Unlocking Key Insights from Black Friday and Cyber Monday 2023

Unlocking Key Insights from Black Friday and Cyber Monday 2023

Black Friday and Cyber Monday (BFCM) mark the start of the holiday shopping season as e-commerce and big-box retailers offer deep discounts to fuel consumer demand in a fiercely competitive landscape.

Originally designed to lure eager shoppers to visit brick-and-mortar stores, Black Friday became synonymous with consumers lining up in the early morning hours in hopes of snagging a bargain. We’ve all seen the crowds of customers camping out at big-box retailers, trampling each other to try and score a cheap television.

However, we’ve seen the competitive landscape shift in recent years as advertisers adapt to changing consumer behaviors. We have witnessed advertisers offer deep discounts and the “Best Prices of the Year” days and weeks before Black Friday—sometimes as early as October. Plus, the introduction of Cyber Monday and online shopping, which exploded in popularity during the pandemic, has eased the commotion in brick-and-mortar stores, as people often want to avoid chaotic crowds and take advantage of promotions from the comfort of their homes. 

While Black Friday remains deeply ingrained in our culture, it's seen a new, modern twist as sales shift online and start earlier, and advertisers need to take note. These insights an be leveraged for future marketing campaigns.

In this article, we’ll unpack the data and statistics around 2023’s BFCM e-commerce sales and look at shifting consumer behaviors while exploring learnings from top e-commerce brands like Shady Rays and Wellow. 

Black Friday and Cyber Monday 2023 Trends

Adobe Analytics reported record holiday spending, with Black Friday shopping sales climbing 7.5% year-over-year to $9.8 billion and Cyber Monday growing 9.6% year-over-year to $12.4 billion. To put that Cyber Monday number in perspective, consumers spent $15.7 million every minute. Cyber Monday remains the biggest online shopping day every year, with many consumers looking to grab major discounts in categories across the board like electronics, apparel, toys, furniture, and appliances. 

A few important trends are driving these numbers – let's dive in and review the headlines.

• Sales Started Early, Strong

Gone are the days of holiday sales held to just one day – now, it’s an entire season. If you opened your email inbox in late October or early November, it certainly felt like this year’s holiday sales started earlier than usual. And data from Salesforce proved that to be true, with retail discounts showing up earlier in 2023 versus 2022.

According to the National Retail Federation (NRF), 55% of consumers took advantage of early holiday sales, and 35% were engaged in shopping during the week leading up to Thanksgiving. 

Similar to last year, as of Thanksgiving weekend, most (85%) of consumers had started holiday shopping and were about halfway (48%) done so far. Retailers are paying attention to consumers wanting to check holiday shopping off their list early and responding by advertising discounts earlier and earlier each year.

The NRF says the top gifts shoppers purchased during the five-day period were clothing and accessories (bought by 49% of those surveyed), toys (31%), gift cards (25%), books, video games, and other media (23%), and personal care or beauty items (23%). Interestingly, this is the first-year personal care and beauty items were among the top five most popular gifts purchased over Thanksgiving weekend. 

Salesforce notes that while there was a steady trickle of promotions early in the season, patient shoppers held out for – and got – attractive Cyber Week deals, with the average discount of goods around 28%.

• Flexible Payment Options and Payment Type Growth

The Federal Reserve has raised interest rates rapidly starting in March 2022 in order to slow down the economy and curb inflation. Although the rate at which prices are rising has eased significantly, the overall increase in prices is weighing on consumers, which has limited the discretionary income at their disposal. As a result, consumers are responding by searching for deep discounts and flexible payment options. 

For example, as consumers adapt to economic challenges like inflation and high interest rates, shoppers opted for alternative payment methods, like “Buy Now, Pay Later” (BNPL), which saw a 42.5% increase in usage YoY on Cyber Monday, contributing to $940 million according to Adobe Analytics. 

Additionally, consumers are signaling they want fast and easy payment options. For example, according to Salesforce, Wallet Pay was the type of payment most quickly adopted by consumers.

E-commerce brands take note: Consumers are looking for flexible and convenient payment options to streamline the checkout process and provide more flexibility with their budgets. It is wise to integrate multiple flexible payment solutions at checkout.

• E-Commerce Sales Grew Faster Than In-Store Retail

While Cyber Monday was created to boost online sales, the reality is that online retailers are offering discounts online on both BFCM. Some even offer promotions throughout the whole week, advertising Cyber Week specials.

According to Mastercard Spending Pulse, Black Friday e-commerce sales increased 8.5% year-over-year. In comparison, in-store sales experienced a more modest increase (1.1%), indicating that traditional retail remains resilient and relevant, although slow to grow. Some shoppers admit they like the hustle and bustle of shopping in-store, noting that it feels like tradition and a bonding experience with their family and friends.

With online shopping dominating this year, global data from Shopify showed strong mobile performance for merchants on that platform, with mobile versus desktop 76% to 24%, respectively. This shift from desktop to mobile underscores the importance of social traffic on mobile, a critical acquisition channel for advertisers, representing 10% of all referrals to retailer websites, according to Salesforce. 

With e-commerce sales growing faster than in-store retail, it’s clear that consumers value convenience. A significant takeaway from this year’s BFCM shopper data is that more and more consumers are shopping online, and advertisers must prioritize mobile experiences to cater to consumer preferences. 

• AI Helps Influence Consumers

Consumers increasingly seek personalized experiences and recommendations, and in 2023, brands have embraced a groundbreaking trend to provide highly targeted and distinct shopping experiences. Utilizing AI, brands deliver seamless and personalized shopping experiences, boosting online growth and customer profitability. In fact, $51 billion of global online sales were influenced by AI in areas such as targeted offers, product recommendations, and generative AI-powered chat services. 

• Data on the Discounts 

If you were a consumer looking to shop during BFCM, you likely enjoyed some fantastic discounts. According to Salesforce, retailers slashed prices more than ever to meet pent-up demand. After lackluster dealers earlier in the season, heavier discounts influenced price-conscious consumers to take action. 

Discount rates rose 27% globally and 29% in the U.S. on average throughout the week. Verticals with the highest global discount rates included makeup (38%), general apparel (33%), skincare (33%), and active apparel (32%).

In addition to the steep discount, Salesforce reported that advertisers were more transparent about discounts, which has led to fewer returns. After an unprecedented high rate of returns during the last Cyber Week, retailers listened to shoppers’ feedback and were more transparent regarding their discounts and return policies in 2023. As a result, we saw return rates fall back to normal levels (5%) for the week. 

Insights from Top E-Commerce Brands in 2023

As we explore the landscape of BFCM 2023 deals, let’s examine the successful marketing tactics and campaigns of two e-commerce brands that Function Growth works very closely with: Shady Rays and Wellow. 

Case Study: Shady Rays

Shady Rays is the fastest-growing eyewear brand in the U.S., and one of the top sixty fastest-growing companies in the nation. 

Function Growth is proud to act as Shady Ray’s lead growth partner and advises on all customer acquisition and marketing activities. We collaborated closely with Shady Rays to develop a distinct BFCM marketing strategy to stand out in a crowded marketplace.

To prepare for BFCM, A/B testing was critical to Shady Rays’ strategy. A rigorous testing approach provided crucial insights into pricing dynamics and promotion strategies. Furthermore, it enabled us to optimize all consumer touchpoints effectively, contributing to the successful scaling of growth during an crucial retail period.  It allowed the brand to uncover key insights about price and promotion, and to optimize consumer touchpoints to scale growth effectively.

Shady Rays’ Pricing and Promotions

When creating a BFCM marketing strategy, Shady Rays knew it had to set itself apart from competitors. Instead of a conventional sitewide discount, the brand opted for an attention-grabbing “Up to 60% Off” sitewide offer. This way, the brand could prominently advertise a very deep discount but execute a variable pricing strategy that caters to different products on the site. This promotional strategy draws people onto the website and gets them shopping and searching for deeply discounted goods. 

Beyond percentages, Shady Rays tested the effectiveness of alternative offers and promotions. Interestingly, a percentage discount proved not always to be the best option. In fact, the brand found that markdown prices, such as an original price with a slash through it ($54/$32), proved to be a compelling alternative. This approach eliminated the need for consumers to do mental math to get the product’s final cost. Furthermore, this strategy indicates how the perceived value can influence consumer psychology and provides Shady Rays with a unique competitive advantage. 

Finally, the brand offered a gift card to orders above $100, making it incredibly easy and “frustration-proof” by automatically applying the gift card at the point of sale. Providing a seamless and hassle-free shopping experience is crucial, especially when competition is fierce. Shoppers are much more likely to be satisfied and repeat shoppers if they are automatically given a discount, rather than figuring out how to get the discounts promised to them. 

The Shady Rays Creative Approach

The Black Friday/Cyber Monday marketing campaign extended beyond discounts and pricing strategies. Aftab Ahmad of Function Growth emphasized the impact of having a cohesive look and feel across marketing channels.

“Getting a top-notch look and feel was very impactful in how the website and other assets are perceived,” explained Ahmad. He explains that Shady Rays had a custom photography campaign commissioned for Black Friday, and they chose black gravel, stones, and natural elements to align with the brand’s image and messaging strategy of designing eyewear for outdoor adventures. Finally, the design team incorporated motion graphics, including scrolling text in the hero image, an animated top bar with multiple offers, and GIFs for snow goggles, transforming a static space into something that’s more engaging to enhance the overall shopping experience.

Case Study: Wellow Compression Socks

Wellow, a Function Growth owned and operated d2c wellness compression sock brand, executed a strategic BFCM marketing campaign. 

To pull shoppers in, the e-commerce brand created an enticing 35% discount, with bold and engaging creative and messaging that promotes their “Biggest Sale of the Year.” 

The brand invested $10K towards the campaign, aiming to make a significant impact during the peak shopping season. Let’s dive in and explore the effectiveness of the strategy by comparing key performance indicators pre, during, and post-Black Friday/Cyber Monday periods.

Unique Selling Proposition and Messaging

The core of Wellow’s Black Friday/Cyber Monday strategy lies in its unique selling proposition—a substantial 35% discount presented as the “Biggest Sale of the Year.” This messaging not only creates a sense of urgency but positions the offer as an exceptional, once-a-year opportunity. The use of clear and impactful communication aligns with consumer expectations during the holiday season—and is enough to influence any new customers that were considering compression socks to take action.

The company also used bold and engaging colors and graphics to draw consumers in and get their attention. Furthermore, Wellow prominently features the brand’s compression socks in the ad, keeping the ad product and discount focused. 

Finally, Wellow took a holistic approach to their marketing campaign, utilizing a variety of marketing vehicles to drive traffic like paid social, email, text messaging, and paid and organic search to acquire and retain customers. 

Wellow’s Performance Metrics 

By leveraging the power of a substantial discount, clear and impactful messaging, and bold advertising creative, Wellow successfully created an eye-catching and successful campaign:

1. User engagement increased by 27.9% overall, with new users rising by 24.7%
2. Overall average engagement time surged by an impressive 27.5%, meaning people spent more time on site.
3. And, Wellow drove more Daily Active Users (DAU), by experiencing a robust growth of 32.8%.

Wellow’s marketing strategy demonstrates the effectiveness of a well-crafted and executed discount strategy coupled with clear, impactful messaging. As a result, the brand experienced noteworthy returns on ad spend and lowered customer acquisitions costs, in addition to achieving substantial growth in user engagement and daily active users. The success of their holistic marketing approach and ability to drive traffic across a variety of marketing channels, showcases the importance of developing a comprehensive strategy in navigating the competitive landscape of e-commerce during the peak holiday season. 

Key Takeaways for Function Growth & Predictions

Let’s recap. Several key takeaways from this year’s BFCM provide valuable recommendations for retailers and e-commerce brands:

• The Great Digital Shift: Digital and online shopping has become increasingly important – retailers must prioritize their online platforms and invest in user friendly websites, mobile apps, paid social media, and seamless checkout experiences. 

1. Embracing Alternative Payment Methods: The uptick in alternative and flexible payment methods (like Buy Now, Pay Later) signals a shift in consumer behavior. Retailers should consider incorporating these flexible payment options into their checkout process to enhance the overall shopping experience.
2. Testing to Prepare for Black Friday: The holiday shopping season is like the Superbowl for retailers. To prepare, testing and learning are crucial stages that should happen earlier in the year. Retailers can gain valuable insights into promotional strategies to influence consumer decision-making. (See Shady Rays’ example)!

We have a few weeks left into the holiday shopping season, and a question lingers for retailers: Can the current growth rate be sustained? As the holiday season progresses, retailers and e-commerce brands should analyze what’s working in their campaigns and capitalize strategically on the momentum generated during BFCM. 

Ready to optimize your e-commerce strategy, embrace alternative payment methods, and implement effective testing strategies? Let Function Growth be your partner in transforming insights into actions that drive real results. Get in touch with the experts today.

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