continue to grow and involve more partners across the globe, providing opportunities to leverage new technological avenues and offline channels in the Asian market.
Do the collective buzz and holiday spirit appear as attractive as a price discount to online shoppers? It may well be the case.