Black Friday is a discount event that has long lasted in the United States. It is the season when the will of the distributors in the US who wish to clear all the goods remaining within the year and the consumers’ desire of consumption during the Thanksgiving holiday matches. Additionally, there is Cyber Monday where the inventory that has not been cleared up is sold online. Black Friday lasts from the very next day (Friday) Thanksgiving holiday (4th Thursday of November) ends until the weekend, but generally, the promotion starts a week before the event. There are about 2 months left at this point to Black Friday 2022, so sales strategies should be established and the inventory should be replenished starting from now in order to achieve a high sales performance. In addition, unlike Amazon Prime Day where the discount is only provided to Amazon Prime members, Black Friday can apply to all consumers.
1. How to Prepare for Black Friday! – Promotion and Inventory ReplenishmentLike Amazon Prime Day, Black Friday should also offer large discounts. There is no big difference between the type and setting of the promotion between Black Friday and Amazon Prime Day. Among discount events provided by Amazon, ‘Lightning Deal’ is first offered to sellers whose sales performance is outstanding. If the sellers accept the deal, their products are shown with a ‘Black Friday Deal’ badge. Even if they are unable to participate in the Lightning Deal, they can take part in the Black Friday promotion with the following method:
[Promotion Setting](Source : Amazon Seller Central)
When sellers click Amazon Seller Central > ‘Advertising’ > ‘Prime Exclusive Discounts,’ a window appears where they can set the promotion. The Black Friday promotion is also set using the same menu as the Prime Day promotion. During the period of setting a Black Friday discount, the phrases ‘Is this a Black Friday Discount?’ and ‘Is this a Cyber Monday Discount?’ are automatically displayed with a checkbox. Sellers then can select the phrase they wish. If the sellers responded ‘Yes’ to the checkbox, Amazon automatically proceeds with the promotion during Black Friday and Cyber Monday period. (However, it is not Black Friday and Cyber Monday period currently, so the phrase ‘Is this a Fall Prime Deal Event discount?’ is being displayed.) Additionally, sellers can check product requirements for participating in the Black Friday promotion, rules for a minimum discount rate, etc. on the page. To briefly touch on some main points, the rating of the listing should be at least 3.5-star and offer a discount rate of at least 20%. In the case of sellers who cannot set the discount due to unfulfillment of requirements, they can provide a Black Friday promotion by setting the discount with general coupons. When setting the promotion, sellers should beware not to suffer a loss as ‘Prime Exclusive Discount’ is applied in duplicate with the previously set coupon. This issue can be solved by stopping the existing promotion or by setting the minimum sales price.
Unlike Prime Day which lasts from June to July, Black Friday is processed in the second half of the year and is the representative peak season of the US where Amazon FBA storage fee increases. Therefore, more cautious inventory replenishment strategies need to be established. Moreover, unlike Prime Day which only runs for 48 hours, Black Friday and Cyber Monday last at least for 4 days and the promotion starts 1 week beforehand, so a sufficient amount of inventory should be compiled.
[Amazon FBA Storage Fee of the Second Half of the Year](Source : Amazon Seller Central)
We recommend sellers set the Stock Keeping Unit (SKU) for goods that will mainly be sold during Black Friday and proceed with compiling inventory beforehand. If the main SKU is not warehoused due to dead inventory, set a high range of discount rate or use the Amazon Liquidation Program to offset excess inventory and secure sufficient inventory storage limits.
2. Different from the Past? Interesting Facts about Black Friday 2022In 2022, the whole world including the US is suffering from high inflation. As of August 2022, prices are continuing to rise such as the US Consumer Price Index (CPI) increasing by 8.3% compared to the same month last year, and the prolonged Russia-Ukraine war is also becoming one of the reasons for the continuous inflation. Due to the prolonged inflation, different consumption patterns have been observed on Prime Day in the first half of 2022 in comparison to the previous Prime Day. According to the overseas market news of Korea Trade-Investment Promotion Agency (KOTRA), the sales performance of traditionally popular products of Prime Day such as expensive home appliances decreased compared to the average year, and the sales of daily necessities highly increased. Of the total sales of Prime Day, 58% came from products with less than $20, and products of more than $100 only accounted for 5% of the total.
Because the inflation is continuing until now from Prime Day 2022, similar consumption patterns are likely to be shown in this year’s Black Friday with Prime Friday. There is uncertainty unlike in past cases, but these patterns could be positive to sellers who sell inexpensiveness products or daily necessities. Therefore, the sellers who fall into those categories may expect exponential sales growth if they are well-prepared for this year’s Black Friday.
There is also the variable ‘Fall Prime Day’ in this Black Friday other than the inflation. Usually, Prime Day is held once a year, but Amazon declared 2022 Prime Day twice a year, and the start of the event is expected to be in October. (Normally Prime Exclusive Discount application begins one month prior to Prime Day.) For consumers, a change in consumption patterns may be shown as a big discount event with one-month interval is occurring two times. In addition, this year’s Black Friday is held offline for the first time after the COVID-19 pandemic, so offline shopping may be more prominent than online. It could be a burden to sellers to continuously provide extreme promotions, so they can consider the strategy of selecting and focusing on one of the two events.
[Fall Prime Day Guidelines](Source: Amazon Seller Central)
Another new variable is the all-time high exchange rate since the 2008 financial crisis. Generally, the rise of the exchange rate can serve as an opportunity for overseas sellers who wish to increase their profit as it has the effect of reducing the price for exporters. If sellers set the discount rate appropriately as usual, they can greatly increase their profit compared to the past and secure stable profit even if they set big discount rate using the increase in exchange rate. However, the rise of the exchange rate is linked to an increase in fees such as FBA fulfillment fee, FBA storage fee, and advertisement fee. Therefore, unnecessary fees need to be reduced by efficient inventory management and campaigns.
[Trend of South Korean Won to US Dollar Exchange Rate for 2022](Source : FRED Economic Data)
Until now, we looked at promotion setting, inventory management, and the uniqueness of 2022 required for Black Friday and Cyber Monday 2022. Uncertainty is prevalent worldwide, but sales increased by 5% year-on-year in the case of this year’s Prime Day. In short, only the consumption patterns of consumers changed, not the spirit of consumption in major discount events such as Black Friday. Therefore, let’s get well geared up for Black Friday and Cyber Monday 2022 and lead a brilliant performance.Now logistics is changing. Let’s use the digital forwarding service, Cello Square.Similar to digital transformation occurring in various industries, transformation to ‘digital forwarding’ is ongoing in logistics where everything can be identified in one platform contrary to the traditional logistics methods such as calls and mails thanks to the advancement of cutting-edge technologies.
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