Even before Covid, the balance of Black Friday consumption was slowly tilting toward e-commerce. But 2020 was a year of extreme tilt, with nearly twice as many consumers choosing to stay home and buy online rather than go out to stores (100 million versus 58.7 million).
The good news is that as a digital event, Black Friday does not involve risking lives and parties in a crowd driven crazy by the possibility of killer deals.
However, as marketing professors who have studied consumer behaviors related to major sales events like Black Friday, our analyzes show that much has been lost in physical to digital translation. Historically, Black Friday shopping has been on par with turkey dinner as the US Thanksgiving tradition of Black Friday 2.0 is certainly safer but also lackluster. Regardless of the deals, logging in and clicking on the website is no fun. This can dampen shopping enthusiasm and lead to missed sales opportunities. While last year’s Black Friday sales in the US totaled $188 billion, outperforming the previous year by nearly $50 billion, retailers are understandably concerned that the digital experience will lead to lower sales in the future because customers have fewer pandemic concerns. About going to the physical stores.
In fact, online retail is at a disadvantage when it comes to encouraging increased consumer spending per visit. A recent report found that 71% of buyers spent more than $50 visiting a single physical store, compared to 54% shopping online.
Our study of consumer psychology reveals that three aspects of old-school Black Friday have made it a particularly powerful commercial and cultural phenomenon: door hunters, scarcity management, and browsing. We believe that these three areas can be digitized more effectively by large retailers as well as small businesses to increase customer shopping pleasure and consumer satisfaction on Black Friday. Furthermore, although the lessons here may need to be implemented differently, for example, in China than in the United States, we believe they apply to online sales events throughout the year and around the world.
Black Friday consumers are popular with certain retailers for their highly publicized amazing deals, or “door hunters” – for example, flat-screen TVs or game consoles at half price.
For retailers, these items often lead to losses — products that are sold at a loss to get customers to the door. Research has demonstrated the effectiveness of offering low prices on shopping merchandise (items for which consumers tend to compare prices across retailers) to attract consumers to their store, and then making profits through impulse merchandise (impulsively bought items) once they are there. Even after door hunters sell out, behavioral tendencies such as sunken cost bias and loss aversion encourage consumers to buy other items as a kind of consolation prize.
Although door hunters are used to entice consumers to visit retail locations on Black Friday, the digital application often does not conform to the traditions of Black Friday. Retailers can make improvements on multiple fronts.
First, on the web page, the gateway elements must be displayed in conjunction with the relevant higher-margin sales items to take advantage of the loss leader effect. These should be items that clearly complement the door rail, such as a modern remote control for a flat screen TV or an ergonomic chair for a desktop computer. Higher margin products can appear during check-out and in confirmation emails.
Furthermore, if a doorbuster item is sold out at the time a customer checks in, instead of simply showing a “Sold Out” page, retailers can compensate consumers for a visit, for example, by giving them a coupon valid only for the next few hours. This could potentially activate a sense of sunk costs and provide an additional incentive for consumers to make purchases on the site. During Black Friday last year, Walmart offered shoppers who missed some tailgate deals an option to sign up to be alerted by email when stock replenished — a good first step, even if it didn’t take full advantage of customers who were already at the door.
Brick-and-mortar retailers are carefully taking advantage of rarity at Black Friday events, offering a limited number of units of a specific item for sale. Since people tend to find rare items more than desirable, these limited stocks are a major part of Black Friday’s allure, driving long lines before stores open and the notorious rush that follows. But retailers have to balance this madness with the risk of customer disappointment and a backlash on social media if advertised items are too scarce.
Research shows that customer satisfaction is a function of expectations, and even fairly slight deviations from what customers expect can seriously affect their attitudes toward the shopping experience and the brand. Physical stores can find a sweet spot for rarity because the brick and mortar environment is rich in cues that allow customers to make realistic expectations about whether they will be able to find the product they are looking for. The traditional Black Friday experience begins with a long queue: customers can literally see where they are standing and adjust their expectations accordingly.
This is much stricter in the context of the Internet in part because it is difficult to define customer expectations about scarcity without the physical line. During Walmart’s 2020 Black Friday event, for example, the Nintendo Switch MarioKart Deluxe 8 bundle sold out almost immediately. Many consumers who came to Walmart.com to purchase the product became indignant and left a large number of toxic reviews; Within a few hours, the item’s rating had dropped from 4.2 stars to 2.5 stars.
Scarcity management becomes more relevant in times of supply chain disruptions that may make holiday shopping a longer and less satisfying endeavor for consumers across the board.
E-commerce players must find digital ways to define customer expectations regarding scarcity. When promoting a door post item before a sales event, note clearly that stock is limited. Show the number of people who have already visited the product page to help consumers assess how likely they are to get the item. Show the percentage of inventory that has been put into carts by consumers or the number of units left, especially when inventory is running low – Macy’s and Amazon already do it. These cues can help entice consumers to buy, but they also define their expectations that the item may be out of stock.
Electronic stores can also display each consumer’s position in a virtual queue, based on when they arrived on the page. Not many retailers are taking full advantage of the capabilities of digital queuing, but Amazon’s “lightning deal” is getting close. This real-time feature allows buyers to see how much of a discounted item is left on the digital shelf. If the bargain item is not available, buyers can request to add it to the waiting list in case the person who beat them to the finish does not complete the purchase within 15 minutes.
Finally, actual sales events like Black Friday are great at turning passive consumers into active shoppers. As humans, we like to feel like we’ve won by discovering things, whether it’s interesting deals or products we didn’t think of when we hit the store. This is in line with a long body of research showing that self-discovery is more motivating than telling one what to do. Plus, finding deals evokes fun “smart shopper feelings” that turn the ordinary buying experience into an adventure, with rewards for discovering exotic deals.
The ability to see, touch and often experience products contributes to the sensory pleasure of discovery in a brick and mortar environment. Having other shoppers is another key element, making shopping a social and competitive experience as consumers look at each other’s shopping carts.
Launching this kind of discovery has always been a challenge for online retailers because web pages and application interfaces are by nature less immersive multisensory environments. Also, as we’ve discussed elsewhere, seemingly powerful and obvious product recommendation algorithms can feel coercive to the consumer, hampering this critical sense of independence and free discovery.
Alternatively, e-commerce merchants can invite consumers to virtual multi-dimensional spaces – or metaverses – for Black Friday and other sales events. As a first step, some retailers are already building virtual showrooms. For example, IKEA has created an interactive 3D digital version of its physical showrooms in several markets – in Russia, this was reportedly responsible for a 17% increase in sales. Marks & Spencer has also (in association with Mindshare) introduced a VR showroom for the Home Appliances division where customers can put together their perfect living space and share their designs on social media.
At the virtual Black Friday event, customers can tour these digital environments. Retailer can hide special discounts in each room, encouraging them to explore and thus discover new products. The same basic principle lies with Walmart’s “hidden clearance” functionality in its mobile app, which reveals incredibly low prices (like three cents for a video game) when a customer scans certain products in the physical store.
In the future, retailers can also use augmented reality to transform communities into Black Friday shopping environments. Think Pokemon Go, only with excessive local deals rather than elusive fantasy creatures. Hunting the biggest street-to-street deals in their city or town, customers will encounter enticing deals that seem like personal discoveries – even if they aren’t quite as amazing as the Pokemon Go creatures.
In all of these events, retailers should de-emphasize official product recommendations in favor of user reviews and community content such as ratings of user-generated deals, the top five items in that category according to today’s user ratings, etc. This will enable consumers to discover deals and items that their peers really like, enhance satisfaction, and provide psychological benefits – feeling part of the community.
. . .
Each of these three methods is effective on its own. But it can pay off much more when used together. For example, retailers can set up a virtual queue for consumers who arrive before the official start time. While they wait, they can be given the option to watch live product demos or play a game that may relate to some of the products sold (solo or in competition with others). Either option can unlock exclusive discount codes. Such digital activities will combine a smart shopper’s sense of discovery with managing expectations for queuing and the exorbitant cost of breaking the classic door.
Whether done once or in combination, these digital counterparts to brick-and-mortar methods can help e-merchants bring the kind of enthusiasm — and sales performance — to the most powerful personal events.