Is Black Friday Discounting Right for Your Online Store?

For consumers, the Black Friday and Cyber Monday shopping period (or BFCM, to retailers in the know) has long been synonymous with big deals. Every Thanksgiving weekend, Americans flood retail shops and hit the web looking for Black Friday sales on items from smart TVs to high fashion to candles shaped and scented like Starbucks Frappuccinos.

Though traditional retail doesn't draw the physical crowds it once did — and boy, we're glad to see the end of crushing crowds at Walmart — consumer spending during this period has continued to grow impressively. (Not just in the US, but across the globe.)

So given that it’s the busiest shopping day of the year, offering deep discounts throughout the Black Friday season should be a no-brainer, right?

Not quite.

More recently, merchants have begun to reconsider blind discounting during the BFCM period. While smart, tactical discounting can have significant benefits, discounting also has major risks that must be mitigated first.

On the one hand, it’s a deceptively simple equation: sell stuff cheaper when consumers are looking for a deal, boost your sales, and then profit.

On the other hand, too frequent or too deep discounting can chew up your profit margins. Worse, they can impact the perceived value of your product and brand, leading to lasting impacts on your pricing strategy. Brands that discount too readily will see consumers hesitating to buy until the next sale.

For merchants, this is the paradox of BFCM discounting: you want to reap the benefits of discounting while still upholding the value of your business. Let’s explore how to do just that.

Pros of Black Friday Discounts

Quick Way to Drive Sales: There is an obvious reason why businesses use discounts: they’re effective! Consumers love a good deal around Black Friday, so offers can be a quick way to increase sales.
Attract New Customers: A worthwhile discount can turn heads, especially for customers who are in the process of deciding to buy your product.
Clear Out Old Stock: Do you have sluggish products from last season? Get rid of them by offering selective discounts, so you won’t have a holdup.
Building a Relationship with Loyal Customers: It's nice to be treated with perks and benefits. As a customer, if I'm rewarded beyond having a good product or service, I will have a better impression and overall experience. People like being recognized for their efforts, which is all the more true with loyal customers.

A typical Black Friday sale (like this one from Fanttik) will offer deep discounts, but that's not the only approach that works.

Cons of Black Friday Discounts

Inviting the Wrong Attention: Discounts can attract customers who are driven by a good bargain rather than appreciate what your business has to offer. These customers may not be as valuable in the long term.
Shifting Focus on Price: Black Friday discounting shifts the emphasis to price, leading you down a cutthroat journey to achieving the lowest prices. What's worse, this may apply to new customers as well as existing ones.
Lowered Perceived Value: We tend to feel uncomfortable when something seems too good to be true. With enormous discounts, people become suspicious that quality may have suffered or wasn’t worth the price.
Cut in Profit: An increase in sales is usually only acceptable if you increase profit margins. If improperly considered, discounting can decrease average order values — which can mean more orders to process with less profit.
Increase in Returns: Black Friday shopping is motivated by FOMO, but consumers are more likely to buy impulsively and then return afterward. You need to be prepared to tackle an upswing of post-purchase requests for returns and exchanges to support these sales, and possibly have a strategy to mitigate their impact.

The Pros and Cons of discounting are really just different sides of the same coin. Depending on how your discounting strategy is implemented, the results can be miles apart.

Considerations for BFCM Discounting

Like every good strategic move, it's always wise to properly evaluate the current situation before jumping into action. Not all BFCM sales are the same, so we’ve identified three key aspects to determine the right solution for your business.

Key Aspect 1: Goal & Reasoning

In the words of Simon Sinek, start with why.

Before you discount, it’s crucial that you have a clear idea of what you are trying to achieve to choose the right strategy. Why are you offering the discount in the first place? What are you hoping to accomplish?

Someone looking to clear stock, for example, should take a very different approach from someone who is trying to build loyalty by rewarding their customers. Determining your focus and the “issue” you are trying to address via discounting can impact the results immensely.

Think about it. As a loyal customer, a member-exclusive discount would make me feel way more valued than a general store discount accessible to everyone. By clarifying your motive, you make it easier to narrow down the best solution for you. (More on this later.)

Key Aspect 2: Your Customer Base

Be aware and evaluate your customer base. Knowing their priorities and what drives them can help you perfect your game.

Are your customers bargain hunters seeking the best deal, or are they brand loyalists willing to pay a premium for perceived value? Knowing the price sensitivity of your customer base will shape the kind of discounts you offer.

For instance, if you cater to high-end consumers, a 20% discount on high-margin items might be more alluring than deep discounts on already low-priced goods. Conversely, if your target market comprises cost-conscious shoppers, significant markdowns may be necessary to entice them during the Black Friday rush.

Key Aspect 3: Nature of Your Product

Is what you’re selling bound by seasons, a one-off sale, or a continuous service sold through subscriptions? These factors are critical in crafting a discounting strategy that not only boosts sales but also aligns with your brand’s long-term goals.

The first step in maximizing the effectiveness of your Black Friday promotion is understanding your product lifecycle. Some types of goods, like fashion apparel, electronics, and homeware, will fluctuate in demand. Ask yourself, are you selling items already at the end of their life cycle?

In contrast, seasonal products that are in demand can be coupled with effective discounting strategies during the Black Friday season. If you sell winter gear, aligning your discounts with customer needs during the cold months can significantly increase sales.

On the other hand, if your product is evergreen — like gym memberships or wellness subscriptions — your strategy may revolve around maximizing long-term customers rather than just quick conversions. This calls for an altogether different discounting strategy.

What is the Impact of Discounts on Brand Value?

Discounting is a double-edged sword. While it can dramatically increase sales, it can dilute your brand’s value. Frequent deep discounts may lead customers to wait for sales rather than purchasing at full price.

To mitigate this risk, a strategic approach to discounting is imperative. Consider offering tiered discounts, bundling products, or creating exclusive Black Friday offers that enhance perceived value without eroding brand integrity.

Even if you decide deep discounts aren’t right for your brand, exploring alternatives to price-based promotions, such as loyalty rewards, product bundles, or value-added services, can keep customers engaged without the crutch of Black Friday sales. Selling at 90% off isn't your only (or best) option.

Thinking Deeper about Black Friday Discounting

Above, we talked about the importance of knowing your focus and the “issue” that you’re trying to address with your BFCM discounting. That’s the “why” behind your discount.

Since business is a relationship between the company's offerings and its customers, understanding these two main components can help you better assess and implement the right strategy.

Customer Focus for BFCM Discount Strategy

Customer focus looks into the target group and the desired behavioral outcome.

Simply put, it’s knowing the change you want to see in your target audience. The process involves identifying their current behavior and establishing the resulting behavior you wish to observe via discounting.

An example would be winning new customers. Your target audience may be early on in the awareness ladder and not know about your brand. So, in this scenario, the target is the ‘unaware audience’, and the desired outcome is to increase awareness and hopefully convert them into your regular customer base.

The behavioral outcome doesn’t have to be a change per se. It can also be a reinforcement of existing behavior. Showing a sign of recognition by rewarding VIP clients with a discount or membership benefit is an example of this, strengthening the original act of buying.

Here are a few discounting strategies for converting or reinforcing:

1. Behavioral Reinforcement

Loyalty programs: Membership discount is a well-documented tactic. The strategy positively reinforces customers to continue buying. Loyalty programs work to further secure relationships as customers are treated exclusively and feel recognized for their support.
Value-add offers: A value-add discount can mean a whole range of things. Essentially, as the customer I am being offered a bonus for supporting the business. Some companies offer free delivery while others offer a small gift. What is unique about these value-adding discounts is that they can be smaller, but they keep your brand at the top of your mind and relevant.
Upselling during checkout: Bulk and bundled discounts are often used with value-adding offers. This rewards customers who buy a lot and encourages regular clients to buy even more. Think about it: If you’re told that you can get free delivery by spending a few more dollars, wouldn’t you also take another look to see what to add to your cart?

Take a look at AfterShip's Ultimate Upselling Playbook for tips and advice on how you can do this during BFCM to increase average order value.

2. Behavioral Conversion

Abandoned carts: Have you ever entered a store wanting to buy something only to come out empty-handed? This phenomenon is well-documented in online stores. A study by the Baymard Institute found that 70.19% is the average cart abandonment rate in 2024. By offering a discount (say 10% off of their next purchase) when reminding them of their abandoned cart, you can motivate them to finish the sale and even encourage them to make another purchase in the future.
First-timer marketing: Indeed, with so many choices to choose from these days, we are plagued with indecisiveness. So by offering a first-time discount, you are more likely to push a potential customer over the edge and choose your product/ service over an alternative.
Exit intent pop-ups: Exit intent discounting uses an algorithm to provide an additional incentive to your customers just as they are about to leave your online store.
Brand advocate/ referral discount: This discount applies to people who are active advocates of your brand. It taps into the social network of your existing customer base. By offering a discount to every referral, you encourage word of mouth from believers of your brand.
Subscription/social media engagement: Giving a discount to people who are willing to engage with your brand, either by subscription or by engagement over social media, you open up a portal to future exchanges. Not only does this help build your CSM, when done successfully over social media, it also casts the net to an even wider audience.

Product Focus for BFCM Discount Strategy

While customer focus looks at the wider scale, product focus helps you identify individual items for your discounting strategy. In an effective campaign, tactics should be applied depending on the product's “true” value and its stage within the product lifecycle.

For this product specific approach, there are three main causes for discounting.

There is increased competition or a lower demand for your product
People are unaware of your product
Your product is soon becoming outdated

1. Overcoming Product Competition

Your product is more valuable when you have a monopoly or have little competition. However, as competition builds up, especially during periods like Black Friday and Cyber Monday, the appeal of your product can become diluted. This is when you may have to adjust the pricing to keep your product relevant.

But how can you offer a discount without impacting the perceived value of your product?

In this case, you can create an occasion (reason) to justify your discount, hiding the fact that it may not have been selling. BFCM is perfect for this reason, as are events such as anniversary sales and themed weeks that help explain the lowered price to the client.

Since the discount is only offered for a limited period (by which it returns to its original price), creating urgency and interest, you may even find that the tactic re-energizes the demand for your product afterward.

2. Initial Awareness Marketing

When you initially launch a product, there is little awareness of it. Your product is so novel that your target customers may not even realize the need for it. To gain traction, it can be helpful to offer a small discount on that particular product during periods like BFCM and start building consciousness and appreciation.

Such discounts are used as a marketing scheme to get the ball rolling, like offering 30% off to the first 50 customers. They are effective in building up hype and work especially well when you have a strong enough product that is able to follow through.

Limiting your Black Friday sales (either in time or the number of offers available) can work in conjunction with awareness marketing to help more customers discover what you’re selling.

3. Clearing Out Old Stock

Some products have a predictable timeline, while others fade into the background. Food and perishables, for example, are done once they expire and cannot be sold after that. Another example is that fashion and apparel go through seasons and quickly become outdated.

So before your product becomes unsellable, it is sometimes a good idea to get rid of the old stock by offering it at a lowered price. Black Friday can be a good time to do this because customers are looking for deals and may be less concerned with the age of your stock.

Long-Term Strategy: Prepare for the Aftermath

After Black Friday, how do you plan to handle your inventory and customer relationships? How do you plan on managing the post-purchase evaluation period? Or the influx of return and exchange requests that may occur?

The aftermath of heavy discounting can lead to overstocks and an influx of bargain-conscious customers who try your product with no intention of coming back. It’s critical to have a game plan for post-Black Friday engagement that retains new customers, provides an incredible post-purchase experience, including shipping and tracking, and encourages repeat business.

Consider sending follow-up communications with exclusive offers for returning customers or launching targeted retargeting ads for those who showed interest but didn’t buy. These strategies can help to transform Black Friday shoppers into lasting customers.

You can read AfterShip's eCommerce Returns Report for BFCM 2023 to see how trends in post-purchase activity impact merchants like you.

Return requests spike in the period after BFCM. Are you ready to deal with them?

The Power of Black Friday Discounting

When done correctly, discounts can be a great way to drive sales, increase order values, and widen your customer base in the lead-up to the Christmas shopping season. However, it’s important to note that they are a short-term tactic rather than a long-term strategy, and relying on discounts to increase revenue can ultimately hurt your brand and your business.

But once you’ve properly assessed the various factors, try to be creative in your solutions. Make discounts feel like a bonus to the consumer rather than something they’d take for granted.