How to survive Black Friday
Black Friday is one of the biggest days of the year for retailers. It isn’t even a day anymore; it’s an entire period of the year. With this brings a multitude of payments and a wave of problems. Patrick Brusnahan speaks to experts on how to survive
One of the biggest shopping days of the year, alongside Boxing Day. What could possibly go wrong? Apart from security issues and abandonment of course.
Sales during the Black Friday season are substantial. According to GlobalData, spend during the period (19 November 2018 – 26 November inclusive) in the UK will be 3.1% higher than during the same time in 2017. This is expected to account for 10.5% of total Q4 2018 spend at a whopping £10.4bn ($13.3bn).
In addition, GlobalData surveyed 2,000 people to see their shopping intentions around this time and 39.9% were hoping to buy something in the Black Friday period. Also, 55.8% were delaying a purchase to maybe benefit from a reduced price.
While traditionally thought of as an “American” thing considering it falls on the day after Thanksgiving, Black Friday has a global reach. In fact, German firm Wirecard expects the UK to spend more than the US on this occasion.
UK consumers are expected to spend $76 on average during Black Friday but in the US, it’s expected to only be $73. UK consumers will also have a higher share of desktop spend (37%) compared to US consumers.
Globally, 39% of respondents said they planned to shop on Black Friday. It was the highest in Brazil (67%), followed by the UK (40%), Germany (40%) and the US (38%).
Markus Eichinger, Executive Vice President Group Strategy at Wirecard, says: “Today’s consumers are willing and able to shop around and compare offers before buying and are also open to trying new brands if they meet their needs.”
Astoundingly, 82% of consumers globally said they were either likely or very likely to combine various channels during the purchasing process – with Malaysia proving particularly fond of cross-channel shopping (96%), followed by Brazil (92%). Comparing prices was the main motive as over half of consumers (51%) stated this as their top answer.
68% of consumers planned to buy online - either via a desktop site, mobile app, or mobile site. Overall, 18% planned to shop in traditional stores, with 22% of US respondents planning to shop in a physical outlet, but only 8% of German consumers intend to do so.
Convenience and experience are both crucial in finalising a purchase. It is easy to get someone into a store or clicking on a website, but making sure the customer buys is a different task.
Oscar Nieboar, chief marketing officer at Paysafe, says: “During these big retail events, merchants should ensure they’re well positioned to capitalise on such a golden opportunity. A study carried out among small to medium sized retailers showed that they believe 9% of purchases are abandoned at check out. While 28% believe this reflects successful fraud checks, 33% say abandoned transactions have a major impact on business performance, and on a Black Friday weekend this would be more painful than ever.
“Notably, 15% of merchants believe purchases are abandoned purely because of a lack of payment options at the checkout phase. With so many choices available, such as pay by invoice, online cash solutions, and digital or mobile wallets, it’s essential that retailers stay on top of their game and work with payment providers and solutions that can help them thrive in a competitive environment. Understanding developing consumer preferences in payment trends can give merchants the boost they need to capitalise on these big events in the retail calendar.”
Ralf Ohlhausen, business development director at PPRO Group, agrees that having a number of payment options is a must.
He says: “For most countries you have to offer 4-5 different payment methods to reach 80+% of online shoppers, and each country has usually their own most popular local (often called alternative) payment methods. Outside the US and UK it is very rare to reach more than 25% with credit cards alone. So, make sure your PSP has the relevant methods on offer and that you can present these to your shoppers depending on their home country or IP address and in the right order.”
British shoppers, according to PPRO, are exceedingly looking abroad to make their purchases. 70% of British shoppers are buying goods from overseas, compared to 53% four years ago. Most frequently, goods were bought from the US, China and mainland Europe.
On the other hand, customers found major hurdles when looking at online merchants with 64% reporting that the payment process halted them from completing their transaction. Reasons behind this were preferred options not available (22%), complicated processes (16%) and lack of trust (9%). In addition, 75% would be more likely to buy good if it became easier to use payment methods they knew.
With such a large amount of payments going though in a season, security becomes of utmost importance. Cyber criminals will see this period as peak time to commit fraud. The UK may be particularly vulnerable.
Richard Anton, co-founder and partner of growth capital firm Oxx, comments on the UK being prepared to stop cyber attacks: “The joint committee on the national security strategy has offered a stark reminder that we cannot be lax when it comes to implementing fit-for-purpose cyber security protections in the face of the growing cyber threats from around the world. These threats are becoming more numerous and increasingly complex, and it's a national priority to respond accordingly.”
ACI Worldwide predicted a 14% rise in fraud attempts this Black Friday compared to last year’s. On Black Friday, the firm expects 1.36% of all purchase attempts to be fraudulent. In addition, 1% of all Cyber Monday purchases will be fraudulent as well. These will have an average ticket price of $243, a 17% increase from last year.
“The first step to fighting fraud is knowing what you’re up against,” says Erika Dietrich, global director, payments risk, ACI Worldwide. “Fraudsters prepare for peak holiday season just as much as merchants and consumers do. By anticipating the increase in fraud during the holiday shopping season, and being aware of where fraudsters may be lurking, consumers and merchants can get ahead of fraudulent activity and protect themselves.
“As more consumers purchase big ticket items like smartphones, TVs and other electronics, we expect the attempted fraud average ticket price to be higher this year than in previous years. Fraudsters will also keep an eye on items that have limited inventory as it gives them an additional opportunity to steal and sell those items on the dark market for a higher price; consumers and merchants alike must be vigilant in such cases.”
Black Friday is an opportunity waiting to be taken. However, with the risk of cart abandonment and fraud in the air, the window could be missed. Retailers and merchants need to think about the consumer. If they do, they may actually keep them for longer than 24 hours.