If there is one thing that e-commerce marketers can be sure of since the pandemic, it’s that no two holiday shopping seasons will be the same.
In 2020, retailers experienced doom and gloom as the world economy (essentially) shut down. Then, they experienced the opposite end of the spectrum in 2021 as e-commerce platforms saw a historical peak in revenues. The following year saw strong sales, though they were down from their peak.
And this year? Who knows.
At least, that’s the story Cristiano Oliva, marketing and media director of Storeis (a Funnel Solution Partner) told us when we sat down with him to uncover his best tips and tricks to make this Black Friday the best one yet. His Italian consultancy helps retailers devise the best strategies and media investments to drive e-commerce sales.
With Black Friday just around the corner, we thought it was the perfect time to extract some of his insights for our readers.
Cristiano Oliva, media and marketing director for Storeis
How are retailers preparing for Black Friday this year?
While COVID-19 accelerated the shift toward digital-based sales, retailers have more recently seen a regression to the mean. In other words, the large spikes in e-commerce revenue they saw in 2021 are returning to the original pre-pandemic trend line.
“The party from the peak season is over,” said Cristiano. “Now, you need to plan, plan, plan from the start. The expectations for Black Friday are lower this year, even though the sales during this period are incredibly important.”
According to Cristiano, while expectations are down, they’ve still seen a significant media investment. In fact, their clients’ Q4 media budgets will equal that of the previous two quarters combined.
Yet, while retailers are building up for a big Black Friday and holiday push, they aren’t isolating their activities to just a couple of weeks.
“We’re seeing fewer clients push all of their spend into a two-week window,” said Cristiano. “Instead, smart retailers are running test activities in September to see how the market reacts. These can be tests on discounts, product features, and more.”
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Building a longer-term strategy
As part of this move away from a single blitz to drive holiday sales, Cristiano is seeing that retailers are more interested in building their brand long term in an effort to drive customer preference. It’s a model he thinks will serve these retailers well.
“The economy is not great, so customers have more appetite for the biggest discount,” said Cristiano. “At the same time, companies need to maintain their profit margins. Building a brand long term helps them become less dependent on big discounts that can cut into revenue.”
This approach can also help differentiate your brand in an ever-saturated marketplace flush with mind-boggling discounts.
A brand-building approach, coupled with the changes in the performance marketing industry, means that retailers need to do things a bit differently this year.
“The landscape of data-driven marketing has totally changed, and you can’t do the same activities as the previous year,” said Cristiano. “We don’t have the same levers. You still need to trust your data, though, which requires you to train and improve your data processes.”
A modern data-driven approach to Black Friday
Cristiano recommends that his clients build a robust data framework to have the right tools to affect positive results. This framework will help them collect data, map it, analyze it, and more.
It’s a long-term process to be sure. But just like building your brand to stand out amid the Black Friday chaos, it is well worth the investment.
Just look at the data currently available to e-commerce marketers. While they used to be able to finetune their target audience on Google and Facebook, they must now find signals in the data and hone in on lookalikes. Plus, while these two platforms dominated in past years, they may not be home to every set of your audience’s eyeballs this year.
“At the height of the pandemic, everyone was on Meta ads,” said Cristiano. “But you can’t just dump all of your ads onto Facebook or Instagram this year. While a large portion of your audience is still there, you need to be more adaptive and find where they have moved to.”
Over-saturation has arrived
An interesting dynamic has played out over the last few years: the challenge to maintain inventory. As late as last year’s holiday shopping season, retailers still struggled to keep products on their physical and virtual shelves.
Now, inventory is overflowing. Backlogged orders stuck in a recuperating supply chain have finally made it to retailers (though significantly delayed) along with new orders for the current season. This all adds up to a world where retailers need to move a lot of products very quickly.
That means they will be willing to make significant media investments that promote deep discounts to clear their warehouses.
Think of it this way: some retailers still have artificial Christmas trees from 2022. They need to move those items off shelves as quickly as possible to make room for current products. The best way to do that? Big discounts.
The problem, according to Cristiano, is that in a world flush with media spend and discounting, everything becomes white noise.
“I think, this year, your media budget and your offer will become a commodity,” Cristiano said.
Directing consumers to owned retail channels
Let’s step back for a second and take a quick look at the different trends Cristiano pointed out.
First, the economy isn’t great - particularly in Europe. While consumers will be looking for discounts that stretch their dollars, retailers are trying to maintain whatever profit margin they can. Second, an overflow of inventory means many retailers will have little choice but to offer deep discounts, which will carry less relevance in a market over-saturated with them. Third, the most successful retailers know that a long-term, brand-led approach can help them to stand apart.
So, what does this all add up to? It means brands are trying to navigate consumers to their own stores and e-commerce channels instead of third-party resellers. After all, brands have less control over pricing (and therefore margins) on sales on distributor and reseller channels.
But as with all things, there is a balance to be had. Third-party resellers are a must-have sales strategy for many retail brands. So, how do you make the most of this relationship?
“While margins might not be as great out in the marketplace [compared to your owned channels], you can use your catalog to your advantage,” said Cristiano.
In other words, smart brands might keep the most premium and highest-margin items as exclusives on their own platforms. Meanwhile, some more mid-market or more accessible goods would be sold through third parties — say an Amazon. In fact, you see this a lot with consumer electronics.
“You also need to look at your promotion strategies for these channels out in the marketplace,” said Cristiano. “Your products on a site like Amazon need to be promoted differently, since the shoppers there are a little more discount focused. They won’t necessarily benefit from the long-term brand experience you’ve been building.”
Data is at the center of it all
Whether you're building a luxury long-term brand or looking to finally get rid of last year’s backlogged inventory, you need data to understand the best mix of strategies for your business. As Cristiano explained , he always strives to merge every possible viewpoint to gain a clear-eyed perspective of the market dynamics.
Additionally, he finds it critical to merge in-store data with e-commerce and reseller data to truly understand what drives performance. Gone are the days of looking at your brick-and-mortar and digital sales channels in silos. The future, and the way to achieve a better Black Friday, is to embrace an omnichannel approach.
- Expect e-commerce sales to be lower than 2022 (and especially 2021) as consumer trends continue to regress to the mean.
- Building your brand long term can help you become less reliant on providing deep discounts to move consumers during peak shopping seasons.
- A strong brand story can also help you stand out in an oversaturated marketplace.
- An ominichannel approach can help you balance shifts between e-commerce, in-store, and third party sales trends.