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Black Friday: A good time to refocus on business basics

by OnDeck Australia,   Nov 25, 2020


After an unpredictable year for many SMEs in the retail sector, the fast-approaching Black Friday sales on the 27 November might seem like an appealing opportunity to engage with customers a month out from Christmas.


But participating in the discounting free-for-all may not benefit your margins, and there might be better ways to boost your SME’s bottom-line.


What is Black Friday?


Black Friday started in the 1960s when police in Philadelphia, the largest city in Pennsylvania in northeast USA, complained about holiday shopping traffic. In the US, Black Friday is an important event for the bottom lines of big retailers such as Target, Walmart, or Best Buy and now their Aussie equivalents such as David Jones, Myer, Kmart, Big W and the local Target are participating in the discounting action.


To give you some idea of the value of Black Friday and Cyber Monday, which this year falls on 30 November, in 2019, comparison website Finder predicted Australians would spend $3.9 billion on the sale days. For small businesses, however, Black Friday doesn’t hold nearly as much sway.


Leave the price-slashing to the big retailers


The major retailers can offer significant discounts because they buy in huge volume. Local small businesses can’t match those prices while remaining profitable, so they have no choice but to sell at a higher price. And while a loyal customer base may keep a small business afloat, it’s difficult for SMEs to compete in a competitive event such as Black Friday, which is based on price slashing.

Anne Nalder Headshot
Anne Nalder

Anne Nalder, Founder & CEO of the Small Business Association of Australia (SBAA) recommends SMEs should attempt to avoid competing with the larger stores for the Black Friday sales. “Consumers are set in their ways for sales and have already made up their minds. They are looking for massive bargains.


“Small businesses cannot compete against these slashed prices, and it would hugely erode their profit margins.”

Anne continues, “I am all for sales but not at the frequency we have seen in the last number of years. Some retailers have shot themselves in the foot by adhering to these methods.”


Positioning your business for success


Rather than attempting to compete with the big discounting retailers, Anne urges SMEs to get their market positioning right. “In most cases, my recommendation is to go for the middle to upper market rather than the discount end.


“Small businesses can be competitive by providing excellent service, quick delivery times and quality products, goods and or services. And the margins are more attractive if the focus is on the middle to upper market.”


Attracting customers and competing online


Today’s consumers are more demanding and take more time to research prices, factors that SMEs must consider as part of their go to market strategies.


“Small business owners must recognise they are working with more sophisticated buyers and should consider ways to address these issues,” Anne advises. “And the response shouldn’t always involve offering the cheapest product.”


Due to competition from big retailers, other small businesses and online shopping, SME owners need a marketing plan to succeed counsels Anne. “A good marketing plan doesn’t necessarily have to break the bank account, but it must be targeted and carefully considered and planned. The plan needs to include the website, social media and if the budget permits could even consider radio, TV or newsprint advertising.”


SME owners with sufficient marketing experience can try and develop a plan of attack themselves. However, if the business needs the assistance of a strategic marketing agency, Anne advises they should expect to pay between $2,000 – $5,000.


Once the plan is in place, the SME should review its digital marketing assets such as the website – and make changes if they are not up to scratch. “The website is the SME’s online shopfront and must be up to date, interesting and mobile responsive.


“Research shows that while Australians are using mobile devices to research goods and services, many SMEs don’t have mobile-friendly websites, which is harming lead generation.”


Anne sums up, “SMEs would be better served by having a more mobile responsive website that is engaging rather than participating in Black Friday discounting.”


Get in touch today to find out about funding which may be available to you to support your marketing initiatives.





Prepared by OnDeck Capital Australia Pty Ltd ABN 28 603 753 215 (“OnDeck”) for general information purposes only. Content may belong to or have originated from third parties and OnDeck takes no responsibility for the accuracy, validity, reliability or completeness of any information. Information current as at November 2020. You should not rely upon the material or information as a basis for making any business, financial or any other decisions. Loans issued in Australia are subject to the terms of a loan agreement issued by OnDeck. Loans are subject to lender approval. OnDeck® is a Registered Trademark. All rights reserved.


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