Do small businesses win with Black Friday?

Black Friday has undoubtedly become the largest shopping event of the year. What was once an exclusively American tradition has evolved into a global sales bonanza. But as ecommerce behemoths prepare to slash prices and dominate digital ad space, new research from Xero reveals small businesses are divided on whether Black Friday — and discounting, in general — has more pros than cons.

Small businesses are divided on the efficacy of major sales events.Credit: iStock

Xero’s survey of over 550 small-business decision-makers found that only one in two plan to participate in Black Friday this year. The rest are either unsure (25 per cent) or won’t participate (24 per cent). Among those sitting out, almost one in three (29 per cent) say they can’t afford to go on sale.

With the market in two minds, and consumers equally torn between managing a cost-of-living crisis and supporting their local, how do small businesses win with Black Friday? Two Australian brands share their perspectives.

To discount or not to discount?

Taylor Battistella got a bug for entrepreneurship when he learned about silkworms in primary school. Years later, this introduction became the inspiration for Seresilk — an Australian-made silk skincare company.

Taylor Battistella has come to the conclusion that sales devalue his products.

In its first year of operation, Battistella had ambitions for his products to be on the shelves of major pharmacies. With this goal in mind, Seresilk discounted heavily for Black Friday to win as many new customers as possible. He set himself up with all the right infrastructure to succeed, using Xero-integrated apps like Shopify and Stripe to manage cash flow and payments. However, having this financial oversight helped him realise that promotions weren’t necessarily serving the company.

“I realised the uniqueness of Seresilk lies in the silk itself. We’re proud to be leading an emerging Australian industry, and I believe our skincare deserves more than a fleeting discount once a year,” Battistella says. “Our focus is on creating lasting relationships with those who genuinely appreciate the quality of our range.”

This sentiment is shared among small businesses that rarely or never go on sale, with just over a third (34 per cent) agreeing that discounting devalues their business’ goods and services.

However, for popular eco-friendly cleaning company Koh, its CEO Charli Walters believes exclusivity isn’t enough to maintain relevance in today’s competitive ecommerce environment.

Charli Walters says being a part of Black Friday is important to maintain retention.

“People are feeling the impacts of inflation, and they’re voting with their wallets. When you’re a premium product in a category like cleaning, consumers start to think of you as a ‘nice to have’. So being a part of Black Friday is actually really important to maintain retention,” she explains.

This rings true for some small businesses participating in Black Friday this year, many of whom are doing so to reach new customers (48 per cent) or build loyalty with existing ones (42 per cent). It comes down to balancing risk and reward, says Walters, with discounting offering opportunities for shoppers to get familiar with a product range in the hope they keep coming back.

Creating value through innovation and connections

Although Koh and Seresilk have different perspectives on sales, both have employed similar tactics, like subscriptions, and brand and product development to win repeat business.

On innovation, Walters says, “It’s not just about the price point; you need to continually improve to serve the evolving needs of your customers. People like ‘new’, so you have to keep them interested.”

Of course, whether this includes discounts or not is up to the individual business, but Battistella says the key is to know your audience. “It’s important to understand your brand voice and who you’re trying to attract. Then, interact with them in a way that makes sense.”

He adds, “Early on, we were trying to be everything to everyone. Now, I just want to create a quality product that people love and tell their friends about, because word of mouth is stronger than any other form of marketing.”

Small businesses are divided on Black Friday as no two are built the same. The choice to discount or not involves several factors, from whether it makes financial sense, to the brand’s overarching goals, and its relationship with customers. Because, ultimately, small businesses can win with sales events, but it has to be on their own terms.

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