The vaunted national holiday, Black Friday, has hit a noticeable speed bump. The retail industry saw a precipitous drop in sales for 2015, and it doesn’t seem as though any old viral marketing campaign will right the ship.
In 2014, Black Friday sales topped $11.6 billion, according to ShopperTrak research. This year, sales slumped 10 percent, down to $10.4 billion. A shift in the industry doesn’t just happen overnight, and this recent drop in spending marks a shift that has already taken place in the way people shop. As always, it’s better to recognize and react sooner rather than later.
Online shopping is easy and addictive
Videos of Black Friday shopping are nerve wracking and, at times, demeaning. A horde of shoppers packed into a store entrance like a can of tuna isn’t enticing in the slightest. The manic shopping experience is why more shoppers are going online.
Adobe tracked sales of 4,500 retail websites on Black Friday and found that there were 14.3 percent more online purchases this year than last, according to The Guardian. This is a massive shift for just one fiscal cycle, and it serves as a notable number to keep in the back of your mind when you’re managing your small business.
Businesses have been promoting Black Friday since the start of November, which ultimately ended up hurting their business, The Guardian reported. Customers had ample time to research and make sure they were getting the best deals. This removed the component of spontaneity that could’ve led to more purchases in-store.
“Shoppers are researching products ahead of time, targeting their store visits and arriving in store with the intention of making a purchase,” Kevin Kearns, chief revenue officer of ShopperTrak, said to the Guardian.
Though this quote was in reference to the holiday, it can apply to almost any point in the year. Every noteworthy business has an app or a website where customers can make purchases – it has become a standard practice across the industry. Not allowing customers the luxury of buying your product from the confines of their home can leave your business in the dust and keep stock on the shelf. Companies that are Internet savvy are already beginning to see their websites pay off.
Amazon is the undeniable e-commerce king of the jungle at the moment. Its 52-week range on the New York Stock Exchange has seen its stock fluctuate between $285.25 and $682.77 per share, according to Yahoo Finance. To put that in perspective, eBay is only trading at $29.24 a share, and Alibaba sits at $82.92. Amazon has caught on relatively quickly that providing two different tiers of service produces fantastic results for the company, and its success serves as a lesson for managing your small business’ transition to online.
An October 2015 press release from Consumer Intelligence Research Partners pointed out that 46 percent of all Amazon consumers are Prime members. Prime is a service that, for $99 a year, provides customers with instant streaming and shipping benefits.
“U.S. Amazon Prime membership has grown significantly since we first started measuring it in 2013,” Josh Lowitz, partner and co-founder of CIRP, said in the press release. “It has almost tripled in two years, with 46 percent of all Amazon customers in the quarter using some form of Prime membership.”
The e-commerce giant has seemingly figured out that charging people for the ability to ship faster and cheaper makes money in both the short term and the long run.
Customers who have Prime spend $1,200 a year, according to CIRP. Those who don’t spend just $600. Enhanced shopping benefits make it more enticing to make more purchases on the platform. Charging a consumer for these privileges has the ability to make them feel as though they are in a club, and they end up spending more because of it.
Add a mobile component to your business
Mobile marketing campaigns have become increasingly popular because of the accessibility to shopping that websites now provide customers.
If you think you’re the only one that looks up and notices a sea of faces staring at their hands on the train ride home from work, think again. According to a Pew Research study, a staggering 90 percent of Americans own a cell phone, while an impressive 64 percent own a smartphone specifically. Taking advantage of this trend in popularity is imperative to a small business’ success.
The first step is optimizing your mobile website. All the marketing in the world won’t do anything if, by the time the customer goes to check out, the website doesn’t work. Simulating a purchase on your website through your phone, or the app if there is one, will allow you to single out anything that could trouble a customer. Creating an easy-to-use website can entice customers to shop again, which creates more revenue for your business.
According to the search engine giant, consumers that frequently use their phones to shop spend on average $15 more on health and beauty supplies and $100 more on appliances than those that only shop every now and then. This seems like common sense, and it is. Providing a consistent outlet for shopping can lead to larger purchases made by consumers that feel comfortable on your website.
Take this information and run with it
Watching the economy for shifts in trends can reveal different tactics to manage your small business, and the drop in retail spending on Black Friday has been one of many indicators that online shopping is becoming more prevalent. Here’s how to put this information to use today:
- Invest in your website: While free website creators can give you an idea of what you want your website to look like, the final product needs to be professional. Set aside money specifically for building and maintaining your online presence.
- Shift deals to the Internet: If you’re looking to drive more traffic, consider running some Internet-only promotions, with discounts on overstocked products.
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