Tactics to help you survive Black Friday, Click Frenzy and Cyber Monday

Add To Cart Podcast
Episode 2

In this episode of Add To Cart, we are joined by Dave Dennings who was most recently GM Digital Storefront Ops & Technology at Surfstitch. We discuss the upcoming discounting season and how retailers can join participate without giving away all of their margin.

🎧 LISTEN TO THE EPISODE HERE:

Questions answered in this episode include

  • Should retailers participate in mass discounting? 
  • What are some tactics retailers can use to protect margin while discounting? 
  • How do you measure the success of sales? 

🔥 HOT TIP

Don’t measure sales ROI before you get your returns! Make sure you return to your sales data at least 30 days post-sale fulfilment to run the numbers with return sales deduced and return costs included. It can make a huge difference!

🔗 Links from the episode 

About your co-host

David Dennings from Surfstitch & Clearspace Digital

Dave Dennings was most recently General Manager of Digital Storefront Ops & Technology at surfwear pureplay, Surfstitch. He has a long history in digital strategy and has helped a wide range of clients across technology, operations and marketing.

You can contact Dave on LinkedIn

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Full Episode Transcript

Nathan: Hello, everyone, and welcome to Episode 2 of Add to Cart. My name is Nathan Bush from E-Commerce Consultancy 12 High. And really happy to be back with you on Episode 2. We’ve made it two episodes so far in the bag.

Thank you so much to everyone who listened to Episode 1 and more importantly, to those who shared it on LinkedIn and every other way. We really appreciate getting the word out there so early in the piece.

A very special thanks to our partners, Shopify Plus, who listen to Episode 1 and decide to stay on board for Episode 2 and hopefully more episodes to come. But thank you very much, Shopify Plus. It’s so great to have you on board.

Okay, onto today’s episode. We have joining us Dave Dennings, who was most recently, the GM of Technology at SurfStitch. Dave is joining us to talk everything around smart discounting, which is a very, very relevant; which as we come up to Click Frenzy, Black Friday and Cyber Monday. So, welcome to the show, Dave.

Dave: Hey, Nate. How are you, mate. Thanks for having me.

Nathan: My pleasure, sir. Thank you for joining. Let’s get straight into our topic today, which is Smart Discounting; How to Discount Without Selling Yourself Broke. Which is obviously the perfect time coming up to what we’ve got known as the Silly Discounting Season, which we’ve got Click Frenzy hitting us on the 12th of November, Black Friday on the 29th of November and Cyber Monday on the 2nd of December, which is a little bit later than what it would usually be for this time of year. Fell, I think, last year around early November, but silly discounting season.

So, Dave, I know that you’ve had a lot of experience with sales and big sales events.

Dave: Yeah, definitely. Look, I mean, it is going to be an interesting year this year because it falls in December. So, anyone comping on last year that November is going to be a battle. So, I’m sure everyone’s got everything weighted into December this year and they’re going to have to be huge Decembers for most of the retailers out there.

But I guess for us, coming from a multi-brand sort of aggregator, we’ve got a small portion of vertical product when I was at SurfStitch, but most of the retailers that I’ve ever worked with have tended to be aggregators.

Nathan: Dave, I read the research the other day and was that 49 percent of Australian retailers see discounting as their biggest challenge. Now, I know you’ve had a lot of experience around discounting and especially Black Friday and Cyber Monday at places like SurfStitch, what’s your experience been like?

Dave: Yeah, discounting is a huge challenge for most retailers, but, it was especially for us at SurfStitch because ultimately, you’re trying to make money, you’re trying to make margin; discounting is obviously because of margin erosion. So, it is a real challenge, walking that fine line around that discounting period and I think that’s why everyone is finding it so challenging, especially when you’re forced into periods that you know you need to heavily discount to compete.

Nathan: It’s an interesting language you’ve got there around “being forced into” because we know that it’s growing in popularity. And I think last year was up about 28 percent year-on-year; that Black Friday, Cyber Monday period.

Why do you feel that retailers are being forced into this sales period?

Dave: I think because unless you’re fortunate enough to have a unique product where you literally can be a full price operator, you have to make hay while the sun shines, as they say. And usually, these key periods where most of your brands, they’re expecting you to be discounting, so you don’t have a lot of flak from your brands, and most of the retailers and the consumers out there are now trying to, you know, waiting and stalling their purchasing behaviours for these discounting periods. You know, they’re savvy. They know that this is when they’re going to be getting their 25’s and 30’s off full price in sale.

So, as a retailer, you really have to play ball in many ways.

Nathan: You have kind of credit on a rod for our own back there; haven’t we?

Dave: Absolutely. Yeah, definitely.

Nathan: I’ve always found it really odd timing; Black Friday and Cyber Monday. And obviously, it’s there for Christmas, but also retailers kind of invented Christmas, if we take the religious context out of it, is retailers credit the consumerism around Christmas in order to drive sales. And now, we’ve put these big sales events where we give away most of our margin at Christmas.

It all seems very odd to me, but it’s kind of snowballed into exactly, like you said, the situation where consumers are there, they expect to be able to shop, they expect to be able to get a discount and you better have a bloody good reason if you’re not going to be offering one.

So, with that in mind, Dave, I don’t think it’s all negative. Tell us about what good you’ve seen come out of this discounting season.

Dave: Yeah, look, I mean, the good things that I see come out here is obviously really strong trading periods. So, what we do now is that while everyone has waited, all these sales and consumers are ready for these sales, their purchase intent is really high as well.

So, if you have the right offering and the right product, your conversions and your sales should be very, very strong. You know, like that Cyber Week really now is stronger than Christmas certainly was for us.

Nathan: Yeah. I saw a stat the other day and it was around that Cyber Week was the biggest shopping week of the year, but Boxing Day still being the biggest day.

Dave: Yeah, it was a massive period for us last year, when I was at SurtStitch; it was it was record breaking. We’ve been around nine years and last year, Cyber Week {indistinct 6:18} beat all records, with revenue and also traffic.

So, this year, the guys to be having to go really strong to comp last year’s numbers, but I’m sure everyone’s got their fingers crossed. It’s going to be a big retail week.

Nathan: Absolutely. And mate, what can go wrong in these big sales periods?

Dave: What can go wrong? Ad planning. Typical retailers all sort of… Oh, no, I won’t say all, but a lot of retailers all reactively are operating. These are the periods when you need to be well-planned. You need to make sure all your product is, you know, you’re putting your best foot forward and going strong.

You need to make sure that whatever the discount is that you’re offering is competitive. And walking that fine line between being the biggest discount across the group, across all the retailers, as opposed to just being in line with the retailers and having a great offering.

So, it’s a pretty dangerous little bit of territory to play in there because no one quite knows what anyone’s going to come out with on the day. And everyone’s watching everyone who’s going early and going light and everything like that. I think that’s the thing.

I think another thing, too, is one of the things to prepare for is get your customer experience right before. You know, do all of your tech tweaks and all of your changes and ideally get a code phrase in place so that you are absolutely ready to go with your customer experience, because that needs to be as optimized as good as it can be.

Nathan: Yeah, I think you’re absolutely right here is like it’s not just one team who is preparing for these sales, such as just marketing. There’s huge pressure on your merchandising and your merchandising teams to be able to make sure they’ve got the stock on hand, to make sure the stocks are available. Your tech teams, to make sure that everything’s running smoothly and is ready for a spike in traffic and transactions. Customer service team; because those queries are going to go up. So, it’s a really whole of business impact, isn’t it?

Dave: Absolutely.

Nathan: Yeah. Like we said, we know that you did a lot of discounting at SurfStitch. What was the general approach there? Was it a discount of everything? How smart was the discounting that you saw applied?

Dave: Yeah. Look, I mean, we’re talking sort of two different periods. We’re talking outside of peak. You know, we were generally trying to be a bit lot better around our segmentation and I guess discounting, where we needed to, but based on aged inventory and stock that we were clearing and things like that.

But when it comes to the peak periods like Cyber Week, really they are what we classed as our true site-wides. And for that it meant creative throughout the entire site, all focused on Black Friday, Cyber Monday, Singles Day, whatever it might be. But ultimately, they were what we were internally classed as site-wides.

And generally, I mean, when you say sophistication, I mean, really what that was about was looking at what we had available, product-wise across the site and ultimately trying to make this a really big bang. So, push as much product into an environment and then drive out sort of kit styles that were rarely on sale during the year. We had these periods where we were able to put them on sale, so they would be our big pool cards that we’d have been merchandising strong and make sure that they were driving traffic.

So, it was more about the really big events that we pushed everything over and could discount.

Nathan: Yeah. So, what we’re saying is kind of like, “Let’s not get too fancy about this. Let’s just take the cash grab while it’s there”, to put it really, really bluntly, which I don’t think is different from too many retailers.

Dave: No. Look, I think the problem with Cyber Week is let’s call it two key days; Black Friday, Cyber Monday and whatever’s in between and maybe a couple of extensions or presales.

But in those periods, when you’re a retailer the size of SurfStitch and other big competitive retailers, a false start of any description for one day can be hundreds of thousands of dollars. So, whatever it is you’re planning on going wide with, you need to get it right and back it ultimately, you know, plan as well as you can to make sure it’s your best foot forward.

Nathan: Yeah. That’s what budgets are made of, isn’t it?

Dave: That’s exactly right. Yeah.

Nathan: Alright, mate. Well, if we keep in mind that 49 percent of Australian retailers are really stressing about discounting, second only to rent and labour costs. Let’s look at tactics around how retailers can approach this period in a bit a smarter way, so that they’re not losing their pants and they’re not giving away all their margin before the busiest time of the year.

So, let’s talk about ranging. So, what have you seen around how discounts are applied for different ranges and how people get really smart around what they choose to put on discount versus what they keep at full price.

Dave: Yeah, I think that comes back to something that again, when I was at SurfStitch, something that they wanted to work on or are working on all the time is a clearance strategy.

I think the basis for this (for the whole period) the whole 12 months really is having a really properly laid out clearance strategy from the beginning. And really, that’s about ideally consumers not being able to get those new styles and those peak styles and the latest on-trend products discounted. And ultimately, the discounts are only being received on items that are aged inventory. You know, they are items that have been around longer.

That’s a challenge for a lot of retailers because obviously, you’re up against competition. And if Joe Blow has their particular product at a discount, then you tend to have to follow when you’re… Like I said, when you’re sort of a multi-brand aggregator of product, you’ve got different challenges to the guys that have strong vertical product.

So, that is the big challenge because then when you get to the peak periods, those products that you’ve not necessarily been discounting or haven’t discounted a lot (maybe only the after-paydays and the Click Frenzies and that) you generate a lot more hype. So, that’s probably the key areas; that solid clearance strategy all year round.

Nathan: Yeah, I think a lot of retailers do it and they put their clearance out. I remember at one of the retailers I worked with once, they put in their very first foray into Click Frenzy, I think it was, they put a car window vacuum cleaner on sale as the only product. And this is in the really, really early days, just because they had bucket loads of them out the back.

Dave: Yeah.

Nathan: Needless to say that the one item of the one clearance that they wanted to get rid of didn’t go too well. But again, that was a long time ago; we’ve come a long way since then.

The other thing that I have heard and this is one of Australia’s biggest {indistinct 13:03} actually is what they did is they actually, when they are planning their ranges, that they plan a range leading up until (like a summer range) right up until Cyber Monday week and they aim then to get rid of it all there and it looks like it’s the normal price stock.

But then they actually have a second shipment of goods, which they bring in post-Cyber Monday to lead them through to Christmas; that they then don’t discount. So, the range they buy for Cyber Monday, Black Friday actually has a higher margin that they can discount and still make a profit. And then it’s a totally different range for after that, which they don’t intend to discount as much, leading into Christmas, which is a more premium range. Which I thought was an interesting strategy.

Dave: Yeah. Look, that does sound like an interesting strategy. I mean, again, like I said, I mean, I guess it’s very much dependent on the retailer and their market and the customer. I think, Harold, you know, primarily, I can really only talk to that most. I think generally, the negatives… You know, it’s the old story that the negative of it moving into December this year means that everything’s waited into December. So, it’s going to be a big December. But the positive is that when it’s in November, it does bring a lot of those sales forwards and that can hurt Christmas.

So, I guess that strategy sounds good. I mean, we tended to find that you get to a certain period and normally it is Cyber Week or maybe it will be Singles’ day this year, which has been gaining momentum. But once you hit that period, it’s pretty much Christmas is here. That’s what we found. And you really don’t get much of an opportunity to throttle off. You pretty much the throttle on until… really up until the delivery window cut off the Christmas.

Nathan: Yeah, that’s a good point too because if you’re purely an online business, then you’re timelines are very different to someone who might be more Omni channel or just physical. Because from an online perspective, you’ve only got up until (it depends on what your fulfilment is) but you’ve probably only got up until say the 23rd of December, at the latest, to make the most of the sales at best. Yeah. And then if you’re a physical retailer, all your footfall is actually coming in that last week leading up to Christmas. So, your traffic is very different, right? Whether it’s physical or online.

Dave: Yeah, absolutely. I mean, you know, you’re literally trading as hard as you can and squeezing as much water out of the sponge for that period. And you know that realistically, January, outside of your Boxing Day sales, January and February, they’re tough; they’re tough months. The heat’s off, people are away, everyone’s bought everything they wanted to buy. So, really, you’re storing for winter, so to speak, in that period. And so, they’ve got to be big and they’ve got to be successful.

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A massive thanks to Shopify Plus for being the inaugural partner of Add to Cart. Now, back to the show.

Nathan: Surf Stitch did an incredible job of having a strong customer base and a member base doing a little loyalty stuff. Did you leverage any of that for your sale period?

Dave: Oh, yeah. Look, we don’t have a loyalty program, so to speak. SurfStitch has just been rather lucky because we’ve been around for a long time. So, the business had been around for quite a while and has a really strong following and a really loyal… like we do have a naturally loyal customer, which is good.

So, again, {indistinct 17:16} have to say we leveraged off those sorts of things. I mean, really, we just appealed to the fact that people are paying for this for what they know we’ve thought. And that during that period, you had strong communication, strong messaging out there around better offers, maybe some reduced shipping rates and also some segmentation, some targeting sale product to your more sort of your real discount shoppers and targeting your more trend-following shoppers with a discount on full price, which is unusual. And we tend to operate most of our sales around non-sale product during the year.

Nathan: Yeah, that makes sense. I think SurfStitch do such a great job. That it actually does feel like you’re a member, even though you just signed up because you do really great personalized content and messaging.

One thing that I have seen around memberships in the sales period is that I’ve seen some retailers actually go loud and proud that they’re on sale, but to access the discounts, you actually have to be a member, which means that, yes, you are given a wide margin for that product, but at the same time, you’re building your membership base, which you can use, post that sales period to leverage more sales, hopefully at a higher cost.

Dave: Yeah. Look, I think that’s a really good point. And we all do talk about the sales and the revenue, but like I said at beginning of this, you’ve got shoppers that are on the hunt. Yes, they’re after a bargain, but they’re also committed to buying gifts and buying presents. And you know there’s these other thoughts in their head, not just about necessarily the discount.

So, I think that you’ve got the advantage during that period of getting acquisition in new customers. I mean, your business like SurfStitch has been around for a long time and has got a pretty strong following. It’s a good opportunity. You know, you’re focused on those styles, {indistinct 19:09} on top line revenue and making money and moving products, but it’s a great time to call on new customers as well.

So, brand awareness, traffic and everything like that; you’re leveraging off that for signups and ongoing communication as you suggested.

Nathan: Yeah. And then I suppose it comes down to a bit of a calculation or a bit of an assumption around, if I acquire a customer or get the details for a new customer and I’m running at a negative margin or a very, very low margin. Is that still worth it for us over the long term?

And it quite possibly is, but it becomes more than just about the percentage of profit on that individual sale becomes more of a customer lifetime conversation.

Dave: Yeah, use your opportunity later in the year, if you get that customer. You know, everyone does it, not just us. You know, you have customers that only shop with you at Christmas. But that does mean you’ve got an opportunity then, from a repeat purchase perspective, be it January, February, even Boxing Day, going again, trying to get someone to repeat and start that momentum, you know, you’ve got that opportunity.

And at the end of the day, like I said, it’s tough getting new customers, but during this period, that is the time to try and build that database up. And that really does mean your customer experience needs to be bulletproof during that period. Like absolutely bulletproof.

Nathan: Yeah, absolutely. A controversial tactic that I have heard and that’s from one of the leading streetwear brands is to actually hide discounts. So, what they do is they say, “Yeah, we’ll discount, but we’ll only show it through our Instagram stores or our Snapchat stores and it’ll be a code.”

So, if you actually go to their website, it actually doesn’t look like they’re discounting, unless you know the code. And the same goes for, “We might advertise, we might be loud and proud of the discounts, but it’ll be a discount code that you have to use to get.” or it might be a different landing page with a discount, so that people who are naturally go into your page anyway with the intention to shop are still buying at full price. What do you think about that strategy? Is it more hassle than what it’s worth?

Dave: No, I actually think it’s a really, really good strategy and I think like it’s a strategy we adopt as well. And I think it’s a strategy that more and more almost platforms that are out there are offering their customers; being able to adjust content experiences, based on cookies, based on where people are coming from and that sort of thing. I think it’s a great strategy.

What I will say is though, what we’ve done in the past, this is years ago. We haven’t made this mistake really of late, but you try and play or try and make it a bit more complicated or sophisticated or a bit more technical in these peak periods, which is what ultimately you let out within these conversations and customers are just out; there out to shop.

Nathan: Yeah.

Dave: They don’t really want things hidden, they don’t want to try to be clever or be secretive, unless you’re giving some incredible offer that’s just, you know, you’re almost embarrassed about which would lack. But you know, from during those periods really, it’s about just good execution, good communication and making it very clear that now is the time to come and shop and buy something because it’s an unusual sale, because it’s off full-price or it’s off latest product or that sort of thing.

So, I’d say during these periods, that sort of strategy for me is risky.

Nathan: It’s almost like if it’s good enough to be on sale, don’t beat your chest about it.

Dave: Absolutely. And again, like I said, it’s not like you’ve got the flexibility in these peak periods. It’s not like we have the flexibility of going, Oh, hey. That was a typical Sunday. We thought we’d work and it didn’t. Fair enough, we’ll walk away.” If you bugger one of these days up, you’d not have another opportunity until this time next year. So, you really need to put a real roll on the dice during that sort of thing in like a steady in my opinion.

Nathan: Yeah. No, it total sense. There’s risk-reward in that strategy. Have you had any experience around getting vendors or suppliers on board to help take some of the pain away from the discounting that you’re expected to do at this time; whether that be coming to market with you or around a discount, so you’re getting at a cheaper price or potentially even offering them prime position in emails, home pages and the rest to put their product front and centre to be able to get some sort of rebate. Have you had any experience around that?

Dave: Not personally. I mean, obviously, I was primarily running sort of digital and the digital sort of customer experience, but I do know, from obviously being in business and working in the thick of it that it is a time it’s always tough because vendors are not overly keen on having their products discounted, no matter what period. This does tend to be the periods that vendors will turn a bit of a blind eye or accept the fact that everyone’s discounting and often including themselves.

I guess, from our perspective, we do try to communicate with the brands and see if we can do a bit of collaboration. But at the end of the day, we’re really about what products are driving the traffic, what are the current products that everyone wants and if they happen to be included in the sale, they’re obviously the ones that you’re really be {indistinct 24:11} out.

Nathan: Yeah, because that’s… even that’s not a new tactic because very retailers have been selling the front page of their catalogues for decades.

Dave: Exactly. I mean, that’s the beauty of it. Nothing’s really changed. The way we can deliver it and the experiences have changed and we can be more clever, but I think the experience is… and again, totally my opinion, but these periods are just grassroots retail {indistinct 24:35}. They are peak periods where people expect great deals on great products and they’re out to hunt a bargain.

Nathan: Yeah, they are. It’s just how do you remain profitable in that time? It’s great for customers. There’s absolutely no doubt about it. It’s just that addressing that concern, isn’t it, of how far retailers are really pulling the hair out?

Dave: Yeah, but I guess, again, I guess it comes down to it’s part of that… You know, it can be and it should be part of the clearance strategy as well. So, you might have a product that is probably going to sell or you’ve got large numbers, you bought a lot of {indistinct 25:10} in it, and maybe you laid out that product and maybe that product does get a bigger discount. But whilst you might be burning the margins on that product, maybe some of your other products are not included. Because we did find during this period, not as much as some other periods, but you do find you are still going to be selling full-price products.

Nathan: Yeah.

Dave: And at the end of the day, you’ve got traffic on your side. So, yeah, you hope that some of that product doesn’t get included or maybe afterwards, you have a period of full price spend, but your brand awareness is up and everyone’s still driving out there. You’re going to try and pull that margin back to the month.

Nathan: Yeah, spot on there. Otherwise to make up for it. It doesn’t all have to be bundled into that one sale, does it?

Dave: No.

Nathan: Have you seen… So, we’ve talked a lot about product discounting. Have you seen things like services used during these periods to come across really great bargains? So, whether that be a free express shipping or free installation or extended warranties that are for free; things that people would normally pay for or would be seen as really great value add. Have you come across any instances where you’ve seen those used during these peak periods to deliver value; that means that you can retain a little bit more product margin?

Dave: Look, in the space that I’ve been in, I would probably say not. I think unless someone’s carved a really tight niche. Again, like I said, or they’ve got really strong vertical product, I think at the end of the day, what is the customer’s expectations? Well, all year round, they get free shipping on {indistinct 26:48} has become important too. I don’t think the customer expects any adjustments in their shipping. I don’t think the customer expects any adjustments in their returns. I think customer just expects they’re going to get a discount, be it deeper or across a broader range of product on the site.

Because again, when people are out shopping presents, they’re also not about buying the sale product. So, when you talk about margin erosion, you’re giving away a discount on your full price product is obviously hopefully helping stabilize the discounts that you’re giving potentially on your sale products. You know, that’s sort of my thoughts on that.

Nathan: That makes sense. Makes total sense. And the last strategy that I just want to touch on is around bundling and merchandising that way. So, if you talk about how do you get smarter around this? And you talked a lot about gifting and around people buying presents. You can really protect a little bit of margin, can’t you, by putting bundles together that people might not normally think about.

So, if you think about, “Hey, someone’s going be shopping for dad. Most people shopping for dad don’t really have anything set in mind.” But if you go, “Hey, we can combine these bullet shorts with this flaks, with this hat and it’s going to cost you 100 hundred bucks.” People will kind of see the value in that and you’ll get a little bit more margin, dollar terms, maybe not percentage wise, but maybe capture a larger basket size there if you can do some really intelligent bundling.

Dave: Yeah, I think that’s a good point. I think that, again though, what I would say with that is that’s what I would call (I don’t know how else to describe this now) but it’s more that sophisticated-during-the-year type strategy. I think when you’re in peak periods, if I was answering that question, it would be more about, okay, you’ve got someone on side that’s come there with an intention to buy certain things, but again, the idea here would be using clever use of recommenders, “You know, other people have bought. You might like these items” and that sort of thing.

Because we’re really trying to get people to spend some time on site and particular case. Because normally you’re driving them in, you want them to find what they want, purchase it, convert and get out. That’s the experience that most people want all year round globally. During these peak periods, people are thinking about, “Oh, maybe I could get a gift.” “Oh, look at that. That’d be perfect for that person.” or “Actually, I’ve been even thinking about that, but look, {indistinct 29:16}.

So, yeah, it is that one opportunity you’ve got, I think to try to be utilizing your recommenders and pushing that product in front of people. Try to keep them energized and purchasing and build up your cart, put up your items in cart.

Nathan: Yeah. I’m totally getting where you’re coming from, Dave. And I think that you are saying that basically, you’ve got two key days; Black Friday, Cyber Monday, maybe third, Click Frenzy and then maybe the days in between Friday and Monday just to get as much as possible and not get too sophisticated. Just basically take what you can get, make hay while the sun shines and don’t overthink it too much.

But I really do think if retailers can stop and plan. And this plan… this can’t happen the month before. It has to happen six months. So, a bit sorry about 2019. This podcast probably should have come out a bit earlier.

Dave: Yeah.

Nathan: But if you’re all thinking about Black Friday, Cyber Monday, around May, June, I think it comes down to being able to use a few of these tactics to be a bit smarter around how you do it and not have to give away so much margin every time.

Dave: Absolutely.

Nathan: Yeah. And I just think too, a lot of it comes down to how you measure success. So, traditional retail is obviously huge on year-on-year, right? And a lot of the time, year-on-year is measured on revenue. So, you’ve got sales goals which you have to hit, which is whatever it is, that’s 28 percent up on year-on-year, then you’re under pressure to hit that.

But I think if you actually look at it and you go, “What was the actual margin? Can we beat our margin, rather than beat our revenue?” You may play the game a little bit differently?

Dave: Yeah, definitely. I think SurfStitch is definitely, I mean, they’ve got more of you know, with… obviously when I was there, there’s more of a margin focus now, obviously, with new owners and the idea of making sure that we’re running profitably. There’s definitely more of a focus on margin.

I think strategies, like you said earlier, you know, maybe holding off on product or creating vertical product that you hold off on that you don’t launch until you get to this period. But when you discount it, you’re still getting a good intake margin. So, that helps balance out a product where you’re really chopping margin.

I think the other big area that people forget about and we’ve forgotten about in the past as well, so to speak, is fine tuning and getting your experience for customer on selecting things like the right sizes of product and product descriptions and making sure. Because returns is a killer.

During these sales periods, you know, when we’re talking about people being motivated to buy, they’re over-motivated to buy in many cases and they’re buying things just because they… and you can be cheering and clapping one day and crying the next that your returns rate doubled.

So, I think one of the takeaways that I would definitely give would be just do everything you possibly can to logistically, get that stuff out when you need to, when you’re under the highest of loads for the year. But ultimately, make returns experience seamless, but ideally try and keep those returns down.

Nathan: That’s a really good point. Especially if you’re putting a lot of effort into that discounting season to clear old stock. The last thing you want is to cost yourself more by getting more returns in, but then also then the costs of getting rid of those returns when you’re out of that sales period becomes a lot harder.

Dave: Oh, hundred percent. Yeah, absolutely. And if this is your strategy for getting rid of those returns, unfortunately you don’t have an opportunity to only have people returning your full-price product, you’re potentially getting back… a lot of the product you’re getting back may be your… things you’ve really have margined out and that’s all coming back.

So, if you double your return rate during this period, you know it could be thousands of dollars’ worth of product coming back in the door.

So, you know, all those little things, all year round; refining side charts, making sure descriptions are right, making sure product details are correct. It’s at its most important during this {indistinct 33:16} frenzy period.

Nathan: That’s {indistinct 33:18}. That’s really good.

Dave: Yeah.

Nathan: What about in terms of marketing? Have you seen any specific marketing channels work much better than others during this sales period?

Dave: It’s not really my area where I’ve sat for. But again, what I’ve picked up or learned from the guys that I’ve worked with who have been some really clever people, is that, you know, watching it really closely because, again, conversion’s high, so doing your paid channels which are always generally quite effective, but watching them hourly and understanding what that return on ad spend is and potentially if it’s really, really high, you know, you’re driving more traffic, you’re driving more money at it because you know you’re going to get a greater return on it.

So, watching really, really closely, I think, is what’s been a bit a plus in the past and definitely I’ve seen the guys do some pretty good stuff with that sort of thing.

So, I think all your traditional channels tend to fly during this period, like email and that, but being clever with the texts, sending out SMS to phones when you’re trying to give something a boost that you {indistinct 34:28} hourly, days, you know, hours during the day and things like that. People are expecting e-mails, they’re expecting lots of communication. So, set one unique time you’ve got where you can do a little bit of bombarding.

Nathan: Yeah. Well, thank you, mate. I really appreciate your time. If there’s anything that I’ve got out of this, I think there’s a couple of key points from our conversation. And it is that for retailers, this discounting season is just so critical, especially around budgets and around even stock churn. So, it’s really important we get it right. And to do that, we need to be planning at least six months out to this time.

Second part of that is that this isn’t just a marketing job to be done. This impacts the whole business. And whether that is your tech; to make sure you stack holds up alright, whether that is your returns policy and how you do that, whether it’s your merchandising or whatever else. It really is a whole business effort to make sure that this key period works well.

And then thirdly, is that as much as we want to protect margin and we can be as smart as we want around tactics to protect that margin, this sales period is really about the customer. So, the customer will tell us if we’ve been successful and we’ve really got to make sure that we’re there for them and we’re listening to what they want during this period, not just kind of trying to set the agenda, because that’s when we will really lose, if we try to get too smart about it.

Dave: Yeah, absolutely, mate. That’s well summarized.

Nathan: Well, thank you very much for joining us, mate. I really appreciate your insights in sharing some of your experiences, especially from your SurfStitch days. And hopefully, we speak to you again soon.

Dave: Yeah, mate. Thanks very much for having me. It was really good.

Nathan:So, that’s it from us for Episode 2 of Add to Cart. Thank you so much for joining us. And thank you again to Dave Dennings for sharing his tips around smart discounting. We hope that you got a few tactics that you can take out of it, if not for this year, then hopefully, next year in your planning. And good luck for everyone participating in what’s coming up with Click Frenzy, Black Friday and Cyber Monday; exciting times.

If you’re after more e-commerce, news and insights focusing on Australia, but bring your stuff from all over the world, you can sign up to 12 High’s High Mail Newsletter, which is available at 12high.com.au/highmail (that’s H-I-G-H-M-A-I-L). Available for free; Just leave your email address and we’ll send it to you every month and we promise that it’s full of good stuff.

Coming up next week, we have Josh Newport, back from Shopify Plus and he’s going to be speaking with us about {indistinct 37:07} Commerce. What is it and how can your business use it? And is it right for your business? We’re really looking forward to that conversation.

So, if you have any questions, hit us up and we’d love to ask him your questions as well.

Alright, guys. That’s it from us this week. We will see you again very shortly. Until then, trade well.