“A Flat Line Isn’t a Flatline” — a BFCM Recap

Phillip: [00:01:28] Hello and welcome to Future Commerce, the podcast about the next generation of commerce. I'm Phillip. Welcome to December. We're in the very last month of the year. It's actually kind of hard to believe. Today my co-host Brian, he's out. He's on vacation. I'm holding down the fort. I thought I'd do a bit of a different episode. Some of my favorite episodes of my favorite podcasts, most specifically, podcasts like Culturally Relevant, are monologue shows. And it's really just one person kind of long form sharing their thoughts and opinions about the current state of affairs. And, you know, right now I'm thinking about all of the things in eCommerce and retail that could be relevant for us to talk about. I mean, certainly we just finished Black Friday/Cyber Monday. I'm an elder millennial, if you will. I'm old enough to remember the engineering challenges of BFCM and past. These days those aren't really the things that we worry so much about. We worry a lot about whether our marketing plans are actually going to come into fruition, whether those things are actually going to come to pass. Probably not so much about capacity. So the concerns of Black Friday have certainly changed and therefore actually the story is around Black Friday are changing in the media. Nate Polen, who is @digitallynativ over on Twitter, lamented over the weekend about Bonobos' very first Black Friday/Cyber Monday.

Phillip: [00:02:55] He brought up this story about how they had a website go up and down and crashing for three days on a measly $1 million in sales. And you look and fast forward now, 10 years to where we are now. And Shopify handling billions of dollars in revenue over the four day weekend. They had a live map as they have for the last six or seven years. Their live map, under their data stories product, really showed the amount of activity in BFCM for 2021 is we have the technology and the cloud scale to be able to meet all of the demand. 2021 for Shopify actually wound up pretty amazing. It was, you know, upwards of 2.9 billion dollars in revenue transacted through the product. By all accounts, if you were to ask Shopify, it was a gigantic season of growth. It's not the same story everywhere else. And so, you know, if you look into a few recaps of Black Friday/Cyber Monday, you'll see retail analysts and reporters kind of drawing a little bit of a flat line. Salesforce data, for instance... Salesforce having a very large footprint in an enterprise sector of eCommerce. Salesforce showing flat, if not slightly down growth, for Black Friday/Cyber Monday. Michelle Grant over on Twitter sharing from Salesforce data that high prices led the stories and fewer discounts across the board, at least for Salesforce data, and their data from a billion shoppers shows that during Cyber Week, prices are up about 11 percent in the US, year over year.

Phillip: [00:04:30] And the average discount was about 26 percent, which is down 8 percent year over year. We will link up the resource in the show notes, but it's a really interesting look into some of the data that Salesforce was seeing that was powering some of their brands and performance. So on the Salesforce side, somewhat flat. And on the Shopify side, actually a stellar Black Friday/Cyber Monday. Which really kind of tells the tale that even despite all of the challenges in our industry, even despite, you know, IDFA and cookie less changes and the Facebook versus Apple debacle, hey, a smaller retailer, smaller eCommerce retailers are still capturing year over year an appreciating set of customers as those customers begin to look to eCommerce to make their purchases for the holiday season. Kyrie Master is a good friend of the show, and over on Forbes wrote an article post-Black Friday that said that brands are seeing underwhelming sales growth on Amazon's Black Friday. I'm quoting from her article where she says, "In general performance for many brands was somewhat muted compared with a The Bumper 2020 sale event. A considerable factor could be that it appears that shoppers did not flock to Black Friday deals as eagerly this year."

Phillip: [00:05:53] So, according to this article, some of that data, which was sourced from software provider called Pacvue advertising impressions were lower this year, which was under a 2x increase week over week, then say what a good measure of advertising impressions would have been for the same period in years prior. And that means, you know, to some degree, advertising impressions can be a proxy for measuring actual web traffic, and to some degree, if advertising is down, it means that either customers have been purchasing steadily before. Or advertisers are relying less on trying to acquire customers during the Black Friday/Cyber Monday holiday season, meaning they're relying on email lists and organic to continue to grow. One of the things that you saw on Twitter quite a bit over the Black Friday/Cyber Monday weekend was a lot of email professionals, including Jacob Sappington and Chase Diamond, a lot of the sort of Klaviyo crowd, they were saying that most of their performing ads weren't the Black Friday deals. The ads that were performing the best were really those of the evergreen variety. It was branded and evergreen ads that were really the outsized performers and not necessarily the BFCM ad touts. And that sort of creative is maybe not working on the consumer in the way that it had in years past, which also signals a real big change.

Phillip: [00:07:22] Another data point that's come out from Klaviyo is that Klaviyo contributed 1.8 billion to online retailer BFCM activity and 1.8 billion of the nearly 9.8 billion in broad eCommerce BFCM total transaction volume. I think Klaviyo has become not just formidable but dominant in helping to drive retention, traffic, and owned audience purchasing. Full disclosure Klaviyo has been a longtime supporter of Future Commerce and we've been rooting for them. We're working alongside them to create some content in 2022. But it's an interesting data point to pull out, and more and more of these types of companies are being transparent with their data, even though they're private companies. As they become more dominant, they're helping us to understand the landscape a little more in the way that they're sharing data. And so I think that that's really notable. Kyrie also goes on in this article in Forbes to talk about the actual Thanksgiving Day performance. She quotes in eMarketer forecast that showed that Thanksgiving would have been the highest year on year growth for eCommerce shopping, where Thanksgiving Day is usually third in line from Black Friday to Cyber Monday. But despite that forecast, it didn't live up to the promise and actually, according to Pacvue, again cost per click jumped on 100 percent basis on Thanksgiving Day itself, but it may not have lived up to the number three spot that was forecast.

Phillip: [00:08:52] So a lot of uncertainty about the actual performance here. And if you look at Adobe analytics and some of their data, it also reinforces that online spend and advertising was down and might have contributed to this flat growth. There's an article over on Barron's that I thought was really interesting as well that covered this Adobe data. Adobe released these statistics from Black Friday, and the data coming out on Saturday that showed online sales on Thanksgiving were about the same as a year ago, which supports Kyrie's article there. But Black Friday sales were down slightly overall from 2020. So it's not quite the blockbuster that everyone was hoping for. Remember NRF, the National Retail Federation is forecasting that December in total for the entirety of the holiday sales season would tick up somewhere in the realm of about 10.5 percent, and we're just not seeing that come into being just yet. The sales figures from Adobe are compiled from over one trillion online visits to retail websites. Adobe always flexing their data volume there. Courting one trillion online visits. I'm not sure how they measure a visit, but it sounds impressive.

Phillip: [00:09:57] That's a thousand billions. So that sounds like a big number. You know, this article on Barron's really talked about how Adobe is showing that these consumers might have stocked up more before Thanksgiving, something that could have been spurred by a lot of the FUD, the fear, uncertainty and doubt, that came into play during the run up to Black Friday. If you looked in the news, the supply chain crisis, as it was called in the media, was probably a bit overstated and might have pulled some demand forward. I'm not sure how much of that actually would have bled into Q3, say September timeframe, but folks might have been stocking up prior to Thanksgiving. So spending has been up throughout the month, according to Adobe, where nineteen days consumers spent more than $3 billion as opposed to just five days last year. So while eCommerce on Black Friday might not have grown, it might have been flat overall, that whole run up to Thanksgiving was as big as ever, at least according to Adobe. So hey, people might have been shopping Black Friday around ahead of time to skirt around some of these supply shortages, and some of those supply chain shortages are coming into focus. If you look at retailers like Apple. Apple is, you know, forecasting two to six weeks for delivery on most of their products.

Phillip: [00:11:10] If you're looking to give AirPods or an iPad for Christmas time, it's going to be a long wait. So, yeah. Another data point out of this article on Barron's, according to Adobe, is that there's almost a 100 percent uptick on out of stock messaging, and more retailers now are being transparent than ever before about the items being in stock before you get to the purchase. And so the availability of the item is becoming a very high factor in whether or not a customer is going to convert. And so that's a big, big point of differentiation here between this year and last year. And even so, even if, you know, [00:11:49] I would venture to say that even if supply chain didn't have the actual impact in contributing to this flat Black Friday year over year, the anxiety around the supply chain woes have changed the way that customers have shopped for this holiday season. [00:12:07] I think we can say at least that much. The article, the Barron's article, stating that some of these consumers are also still changing the way that they're shopping. Some of them are buying online and having curbside delivery, so that mixed pickup option, mixed in-person and online engagement is making up a good portion of purchases, and it's increased 70 percent this month from years prior.

Phillip: [00:15:37] So, you know, another data point to say the way we're shopping has changed forever. It's interesting to see this demand pull forward. I've actually conducted some research over at Rightpoint, which is where I spend my days toiling away in the eCommerce content minds. And we've done some primary research over at Rightpoint, particularly in a report that we put out in Q3 called Stocking Up and Seeking Out about these two emergent behavioral modes that consumers find themselves in and how eCommerce experiences actually don't really fully meet the needs of customers in the way they say they like to shop. Where most eCommerce brands offer something like a subscription product, allowing a brand to be able to forecast future revenue, customers are actually more likely to stock up on product if we were to offer bulk purchasing, and bulk could even be considered in the offer and bundle and kitting merchandizing vector is something that could actually help move the needle for a business. Buy two get one free, not often considered as a discounting strategy, but as actually merchandizing strategy, could be a way of really differentiating that consumer desire to move away from subscription and move more towards stocking up and then Seeking Out is, you know, having a merchandizing strategy that allows for something new to sort of come all the time. You see brands, certainly what I would say as a direct consumer darling right now, a company like Parade, which is really just use their on demand manufacturing and offshore manufacturing to drive a merchandizing engine that just always has something new.

Phillip: [00:17:18] It's kind of amazing to watch. Of course, Parade might be the one company in my inbox that had the highest discount percentage the entire holiday season. I saw Parade have 50 percent discounts they offered for friends and family for Black Friday/Cyber Monday, as well as some new product launches. And I just thought that was really interesting. They were the only one that I saw provide that sort of level of discount. That's what we used to see. These doorbusters used to be giant discounts, but we just don't see that level of discounting anymore. You know, 25 percent might have been about the median. That's supported by the data from Salesforce saying 26 percent was about average. Finally, there was an article over on Payments.com, my favorite outlet and yours for paid placement {laughter} Payments.com is a really payments industry focused online blog, and this article "Black Friday results put pressure on Walmart to keep up with Amazon" really detailed some of these Walmart v. Amazon conversations that we'll have seen. Payments did some primary research finding that 71 percent of Black Friday shoppers made their online purchases at Amazon, while 41 percent made digital purchases through Walmart, and then 28 percent did so through Target.

Phillip: [00:18:36] So among the three Amazon was certainly the clear winner there. This is, of course, a smallish data set. Two thousand sixty consumers were surveyed on Friday and Saturday. Always pinch of salt in the data here is to say how many consumers that are answering lengthy survey on BFCM Friday and Saturday to answer how they just went shopping. But nonetheless, it's an interesting data point. Thirteen percent of holiday shoppers made purchases online rather than in-store, and that actually lines up really interestingly. The data point, actually, comparatively, when you look at what some of these news headlines, you know, CNBC had an article on Saturday showing that Black Friday foot traffic was down some 28 percent. Well, that was from the 2019 number. So "No crap Sherlock," is what I would probably say to maintain our family friendly rating here on this podcast. I don't know what you would expect to see. Yeah, people aren't in store the way they used to be. Also, that's been trending down for ages. Who goes to the mall anymore? Anecdotally, I would say I was in and out of the mall quite a bit just prior to Black Friday, but I did not shop at all online or off this holiday weekend, and that's unusual for me.

Phillip: [00:20:00] There just weren't any deals that really moved the needle. I'm sort of feeling like the consumerist mindset around purchasing for myself kind of feels icky this time of year, but something I certainly have done quite a bit of in years past. It's a big shopping season for a lot of people. I didn't shop this year, and that's really interesting. I am usually the person shopping on Thanksgiving and Black Friday. I'm squirreled away on the couch, away from the family bustle and I'm checking out the deals. I will say the site I click through most often, and the email offers that click through most often was Saks Fifth Avenue. Saks was offering a tiered discount, something I find very fascinating. They were offering, you know, as much as $150 gift card on $1500 purchase, so akin to 10 percent off, I believe, was the offer. But it was stepped from purchases $250 and up with varying break points. I did not bite. There just wasn't anything that really interested me. Through Cyber Monday they had, you know, discounts as steep as 70 percent off, supposedly, but I didn't find a single product with that discount. Saint Laurent and, you know, some other brands that had some inventory that apparently was clearance priced.

Phillip: [00:21:19] Again, not something I witnessed, but was touted in the email. It was a big weekend, actually for NFTs. A number of NFT projects launched efforts over BFCM. On Black Friday there was a Poolsuite, which is the company that was rated on our Nine by Nine, most recently on our Nine by Nine report. And if you haven't actually checked out that Nine by Nine report, I highly recommend that you do. We put a lot of work into rating brands and trying to find the brands that we believe we say is the 81 brands that are changing our world. Poolsuite ranked on this year's nine by nine, you know, formerly known as Poolside. They operate that streaming media and streaming audio service at Poolside.fm. But Poolsuite actually unveiled its series of NFTs and raised about $2 million in the space of an hour selling NFTs, which allowed them to not seek a round of funding, but to put that money to work on future projects. And they had two levels of NFTs. One was an executive member NFT, of which there were only 2400. Sorry, 2500 that were issued. They sold originally for .2 ETH, which at the time of the purchase, I think equated to somewhere in the tune of 450 ish dollars, maybe 500 USD.

Phillip: [00:22:40] They're going for almost, you know, there's offers right now in the secondary market on OpenSea going for as much as one ETH for Poolsuite membership as people are desperately trying to get in on this, with the promise of future perks. They've updated their website to allow signing in with this NFT. So you get access to a playlist and then there's a promised forthcoming series of events that would allow you access, including an Art Basel event here in Miami this weekend that would give you access to some Poolsuite sponsored event with your NFT, your executive membership privilege. They also had a one of one patron of the pool that was on auction that I think went for about 45 ETH, which is just an astounding amount of money. I'm just going to calculate it now at today's market rate at $4700 for US ETH, 45 ETH would be about $211,000, and that's just bonkers. The purchaser was unknown and anonymous, and so now Poolsuite is trying to figure out who that was exactly. {laughter} So welcome to the future of fundraising and pseudo anonymity and I guess just, you know, on chain purchase behavior. So congratulations to Poolsuite. What an amazing thing. If you want to hear more about why we rated Poolsuite as being a standout company and one that could actually marry the metaverse to the physical universe for their forward thinking approach, and everything from fragrance and sunscreen launches to 1990s style computer anti design, design, brutalist design on the web. Hey, Poolsuite is doing it all.

Phillip: [00:24:26] You can check out our Nine by Nine report. That's NinebyNine. Just write it out as words. NinebyNine.Report and download the report. It'll show you how we are thinking about how Poolsuite is changing direct to consumer. And then just to kind of wrap up some thoughts here. I guess maybe, maybe I lied. I got an executive member for Poolsuite NFT. I got it at the Mint. And so maybe I did purchase something on Black Friday. It just and it was for me, so it was selfish. So I guess I'm a liar, but we'll see. {laughter} We'll see. I don't know if that counts. It was a product launch, not necessarily a discount. I guess, I'm going to rationalize it in my mind. Some other things that I think are really sort of fitting for this time of year is there's a lot of talk about the changes in eCommerce landscape and sort of the changes of the business side of running eCommerce and direct to consumer and how the skill set has changed so dramatically over the last couple of years.

Phillip: [00:25:29] It used to be that you had to have some knowledge of engineering and project management and outside agency vetting, but in this wild, crazy New World where you kind of have to be excellent at retention marketing. You can't really rely on customer acquisition through paid channels like you could in years past. You have to have some knowledge of the metaverse. These are all things that are changing the way that brands are interacting with customers. It changes the job description for an eCommerce director or VP of digital. And I'm curious how that is not just changing the playbook, but it's changing the job rec as ecommerce brands become more digital. Certainly we have one outlook at Future Commerce that is much more forward thinking. And there's brands that aren't even up to speed.  [00:26:17]The future is here, but not equally distributed yet, for sure. But if online activity and sales in Black Friday are any indication, if sales are flat year over year, a lot of brands are going to be looking for incrementality. And if you look at how the big brands, the market leaders are making investments in Metaverse, it seems like this might be an area where more brands are going to make investments, and I would say, become more experimental. [00:26:49]

Phillip: [00:26:49] And so, you know, one thing we are forecasting and it was in our Nine by Nine report is that the Metaverse is here. And so when you see Nike and Adidas and Gucci building worlds of their own, it sort of makes you sit up and take notice. I wrote a piece on Future Commerce Insiders about the Pygmalion effect and how Meta, the artist formerly known as Facebook, Meta, will be really setting the tone here and staking their entire future on the Metaverse. How can you not participate or at least have some sort of outlook or point of view about it? That's required now in your job as you're thinking about the future in the next three to five years. So certainly, the future of membership and loyalty could be a Metaverse play. It could be a Web3 play for many brands, but you at least need a point of view, and that means you need to learn a little something about it. I'm curious if that's affecting how your thinking about 2022 and beyond, and if so, then there needs to be an entire ecosystem that rises to meet that need and demand.

Phillip: [00:27:57] And so I think this was a really interesting future signal that I saw over on Twitter. Michael Miraflor shared a story about the first named agency of record in the Metaverse, a story over here on Agency Spy, which is an Adweek property, has a story from yesterday saying that Boson Protocol has named Futures Intelligence Group as a Metaverse agency of record. I think this is the first story of its type and probably a hint about where we're probably going to see a lot of agency activity as they start to try to get into that arbitrage space of having not just a point of view about the Metaverse, but looking at brands like Budweiser, who, you know, just changed their Twitter handle to Beer.ETH, to say, "Hey, a lot of brands are actually putting a lot of stock and maybe a little bit of risk into building out some kind of capability among the crypto crowd." Is it a bubble? Maybe. Is it something that we need to care about? Probably. Is it something we're going to talk about for next Black Friday/Cyber Monday? Absolutely. So, yeah, be on the lookout and we'll keep you in the know here on Future Commerce. And hey, subscribe to this podcast. I want to know what you think. Is your job changing? Are you worried about the skill set that it takes to be a VP of Digital or Director of eCommerce here in the modern cloud era and maybe in the transition to Web3? These are all things that I think could be existential risks for all of us in our jobs and understanding what it takes to be successful.

Phillip: [00:29:35] And I want to hear from you as to how you're going to deal with that. Drop me a line. You can email us at Hello@FutureCommerce.fm and hey, while you're at it, if you want to support this podcast the best way to do that is to subscribe so you don't miss out on anything that we are putting out. We put out two written pieces a week. Insiders and The Senses. They come out every Wednesday and Friday, and you can get them all at once by subscribing over at FutureCommerce.fm/Subscribe. And I mentioned it a few times, but our most recent omnibus report, our biggest report of the year, loaded with data and insights, the nine categories and nine brands apiece that are changing our world, it's called Nine by Nine. Go download that report. It is free for you as a subscriber. You can get that at NinebyNine.Report. Well, thanks for listening. Thank you so much for your support of this podcast. And hey, remember, the future is what we make of it. Let's build the future together. Thank you for listening to Future Commerce.