The Impact Of Black Friday on the Health and Beauty Industry
In the strive to take advantage of the most lucrative event of the year, Black Friday, DTC health and beauty brands scramble to try out new channels, models, and strategies.
The pursuit of feeding deal-hungry buyers with mouth-watering offers, a race to the lowest prices, with the hope to attract and keep them coming back for more.
But one question remains: what is the impact of Black Friday on Health and Beauty brands?
In this article, we will delve into the
- Economic Significance Of Black Friday
- Multifaceted effects of Black Friday on the health and beauty industry.
- The impact of Black Friday on consumer behaviour
Economic Significance Of Black Friday
According to Digital Commerce 360, the e-commerce sector contributed $1.03 trillion annually to the US GDP in 2022, accounting for 5.8% of the US economy.
Retail spending, in general, contributes to the major growth of the US economy; Black Friday is the largest retail spending every year and holds immense economic significance.
Nosto BFCM report shows US Black Friday online sales in 2020 increased to $9 billion, that’s 22% from 2019.
However, Adobe Analytics reported a drop in online black Friday sales to $8.9 billion in2021. Some reports show that this was a result of the pandemic (longer shipping times, stockouts, etc.)
But let’s talk about the consumers who participate in the Black Friday event. What products go into their shopping cart?
According to NIQ survey data in 2022, clothing, shoes, accessories, electronics, toys, Beauty, personal care, and grocery products are the trending Black Friday deals.
The survey chart showed that Beauty and Personal care was the fourth most shopped category during Black Friday, with 28% of consumers saying that’s what they spent their money on.
The top three categories were Clothing, shoes and accessories, electronics and toys.
53% of consumers spent their money on clothes, shoes, and accessories, compared to 49% of consumers who spent their money on electronics and 35% of online shoppers who purchased toys.
Only 26% of shoppers spent their money on groceries.
Amazon also highlights its best-selling categories from the 2022 Black Friday season, with Fashion, Beauty, toys, and Amazon devices being among the top-selling categories Of the year.
Black Friday sales give businesses the opportunity to offer low prices on overstock inventory and offer jaw-dropping discounts on best-selling items, which stimulates consumer spending and boosts the US economy.
The Impact Of Black Friday on the Health and Beauty Industry
Black Friday has a profound impact on DTC health and beauty brands businesses, and its influence continues to grow as more consumers prefer online shopping.
Here are some ways in which Black Friday affects health and beauty brands:
Revenue Growth
According to Nosto’s 2022 Black Friday Cyber Monday sales performance by industry, the health and beauty industry had the strongest sales growth.
Accounting for 13.5% growth year-on-year in traffic of 107 million website visits across 1,269 online stores globally.
Compared to other sectors like fashion and accessories (9.4%), home, garden, and DIY (-3.3%), sporting goods and hobbies (-0.1%).
The Health and beauty industry saw a higher rise in sales of 22.6%, and AOV, up 1.2%.
Meanwhile, fashion and accessories saw the largest increase in AOV of 9.8%, following Sporting Goods and Hobbies (2.2% Increase in AOV) and Home, Garden & DIY (5.5% increase in AOV).
However, the latter category saw a drop in overall sales of -5.9%.
According to the performance marketing world, Black Friday sales reports, Health, beauty, and wellness increased in AOV by 3% and total order value by 2% compared to 2021 Black Friday week.
Increased Competition
Black Friday marketing has influenced the marketing approach of DTC health and beauty brands, with consumers looking for deep discounts and deals.
Many brands employ various strategies to ensure they have a successful Black Friday sale and to stand out from the competition.
These strategies may include:
1. Inventory management and Supply chain:
One crucial aspect of preparing for Black Friday is managing inventory and optimizing supply chains. Brands ensure they have enough stock to meet the surge in demand.
2. Research:
It is crucial to conduct research in preparation for Black Friday sales. Smart brands check out the Black Friday ads and promotions of their competitors.
Websites, apps, emails, and posters provide a sneak peek into what their competitors are offering.
They take notes of the stores or websites that have the best offers, designs, and content and make sure it’s at least good, if not better.
Because at the end of the day, consumers are on the lookout for the best deals to spend their money on.
3. Marketing and Advertising:
Leading up to Black Friday, brands engage in extensive marketing and advertising campaigns.
They craft enticing promotions, create compelling advertisements, send out push notifications, and often employ influencers to generate buzz and anticipation, resulting in fierce competition amongst businesses as they fight to provide the best deals to consumers.
Sales and Profit Margin
As we all know, Black Friday is the busiest shopping day of the year; the eye-popping discounts attract hordes of shoppers, driving in higher sales and revenue.
However, the profit margins can be razor-thin for small businesses in the industry due to the hefty discounts offered.
Smart brands focus on developing new, higher-markup products that are branded right, provide value to consumers, and, most importantly, are not loss leaders.
These strategies, combined with discounts, have improved the health and beauty industry’s gross margins.
Increased Website Traffic
Black Friday attracts large audiences to DTC stores, which can boost traffic, leading to additional sales of non-discounted items. It also helps brands showcase their store layout, products, and customer service.
Tapcart’s BFCM survey reports that 42% of health and wellness consumers prefer to shop online and in-store, while 43% said they prefer a mobile app or browser.
Sales Surge
DTC health and beauty brands experience a significant increase in sales as consumers seek out online deals and discounts on Black Friday.
Nosto BFCM 2022 analysis reported a strong boost in sales by 16.4% on Shopify’s year-on-year performance.
Other e-commerce platforms, like Magento, Prestashop, and others, experienced a drop in sales.
Increased Customer Engagement
DTC health and beauty brands often use Black Friday as an opportunity to increase engagement with their customers.
Brands send out Black Friday marketing campaigns on social media platforms to their contact list and loyal customers to entice them, build excitement, and encourage repeat business.
A BFCM consumer shopping report from Tapcart noted that 67% of health and wellness shoppers are more likely to engage with black Friday marketing campaigns through emails than with other channels like TV ads, Facebook, Instagram, Push notifications, SMS, Tiktok and other channels.
Increase Consumer Spending
Black Friday increases consumer spending by capitalizing on the desire for savings, creating a sense of urgency, and offering a wide range of appealing deals.
These factors, coupled with an extended shopping season and strong marketing efforts, drive consumers to spend more during this holiday shopping event.
According to the National Retail Federation 2022 BFCM Analysis, Consumers spent an average of $325.44 on items over the Black Friday weekend, an increase from $301.27 in 2021.
76% of the amount spent on products was specifically directed toward gifts.
The Impact of Black Friday On Small Businesses
Black Friday can have both positive and negative impacts on small businesses. While it presents opportunities for increased sales and visibility, it can also pose challenges and risks.
The pros and cons of Black Friday for small businesses
Pros:
1. Sales Boost:
Due to the awareness of Black Friday and the search for the best deals, small businesses can have their share of the market by offering attractive discounts and promotions.
Black Friday can significantly increase the traffic of small businesses, resulting in a boost in sales.
2. Customer Acquisition:
With so many customers looking to buy a variety of gifts and items for the festive period, black Friday provides an opportunity for small businesses to attract new customers.
With the right marketing strategies, small businesses can draw in shoppers who may have yet to be aware of their products or services.
3. Visibility:
Small businesses can gain increased visibility during the Black Friday shopping frenzy.
When competing with larger brands, small businesses can focus on providing the best customer experience possible so as to retain newly acquired customers.
Cons
1. Competitive Pressure:
Small businesses face intense competition during Black Friday, with larger retailers offering deep discounts.
Maintaining profitability while offering significant discounts to entice customers can be challenging for small businesses.
2. Increased Stockouts:
With increased sales, small businesses can run the risk of stockouts, making it hard to meet demand and resulting in loss of sales opportunities and potential customers.
Small businesses need to ensure they have enough items in stock to offer customers.
3. Financial Risks:
For small businesses with tight profit margins, participating in Black Friday can be risky.
Large brands can offer slash prices and deep discounts on Black Friday, but small businesses, on the other hand, are more likely to experience reduced profit margins for offering heavy discounts.
If they don’t achieve expected sales or manage their expenses effectively, it can affect their financial stability.
Black Friday and Consumer Behavior
Black Friday has a significant impact on consumer behavior. The psychology behind Black Friday shipping is fascinating, and it taps into several behavioural triggers.
1. Scarcity and FOMO:
In the e-commerce sector, the fear of missing out is the driving force that persuades consumers to make buying decisions.
This psychology behind Black Friday is to make consumers have the fear of missing out on a great deal or owning a product before it’s sold out, triggering a strong desire to buy.
2. Anticipation and Excitement:
As businesses begin to send out pre-black Friday campaigns on early bird deals, consumers tend to be excited and anticipate the event.
Stats show that 140 million consumers planned to shop on Black Friday, and nearly 39% saved money for the event.
3. Deal seeking Behavior:
The desire to save money during Black Friday week is so strong that most consumers are on the hunt for the best of the best deals before purchasing any products.
A 2022 survey of more than 24,000 consumers carried out by Shopify noted that 84% of consumers compared prices for the best discounts before purchasing products during the holiday shopping season.
76% of shoppers also stated that they looked for quality products that would last long.
4. Social Proof and Peer Pressure:
Social interactions and testimonials from peer groups or friends drive people to participate in Black Friday shopping.
As Black Friday sales continue to evolve, both in-store and online, businesses need to understand the psychological factors that drive consumers to make buying decisions during this shopping season.
So, they can capitalize on it, create profound marketing strategies, and make the most of this year’s Black Friday.
If you want help figuring out the best ways your brand can dominate this Black Friday shopping event, reach out today.
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