Ahead of Black Friday, direct-to-consumer brands weigh questions of discounts and inventory

For direct-to-consumer brands, Black Friday is a sales opportunity unlike any other. But they must balance awareness and discounts with shipping delays, inventory problems and more.

Mattress and sleep accessories brand Eight Sleep has been preparing for the November sales weekend since the start of the year. (Photo: Eight Sleep)
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In the Slack channels of mattress brand Eight Sleep, all anyone can talk about is Black Friday.

Right now is crunch time, says Alexandra Zatarain, the brand’s cofounder and head of brand and marketing. Suppliers are being given the go-ahead on final order numbers — forecast at the start of the year, then fine-tuned monthly — and the marketing team is busy determining how they’re going to get the word out about the brand’s discounts. Exactly what that offer will be is just days away from being finalized (last year, customers could get up to $500 off its $2,000-plus smart mattresses).

“Most companies start preparing very far in advance,” Zatarain says of Black Friday, America’s biggest sales event of the year. “The holiday falls at a time where we’re all supposed to be relaxing with our family at Thanksgiving. And I need to ensure my team can enjoy that time off.”

The big business of Black Friday

Black Friday has always been a big event for retail brands, kicking off one of the biggest revenue-generating weekends of the year, and marking the start of the shopping season which runs all the way through to the New Year. But in 2020, amid the turbulence and uncertainty of the pandemic, shoppers were more hungry than ever for online bargains.

According to Adobe Analytics, Black Friday 2020 was the second-largest online spending day in the history of the U.S. — beaten only by that year’s Cyber Monday sales, which followed a few days later.

Online spending hit $9 billion the day after Thanksgiving, up 21.6% year-on-year. It’s thought that between $10.8 to 12.7 billion was spent online the following Monday, with shoppers hunting for bargains on not just the usual electronic devices, but groceries, clothing and alcohol, too.

Direct-to-consumer brands are no stranger to cashing in on the sales weekend hype. Once-in-a-year sales from the likes of makeup brand Glossier, luggage company Away, and mattress company Casper are all hotly anticipated events, while other brands have used Black Friday as an opportunity to push a broader social message (and drive sales).

In 2019, Allbirds emptied its London store on Black Friday to point out the conflict between rampant consumption and sustainability goals. The next year, it raised prices so it could donate money to Greta Thunberg’s Fridays for Future initiative. Everlane’s Black Friday Fund puts $1 from every purchase over the weekend following Thanksgiving towards a charitable cause. The brand also donated significant sums of its own money in 2020.

“It’s an important time of the year,” Zatarain says, pointing out that for mattresses and other costly products, discounts can help people pull the trigger on an item they’ve been eyeing for a while.

Direct-to-consumer discounting

But while some online-first brands have gone big with their Black Friday discounts, others feel more cautious about offering substantial markdowns on their products. After all, the whole idea of selling directly to customers (rather than via retailers and wholesalers) is that it results in a more fair and transparent price for consumers. Discounting could make customers feel like they were paying more than needed all along.

When launching Fifty One Apparel, a clothing brand catering to menopausal women, founder Louise Nicholson says “one of the things that was really important to me was giving a fair price.” While it’s common practice for retail brands to charge a bit more than necessary so they can lure customers in with a discount when they want to, Nicholson didn’t believe this tactic was the right approach. “I veered away from doing discounting, but Black Friday is such a thing that you have to be part of it.”

Last year, Fifty One Apparel opted for a 10% discount over the Black Friday weekend.

It’s a sentiment shared by hiking boot brand Season Three (which also plans to offer a 10% discount this year). “We don't love the idea of discounts, because we price our products where we hope people would have a willingness to pay, and not higher,” says cofounder Adam Klein. “I will say that November 2020 was our best month since launch though, so it shows that we need to care about it.”

Jaime Schmidt, the founder of Schmidt’s Naturals, a personal care brand that she sold to Unilever in 2017, says that Black Friday is something that brands struggle to ignore — even if their founders are morally opposed to or simply not concerned with sales shopping themselves.

It is also tricky for new brands to anticipate demand, or figure out what an attractive (but hopefully still profitable) discount looks like for its products. One of the biggest risks is mis-forecasting and ending up with far too much stock than it’s possible to sell before the year is out, Schmidt says. The reward, on the other hand, is giving people (and the press) a reason to talk about you. “It’s a game. And if you want to be relevant it’s a game you have to play as a brand,” she says.

“The reason to participate is because we want to make sure we have some presence when people are ready to purchase gifts for themselves and others,” says Zatarain. “That’s why even brands that may not be doing promotions year-round, or may not have a very traditional gifting-type product want to have an offering.”

Preparing for Black Friday

Even brands that aren’t so bothered about the Black Friday hype will need to make sure they have their ducks in a row by the time the fall shopping season kicks into action.

This year’s Black Friday in particular presents some unique challenges. As well as the usual things that can go wrong — from underestimating the amount of inventory needed to forgetting that European manufacturers tend to take August off as a summer holiday — the pandemic has created further supply chain issues with which brands must now wrangle.

Fifty One Apparel says stock is currently arriving in the U.K. anywhere up to eight weeks after it was originally scheduled, while around the world shipping container shortages (and rising prices) are causing brands to scramble for what limited space is available.

According to Forbes, prices per shipping container are up 122% compared to this time last year, while the products themselves are taking twice as long to arrive in the U.S.

“Every company is going to be scrambling for that warehouse space, for space in shipping containers and trucks,” says Zatarain. “We don’t have much more time.”

While it is easy for brands to lure customers in with a discount, making sure there is enough product on hand to meet demand will be a big test for this year's Black Friday. At this point, brands have done a lot of what they can to prepare. Now, there’s not much to do other than hope everything goes smoothly.

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