Even before Covid, the balance of Black Friday consumption was slowly tipping toward e-commerce. But 2020 was the year of extreme tilt, with nearly twice as many consumers opting to stay home and buy online instead of going out to stores (100 million versus 58.7 million).
The good news is that as a digital event, Black Friday doesn’t involve risking life and limb amidst a crowd driven wild by the prospect of killer deals.
However, as marketing professors who have studied consumer behaviors relating to major sales events such as Black Friday, our analyses show that much has gotten lost in the translation from physical to digital. Historically, Black Friday shopping was on par with turkey dinner as a Thanksgiving tradition in the U.S. Black Friday 2.0 is certainly safer but also duller. Regardless of the deals, logging onto a website and clicking around is just not nearly as engaging. This can dampen shopping enthusiasm and result in missed sales opportunities. While last year’s total Black Friday sales in the U.S. topped $188 billion, besting the previous year by almost $50 billion, retailers are understandably concerned that the digital experience will yield lower sales going forward as customers have fewer pandemic-related concerns about going to physical stores.
Indeed, online retail is at an inherent disadvantage when it comes to encouraging higher consumer spending per visit. A recent report found that 71% of buyers spent more than $50 in a single physical-store visit, as compared to 54% for online shopping.
Our study of consumer psychology reveals that three aspects of old-school Black Friday have made it a particularly strong business and cultural phenomenon: doorbusters, scarcity management, and browsing. We believe that these three areas can be more effectively digitized by big retailers as well as small businesses to increase customers’ shopping enjoyment and consumption satisfaction on Black Friday. Moreover, though the lessons here may need to be implemented differently in, say, China, than in the U.S., we believe that they hold true for online sales events all year round and across the world.
Black Friday consumers are famously drawn to certain retailers because of spectacular, highly-publicized bargains, or “doorbusters” — half-price flat-screen televisions or gaming devices, for example.
For the retailers, these items are often loss leaders— products that are sold at a loss to get customers in the door. Research has illustrated the effectiveness of offering low prices on shopping goods (items for which consumers tend to compare prices across retailers) to attract consumers into its store, and then generate profit through impulse goods (items purchased on impulse) once they are there. Even after the doorbusters have sold out, behavioral tendencies such as sunk-cost bias and loss aversion encourage consumers to purchase other items as a kind of consolation prize.
Although doorbusters are used to entice consumers to visit retail websites on Black Friday, the digital implementation often does not live up to Black Friday traditions. Retailers can make improvements on multiple fronts.
First, on a webpage, doorbuster items should be displayed in conjunction with relevant higher-margin sales items to take advantage of the loss leader effect. These should be items that clearly complement the doorbuster, such as a state-of-the-art remote for a flat-screen TV or an ergonomic chair for a desktop computer. The higher-margin products could appear during check-out and in order confirmation emails.
Further, if the doorbuster item is sold out by the time the customer logs on, instead of merely displaying a “sold out” page, retailers can compensate consumers for visiting by, for example, giving them a voucher only good for the next few hours. This is likely to activate a sense of sunk costs and provide additional incentive for consumers to complete purchases on the site. During last year’s Black Friday, Walmart offered shoppers who missed out on certain doorbuster deals an option to sign up to be alerted via email when stocks were replenished — a good first step, even if it didn’t take full advantage of customers who were already in the door.
Brick-and-mortar retailers leverage scarcity carefully at their Black Friday events, offering a limited number of units for a particular item on sale. Because people tend to find scarcer items more desirable, these limited stocks are a major part of the attraction of Black Friday, driving long lines before stores open and the well-known rush that follows. But retailers have to balance this frenzy with the risk of customer disappointment and social media backlash if advertised items are excessively scarce.
Research shows that customer satisfaction is a function of expectations, and even fairly minor deviations from what customers expect can seriously affect their attitudes toward a shopping experience and brand. Physical stores are able to find a sweet spot of scarcity because the brick-and-mortar environment is rich with cues that allow customers to form realistic expectations about whether they will be able to find the product they’re looking for. The traditional Black Friday experience begins with a long queue: Customers can literally see where they stand and adjust their expectations accordingly.
This is much tougher in the online context in part because it is harder to set customer expectations around scarcity without the physical line. During Walmart’s 2020 Black Friday event, for example, the Nintendo Switch MarioKart Deluxe 8 bundle sold out almost instantly. Many consumers who came to Walmart.com for the product became disgruntled and left a slew of venomous reviews; within just a few hours, the item’s rating plummeted from 4.2 stars to 2.5 stars.
Scarcity management becomes even more pertinent in times of supply chain disruptions that may render holiday shopping a longer and less satisfying endeavor for consumers across the board.
E-commerce players must find digital ways to set customers’ expectations about scarcity. When promoting a doorbuster item prior to the sales event, clearly note that stock is limited. Display the number of people who have already visited the product page to help consumers assess how likely are to get the item. Display the percentage of the stock that has been placed in carts by consumers or the number of units remaining, particularly when the stock is running low — Macy’s and Amazon do this already. These signals can help nudge consumers to purchase, but also will set their expectations that stock of the item might be running out.
Finally, brick-and-mortar sales events like Black Friday are great at converting passive consumers into active shoppers. As humans, we love to feel that we have scored a victory by discovering things, be they deals or interesting products that we did not have in mind when we came into the store. This is in line with a long-standing body of research showing that self-discovery is more motivating than being told what to do. In addition, finding bargains elicits pleasurable “smart shopper feelings” that turn an ordinary buying experience into an adventure, with rewards for spotting exotic deals.
The ability to see, touch and often try out products contributes to the sensory pleasure of discovery in the brick-and-mortar environment. The presence of other shoppers is another key element, making shopping both a social and a competitive experience as consumers peek into each other’s shopping carts.
Sparking this kind of discovery has always been a challenge for online retailers because webpages and app interfaces are inherently less immersive multi-sensory environments. Also, as we’ve argued elsewhere, product recommendation algorithms that seem forceful and obvious can feel coercive to the consumer, impeding that critical sense of autonomy and free discovery.
Instead, e-tailers can invite consumers into multidimensional virtual spaces — or metaverses — for Black Friday and other sales events. As a first step, some retailers are already building virtual showrooms. For example, IKEA created a 3D, interactive digital replica of its physical showrooms in several markets — in Russia, this was reportedly responsible for a 17% boost in sales. Marks & Spencer also (in collaboration with Mindshare) introduced a VR showroom for their homeware department where customers could assemble their own ideal living space and share their designs on social media.
At a virtual Black Friday event, customers could walk through these digital environments. The retailer could hide special discounts in each room, encouraging them to explore and thus discover new products. The same basic principle underlies Walmart’s “hidden clearance” functionality in its mobile app, which reveals unbelievably low prices (such as three cents for a video game) when the customer scans certain products in the physical store.
In future, retailers could also use augmented reality to turn communities into gamified Black Friday buying environments. Think Pokemon Go, only with hyper-local bargains instead of elusive fantasy creatures. Chasing down the biggest deals from street to street in their city or town, customers would encounter attractive ones that would feel like personal discoveries —even if they’re not quite as amazing as Pokemon Go creatures.
In all these events, retailers should deemphasize official product recommendations in favor of user reviews and community content such as user-generated deal rankings, top-five items in this category according to user ratings today, and so on. This would enable consumers to discover deals and items that their peers truly like, bolster satisfaction, and provide psychological benefits — a sense of being a part of a community.
Each of these three approaches is effective in and of itself. But they can pay off much more when used in combination. For example, retailers can set up a virtual queue for consumers arriving earlier than the official start time. While they wait, they could be given the option of watching live streaming of product demonstrations or playing a game that could relate to some of the products sold (solo or in competition with others). Either choice could unlock exclusive discount codes. Such digital activities would combine the smart shopper feelings of discovery with the expectation management of queueing and sunk cost of classic doorbusting.
Whether implemented as one-offs or in combination, these digital analogs of bricks-and-mortar tactics can help e-tailers achieve the kind of enthusiasm — and sales performance — of the most powerful in-person events.
This content was originally published here.