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Is Black Friday David v. Goliath?

I find it interesting that a few “big days” are growing drastically out of proportion related to overall holiday sales. 5 years ago, Black Friday was closer to 10% of total holiday sales. Today it is above 20%. Add the other two big days “Cyber Monday” and “Green Monday” and you have 3 days that provide almost 40% of holiday sales.

Is Retail David v. Goliath?

This is not a good thing for most retailers because the winner of these big days are the stores who can win on price. Who wins on price? The stores with the strongest buying power like WalMart, Amazon, Target and Best Buy. They will do what smaller retailers can’t: win a race to the bottom.

That said, it is not all gloom and doom for smaller retailers. We have seen great examples of companies taking over control of commoditized products from the big players through greater customer service or by disrupting business as usual.

Zappos.com: At first, no one would buy shoes online because they couldn’t try them on. Zappos solved that by offering free shipping, free return and superior service. We tell shoppers to buy three pairs in different sizes and return the two that don’t fit. Zappos has a 365 day return policy. Amazon sells too many things to do that so Zappos' focus wins.

BlueNile.com: disrupted the way jewelry is sold. Instead of buying at the mall or local jewelry store where you pay 100% markup for a diamond, they sell it online for a 15-20% markup. They buy from the same distributors, for the same prices, but the end price is dramatically less because their entire infrastructure is a 27,000SF warehouse in Seattle. And to answer the question "Who would buy expensive jewelry sight-unseen?" they utilize their website incredibly well to educate and empower their consumers - myself included - about their jewelry purchase, something that can't happen at the mall.
They also provide free FedEx and a generous return policy. That's what has enabled them to sell an incredible 200,000 engagement rings online. Again, Blue Nile's focus wins.

This year I am seeing the run-up to Black Friday extending farther than ever before. It's as much "Black November" as it is "Black Friday." This time last year we had not even launched our Black Friday site. We launched 3 weeks earlier this year and were immediately getting 40,000 uniques a day at BlackFriday2010.com without advertising it.

Update 11/6: Amazon (Goliath) has just acquired another strong, niche "David," buying Diapers.com in a $540M deal.  Walmart was supposedly in the bidding as well. See WSJ or Fortune.

About the Author: Brad Wilson

Brad is the founder and Editor-in-Chief of Brad's Deals and Brad's Black Friday, as well as and author of Do More, Spend Less. He loves the game of hunting down the best deals and being able to spread the word to so many others. He is likely travel hacking his way around the world right now, trying to spend his millions of points and miles faster than he earns them!

5 Responses to “Is Black Friday David v. Goliath?”

  1. Andy says:

    Thanks for the insight, Brad.

    I’ve been a solid Black Friday buyer for the past 10 years. Most people think I’m nuts, but it’s become a tradition and it used to be quite exciting. It’s great that stores have gone to a “Black November” approach because Black Friday has drastically changed over the years. 10 years ago, I could get to Best Buy at 4am with 5am door opening and get whatever I wanted. This was before the days of handing out tickets where speed and strategy is what paid off.

    Every year that has passed the lines have gotten longer and longer, requiring me to get to the stores earlier and earlier. Last year I got to my local Best Buy at 1am and it was not early enough as tickets for the front page items were gone by the time they came around to me. If you want the best front page items (ie, Target $298 40″), you’ll have to camp out from about 8pm.

    Unfortunately, I’ll be in Costa Rica this BF (I know, poor me), so I’ll be looking for online BF deals.

    Good luck to those who camp out! When in doubt, buy it. You can always return it the next day if you change your mind.

    Andy

    • Brad says:

      Nice – Black Friday shopping online from a beach in Costa Rica certainly beats a cold 4am line in Chicago!

      • Andy says:

        Yeah, that’s dedication! Luckily, I’m in So Cal, so weather isn’t too big of an issue (Maybe 45 degrees at the worst). Ironically, we were in Chicago for BF 2006 and we took the “L” to the local Best Buy at 1am. That was cold. Good luck if you’re out there!

  2. Cheryl says:

    So far, I am totally unimpressed with what I’ve seen for Black Friday this year. Not near the deals as in the past. There isn’t anything I’m needing so I won’t be breaking my neck on Black Friday. There are no deals on Nintendo Wii, I passed most of those up over the summer. I guess retailers think the economy is better this year. Good Luck and happy Black Friday shopping to the reat of you, I’m staying home.

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