Black Friday: More than just hype
The bargain day that kicked off Christmas shopping and got rid of old stock has become so big that it needs cloud capacity
For something that’s not been in SA for too many years, Black Friday promotional sales are making a noticeable impact on the local retail sector.
Conceived in the US in 1952 as the start of Christmas season shopping the day after Thanksgiving, the name Black Friday began to be used only in the early 2000s.
It has come to be seen as a way for retail chains to get rid of stock — including dated electronic goods — at large discounts on the last Friday of November.
In SA, the sales extravaganza has morphed into a marketing tool for e-tailers looking for a way to generate interest in buying things online.
According to World Wide Worx MD Arthur Goldstuck, Black Friday has proved to be effective in getting people to buy online.
"Our research has shown over the years that, as people become more experienced in using the internet, their propensity to shop online increases. This is part of a World Wide Worx model known as the digital participation curve."
The missing factor in the curve, he adds, is that most retailers do not know how to convert that propensity into actual online shopping behaviour.
"Black Friday is becoming a powerful tool for converting propensity into behaviour."
The promotion has done more than spark interest in buying online: it’s reshaping how South Africans buy over the period.
Sales in November 2017, for example, were 7.2%, or R1.36bn, higher than the average for the preceding two months, according to research group Nielsen’s report "Black Friday: Heyday or Hype". Measured year-on-year, sales were up an impressive 8.8%, or R1.6bn. Even more remarkable was that overall sales for the November and December period did not suffer, but actually rose more than 8%.
Even the SA Reserve Bank noticed its impact. Its Quarterly Bulletin in June reported a "robust increase" in durable and semi-durable goods in the fourth quarter of 2017, in part as a result of "substantial ‘Black Friday’ promotions".
The Black Friday deals worked out well for consumers who, on average, saved R2,600, according to research by Global Analysis Team. It found that 66% of respondents surveyed — a 12 percentage point increase on 2017 — said they would participate in Black Friday this year.
For their part, retailers are again expecting a sharp rise in sales this year. "We expect sales to more than double this year," says Takealot chief marketing officer Julie-Anne Walsh. On Black Friday last year the group racked up about R87m in sales — R6m in the first hour.
Though Takealot has been one of the biggest proponents of Black Friday, its systems have been overwhelmed by the event almost every time. One year, though, the national payments system was unable to cope with all the card payments, resulting in a delay in transactions being closed.
Walsh says the group, which has recently been taken over by Naspers, is preparing as best it can, but points out that every year comes with challenges.
Takealot is not the only retailer that has to plan for an increase in traffic for a steep rise in sales. Companies have to plan for a spike in demand but have no idea how much it will rise.
This dilemma is compounded by having to expand the capacity of their IT infrastructure for a short time.
One thing retailers can do to cope with the increased demand is to employ the services of a cloud computing provider, says Grant Morgan, cloud general manager at Dimension Data.
Cloud computing — using a network of remote servers rather than a local server or PC to store, manage and process data — is one way to scale up in anticipation of a rise in demand the size of which is unknown.
To prevent downtime, Morgan adds, local retailers should start developing applications in a way that allows for continuous updates, in the way global e-commerce sites Amazon and Alibaba have done. "You don’t hear about Alibaba going down."
To better manage the surge in demand, Takealot is this year spreading Black Friday deals over five days and not just one.
Several other retail groups including Makro are doing the same, while TFG is offering deals through its various sites from Black Friday to Cyber Monday.
To make sure orders get delivered before Christmas, Walsh says Takealot has doubled the number of delivery people.
"We expect to deliver more than a million orders across the Takealot group during the season," she says.
Black Friday might have started as a way to kick off the festive season shopping in the US — and promote online retail in SA — but it has become something way bigger. "Black Friday has moved on from getting rid of stock. It’s now more about the festive season."