Every November, the same thing happens. Retailers launch their Black Friday promotions, advertising budgets increase, inboxes fill with discount codes and social media becomes a seemingly endless stream of supposedly unmissable offers. By the time Cyber Monday arrives, businesses are celebrating record sales figures, impressive conversion rates and their busiest trading periods of the year.
And fair enough, there's something exciting about seeing orders flooding in and revenue climbing considerably faster than usual. For eCommerce businesses, particularly those that have experienced a difficult trading year, Black Friday can feel like an opportunity to make up some lost ground and finish the year strongly. But we've always found the obsession with Black Friday revenue a little strange.
You'll see retailers proudly announcing they've achieved their biggest sales weekend ever, while marketing agencies are equally quick to celebrate record-breaking ROAS figures and impressive increases in conversion rates. Everybody seems delighted with themselves, but there's one rather important question that doesn't always get asked.
How much money did the business actually make?
Let's get this straight. Generating £50,000 in sales over a weekend sounds fantastic, but that figure tells us remarkably little about whether the promotion was commercially successful. Once you've accounted for the discounts offered, advertising expenditure, product costs, fulfilment, payment processing and returns, the amount left over could be considerably less impressive.
And what about the customers who were already planning to buy? How many have simply waited until Black Friday to purchase something they would happily have paid full price for a few weeks earlier? Or those who would ordinarily have purchased in December but have brought their spending forward to take advantage of a discount?
These are important considerations, particularly when retailers are sacrificing 20%, 30% or even more of their selling prices in the hope that additional sales volume will make up the difference.
We're certainly not suggesting Black Friday is a waste of time for every retailer. There are businesses that use it extremely effectively to clear unwanted stock, attract valuable new customers and generate genuinely profitable additional sales. But we'd question how many businesses have actually worked out what they need to achieve commercially before deciding to participate.
If your biggest sales weekend of the year leaves you with less profit than an ordinary weekend, who exactly has benefited from your Black Friday promotion?
Your customers might have got themselves a fantastic deal, and your marketing agency might have some impressive numbers for its next case study. But we'd argue that the business footing the bill deserves a little more than a record turnover figure to show for it.
Record revenue doesn't mean record profit
One of the biggest problems with Black Friday is how easily the success of a promotion can be judged by the wrong numbers. Revenue is usually the headline figure, followed closely by the number of orders, conversion rates and return on advertising spend (ROAS). These are all useful indicators of performance, but none of them tells you how much profit the business has actually made.
When retailers are offering substantial discounts, that distinction becomes particularly important.
Let's take a relatively straightforward example. An eCommerce business sells a product for £100, with a cost of goods of £50. Under normal circumstances, that leaves £50 in gross profit before advertising, fulfilment and other operating costs. During Black Friday, the retailer decides to offer a 25% discount, bringing the selling price down to £75.
The product still costs £50 to supply, but the gross profit has fallen from £50 to £25. A 25% discount has effectively wiped out 50% of the gross profit available on that sale.
To generate the same £5,000 in gross profit that 100 full-price sales would have produced, the business now needs to sell 200 units. That's twice as many orders to process, twice as many products to fulfil and potentially twice as many opportunities for something to go wrong. That's before we've even considered the additional advertising expenditure.
Black Friday is an incredibly competitive period for paid advertising, with retailers fighting for the attention of customers who are actively looking for deals. Increased competition can push acquisition costs higher, particularly on platforms such as Google and Meta, where advertisers are competing for the same audiences.
A retailer might ordinarily achieve a 5x ROAS on its advertising campaigns and consider that a healthy return. During Black Friday, it might achieve exactly the same 5x ROAS while offering a 25% discount across its products. On paper, advertising performance hasn't changed, but the profitability of those sales could be considerably worse.
It's something we think marketing agencies should be much more conscious of when reporting campaign performance. Celebrating a record ROAS or a substantial increase in attributed revenue is all well and good, but those figures need to be considered alongside the retailer's margins and the wider commercial impact of the promotion.
Of course, every business has different margins, costs and objectives. Some retailers can comfortably absorb a 25% discount, while others would struggle to make a meaningful profit after offering just 10%. The important thing is understanding those numbers before committing to a promotion, rather than discovering afterwards that a record-breaking sales weekend hasn't delivered the financial return everyone expected.
Turnover might make for an impressive headline, but it's the profit left in the business that ultimately determines whether Black Friday was worthwhile.
Are you generating new sales or just discounting existing ones?
Another consideration that often gets overlooked during Black Friday is whether the promotion is actually generating additional business, or simply encouraging customers to spend money they were already planning to spend.
Retailers naturally want to attract new customers, and a well-structured promotion can certainly help achieve that. However, there's a significant difference between winning a customer who wouldn't otherwise have purchased and offering a substantial discount to somebody who was already intending to buy at full price.
Think about the customer who's been researching a new television, sofa or piece of furniture for several weeks. They've compared products, visited websites, read reviews and perhaps even added something to their basket. They're interested, they have the money available and they're approaching the point of making a purchase.
Then Black Friday comes along, and the retailer offers them 25% off.
The business records another Black Friday sale, the advertising platform attributes a conversion and everybody celebrates. Yet there's every possibility that the customer would have purchased anyway, leaving the retailer having sacrificed a quarter of the selling price without necessarily generating any additional demand.
It's a particularly interesting problem for businesses selling considered purchases, where customers typically spend several weeks or months researching before committing. Flooring, furniture, home improvements and expensive consumer electronics are all examples where the timing of a promotion can influence when somebody buys, rather than whether they buy at all.
We've also seen Black Friday evolve from a relatively short promotional event into something that can dominate much of November. Black Friday Week, early-access offers, extended weekend promotions and Cyber Monday campaigns have gradually stretched the discounting period, giving customers even more reason to hold off purchasing at full price.
Over time, there's a risk of conditioning customers to expect discounts. If somebody knows a retailer offers 20% off every November, why would they make a significant purchase in October unless they absolutely had to?
That behaviour can have consequences well beyond the promotional period itself. A retailer might experience a fantastic November, only to discover that December sales are weaker than expected because customers have already brought their purchases forward. Looking at November in isolation could suggest the promotion was an enormous success, while the combined performance across both months tells a rather different story.
Of course, determining exactly how many customers would have purchased without a promotion isn't straightforward. Retailers can't know every customer's intentions, and there's always going to be an element of uncertainty when assessing how much additional demand a campaign has generated.
However, comparing performance against previous years, examining purchasing patterns before and after the promotion and understanding the proportion of new versus returning customers can help build a more meaningful picture.
We'd also encourage retailers to consider whether they're attracting the right customers. Somebody purchasing purely because a product is heavily discounted might never return, particularly if they're shopping around for the cheapest possible deal. That doesn't automatically make the sale unprofitable, but it should influence how much the business is prepared to spend acquiring that customer.
If Black Friday is simply moving sales from one month into another, while reducing the profit earned on those orders, it's worth questioning how much additional value the promotion is actually creating.
Black Friday shouldn't be a race to the bottom
There's also a wider question about whether retailers are putting themselves under unnecessary pressure to participate in Black Friday simply because everybody else is doing it.
As November approaches, businesses start looking at what their competitors are offering. One retailer announces 15% off, another goes to 20%, and before long somebody decides they need to offer 30% to remain competitive. The focus gradually shifts towards having an attractive enough offer to compete, with considerably less attention paid to whether the business can actually afford it.
It's understandable, particularly when retailers are worried about losing customers to competitors offering seemingly better deals. Nobody wants to spend November watching their competitors generate sales while their own order volumes decline.
However, matching a competitor's discount without understanding their commercial circumstances can be a dangerous game. They might have considerably better supplier terms, higher margins or excess stock they're desperate to clear. They might even be prepared to sacrifice profitability in exchange for acquiring customers or improving their cash position.
You simply don't know.
This is where we'd encourage retailers to have a little more confidence in their own businesses. If you've spent years building a reputation for quality, customer service, specialist knowledge or a particular product offering, why should that suddenly become irrelevant for a few weeks in November?
Price will always influence purchasing decisions, especially during Black Friday, but it isn't the only reason customers choose one retailer over another. Product availability, delivery times, customer reviews, aftersales support and trust can all influence whether somebody completes a purchase.
There's also nothing wrong with deciding that Black Friday isn't commercially appropriate for your business. Some retailers might benefit from running a carefully selected promotion on particular product ranges, while others may decide that maintaining their existing pricing is the more sensible approach.
The important thing is making that decision based on the business's own circumstances rather than feeling obliged to follow the rest of the market.
We've spoken before about the dangers of copying competitors without understanding why they're making particular decisions, and Black Friday is a perfect example of where that thinking can become expensive.
If the only reason you're offering 25% off is that your competitor has announced 20%, we'd seriously question whether you've got a Black Friday strategy at all.
Is Black Friday actually worth it?
For some eCommerce businesses, absolutely. Black Friday can provide an excellent opportunity to clear ageing stock, introduce new customers to a brand and generate additional revenue at a time when consumers are actively looking to spend. There are plenty of retailers that approach the promotional period with a clear commercial objective and achieve a worthwhile return as a result.
But we'd question how many businesses are genuinely measuring that return properly.
Before committing to a promotion, retailers should understand what they're trying to achieve, how much margin they're prepared to sacrifice and what additional sales volume would be required to justify the discount. They should also consider the likely cost of acquiring those customers, the impact on their existing customer base and whether the promotion risks undermining sales at other points in the year.
The same scrutiny needs to continue once the promotion has finished. A report showing record revenue, hundreds of additional orders and an impressive return on advertising spend might make everybody feel good, but we'd want to know what those results meant for the business financially.
Did the promotion generate genuinely additional sales? Were those orders profitable after all the associated costs? Did the business attract customers who are likely to purchase again? Has the increase in November revenue come at the expense of December trading?
These are the sorts of questions that should determine whether Black Friday was successful and, perhaps more importantly, whether it's worth repeating next year.
We'd also encourage marketing agencies to take greater responsibility for understanding the commercial implications of the campaigns they're recommending. It's remarkably easy to suggest increasing advertising budgets and offering bigger discounts when somebody else is responsible for the profit and loss account. Businesses deserve advice that considers the financial consequences of those decisions, particularly when margins are already under pressure.
Ultimately, Black Friday should be treated like any other commercial decision. It needs a clear objective, a realistic understanding of the costs involved and a willingness to question whether the results justify the investment.
There's nothing wrong with celebrating a record-breaking sales weekend, provided there's something worth celebrating once all the bills have been paid.
Your customers might have had a brilliant Black Friday. The question is whether your business did too.
