Published in: Product

Black Friday: A Double-Edged Opportunity For Retailers And E-Commerce Leaders

Black Friday is often seen as the highlight of the shopping year. In 2024, the figures are impressive: in France, growth is close to 5% compared with the previous year, and the dynamic is better in shop than online (Webinar Fevad: Black Friday 2024). Shopify set a world record with €5 billion in transactions, an average basket up by €110.93, and remarkable performances in categories such as high-tech, homeware and cosmetics. Major players such as Amazon, E.Leclerc and Ikea have also confirmed their dominance of e-commerce, thanks to attractive promotions and proactive management of their offer (source: Journal du Net in French).

+ 150%: the difference in sales volumes between Black Friday week and the average for all weeks in 2024 (Webinar Fevad)

It is also important to note that the weight of discounted sales volumes (over 15%) is higher online than in physical stores. This is because consumers, whose purchasing intentions are up on last year, are taking advantage of bigger promotions in e-commerce than in-store! (Webinar Fevad)

If we had to sum up, two words would suffice: edifying results!

But behind these apparent successes, one key question remains: is Black Friday really profitable for retailers and e-tailers?

The Hidden Aspects Of Black Friday

1. Excessive Focus On The Top Line

For many players, Black Friday means an explosion in sales and an increase in turnover (+175% – average turnover of PricingHUB customers on 29 November 2024). But this performance often masks a darker reality: the collapse in net margins.

Indeed, net margins are often sacrificed to offer aggressive discounts, especially when reductions are applied uniformly without strategic analysis. One solution to cushion this impact is to negotiate solid back margin contracts with suppliers. These contracts allow part of the discounts to be recovered in the form of post-sale rebates or financial bonuses, thereby improving overall margins after the event.

An inspiring example: On average, our customers recorded an impressive increase in sales of +175% during Black Friday. However, their margins plummeted by -200%, revealing a promotional strategy that sacrificed profitability in favour of volume (average result for PricingHUB customers on 29 November 2024). 

This dynamic highlights a frequent paradox: a Black Friday that boosts the ‘top line’ (i.e. sales) to the detriment of the ‘bottom line’ (i.e. net profits).

2. Average Shopping Basket Under Pressure

rease in the overall average shopping basket in 2024, this trend is not uniformly observed. In many cases, the frantic search for the ‘best deals’ is leading to low-value purchases, limiting average basket growth. High volumes of low-margin transactions often undermine overall profitability.

3. Dilution Of Customer Value

By adopting massive promotions, retailers risk cannibalising their future sales and creating ‘wait and see’ consumers. The latter delay their purchases in the hope of even bigger discounts, thereby reducing long-term profitability.

Why Black Friday Is A Problem ?

In its current form, Black Friday exacerbates the following problems:

Lack of differentiation: Too often, Black Friday promotions focus solely on price discounts, overlooking the psychological impact of the halo effect. When a flagship product is heavily promoted (such as a console, smartphone, or iconic piece of furniture), it has a positive influence on the perceived value of complementary or related products.

For example:

• A promotion on a television can increase sales of HDMI cables or TV furniture, even without a discount on these items.
• Discounts on sofas or beds can boost sales of decorative items or bedding.

However, when this effect is poorly exploited (for example, by reducing prices on all products instead of concentrating promotions on flagship products), retailers dilute the overall impact and miss the opportunity to preserve their margins on related products. By integrating the halo effect into their pricing strategy, retailers can reinforce the perceived value of their assortment and better balance their offers.

Destructive price war: By trying to outdo the competition, retailers are eroding their margins to critical levels.
Negative effects on the rest of the year: Aggressive promotions displace sales without increasing them overall, reducing the performance of post-Black Friday periods.

How Retailers Can Improve Their Management Of Black Friday

1. Adopt A Dynamic Pricing Strategy

Rather than applying one-size-fits-all discounts, retailers should use pricing optimisation tools like PricingHUB to analyse price sensitivity in real time and adapt discounts based on consumer behaviour. A targeted approach maximises revenue while preserving margins.

2. Prioritising Profit

Although Shopify has noted an increase in the overall average shopping basket in 2024, this trend is not uniformly observed. In many cases, the frantic search for the ‘best deals’ is leading to low-value purchases, limiting average basket growth. High volumes of low-margin transactions often undermine overall profitability.

3. Segmenting Offers

The application of the halo effect can play a key role here. By identifying flagship products (such as best-sellers or premium items), retailers can focus their promotions to generate traffic while maintaining high margins on complementary items. This requires a detailed analysis of the correlations between products using price intelligence tools.

4. Think About The Customer Experience

Black Friday can be an opportunity to build customer loyalty with exclusive offers and additional services, rather than just attracting them with massive discounts. This reduces the reliance on aggressive promotions in the long term.

5. Stagger Promotional Periods

The phenomenon of sales cannibalisation can be mitigated by spreading promotions over several weeks, as was observed during Black Week. This avoids over-concentration of purchases and makes it easier to manage logistics.

An Enlightened Vision For The Years To Come

Black Friday, while unmissable, must not be a festival of value destruction. Retailers and e-tailers need to adopt a more strategic approach, integrating tools like PricingHUB to optimise their pricing in real time, maximise profitability and build customer loyalty.

By refocusing their efforts on margin management and abandoning indiscriminate promotions, they will be able to turn Black Friday into a genuine lever for sustainable growth. At the end of the day, success is measured not just in euros of sales, but in the value generated for the company and its customers.