Black Friday App Revenue Was Up 700% On an Average Friday – But What Does it Really Mean?

Now the dust has settled on Black Friday, we can look back and examine what it really means for UK retailers.

This year online and mobile apps were the real winners, with our customers seeing their app revenue up 700% on an average Friday. But that fantastic stat on its own doesn’t tell the whole story.

  1. Black Friday doesn’t drive incremental sales

Overall, UK retailers suffered their weakest sales growth since 2011 in November, according to the British Retail Consortium. This suggests Black Friday is not driving incremental sales, it’s just changing the sales mix, and longer term there seems to be no correlation between having a great Black Friday and your overall results for the year, particularly as aggressive discounting will reduce your gross margins.

  1. A lot of it’s coming back, at a cost to you

Bargain hungry shoppers, once they have the chance to reconsider, are likely to send back a significant proportion of their purchases. Retail intelligence company Clear Returns estimated that UK retailers stand to lose £130m just from handling returns of items bought on Black Friday. And it’s not only the financial cost that causes headaches, as warehouses struggle to deal with a huge volume of returns during the peak trade period, impacting the rate of dispatch for ongoing orders.

  1. Distribution is key to meeting customer expectations

This year most retailers were at pains to ensure they didn’t run into the same problems as last year, with crashing websites and delivery problems. John Lewis, who saw online sales up 15.5% on the previous year, said their success was a result of their distribution teams, who processed 18% more parcels on Black Friday than in 2014. They also removed the next day delivery option to relieve the pressure on their processing centres.

  1. You can’t overestimate the increase in online traffic

Despite careful planning to cope with the increased traffic expected over the weekend, even John Lewis said about 7% of its customers were unable to access the site first time due to the level of demand. Currys PC World had to implement a queuing system to make sure their site could cope, and Tesco’s site crashed overnight.

  1. Getting your mobile offer right is critical

The increase in mobile app revenue on Black Friday outstripped website growth by four times, with revenues up 75%. Online sales increased by only 18%, according to Adobe. And it’s not just about iOS devices – Android accounted for a quarter of all Black Friday mobile app purchases compared to only 15% in 2014. Yet only a handful of retailers even offer apps for customers with Android devices.

  1. Take advantage of the increase in app activity to drive store footfall

This year customers chose to steer clear of the high street and shop online, increasingly using mobile apps. In order to address the imbalance next year, consider developing targeted push promotions that can only be redeemed in store, giving you the chance to upsell additional products at a better margin.

 

So is it all worth it?

As a relatively new institution in the British shopping calendar, we have yet to fully understand the impact this brief period of heavy discounting really has. However it could be said that all it does is cause shoppers to buy earlier, reducing their willingness to pay full price before Christmas, with a detrimental impact on margins.

Whilst a few retailers did decide not to take part this year, it’s likely to remain a fixture for the next few years. So next year consider a smarter more targeted approach, using mobile (including Android) to help drive bricks and mortar sales rather than simply offering blanket discounts across your channels.