Member Exclusive   //   November 29, 2022

DTC Briefing: Takeaways from this year’s Black Friday results

This is the latest installment of the DTC Briefing, a weekly Modern Retail+ column about the biggest challenges and trends facing the volatile direct-to-consumer startup world. More from the series →

This is the latest installment of the DTC Briefing, a weekly Modern Retail column about the biggest challenges and trends facing the volatile direct-to-consumer startup world. To receive it in your inbox every week, sign up here.

Despite the looming threat of inflation, it was another year of record sales results for direct-to-consumer startups on Black Friday and beyond. 

Shopify, the e-commerce engine of many DTC startups, reported that its merchants generated $3.36 billion in sales on Black Friday this year, a 21% increase compared to last year. The retail industry as a whole reported more muted results, with Adobe Analytics reporting that online Black Friday sales were up 2.3% compared to last year. 

But topline results don’t tell the full story. The DTC startups that were the happiest with their Cyber Week results weren’t the ones that resorted to higher discounts for the sake of saying they saw “record” Black Friday results. Rather, they were still able to increase revenue while hitting other goals like cutting back reliance on paid social or building out their loyalty programs. 

After talking to a variety of DTC executives over the past week, here are my three biggest takeaways on what tactics won out this Black Friday. In short: Black Friday was a record sales day, as it was nearly every year.  In short: Black Friday was still a record sales day, and Cyber Monday appears to have shaped up similarly​.  as many aspects of running an e-commerce business have gotten more challenging over the past year. 

The move away from paid social continues
This year, one of the biggest areas of focus for DTC startups was coming up with a more diversified marketing strategy for Black Friday in light of Apple’s privacy updates hampering Meta’s ad business. 

Matt Mullenax, CEO of men’s body care brand Huron, said that his company’s sales during the Black Friday through Cyber Monday period doubled compared to last year, reporting a conversion rate of 11% this year. At the same time, Huron had also pulled back spend on some of its marketing channels by as much as 50% compared to last year. 

Like many other DTC brands, Mullenax said that Huron has been trying to reduce its reliance on Meta-owned properties, and has instead opted to work more closely with influencers and creators. Mullenax said that Huron also wanted to focus its Cyber Week promotional efforts more on existing customers. 

Huron offered two different promotions this year — 25% off from Nov. 17 through Nov. 24, and a buy one, get one free offer through Black Friday — as one way to gin up more excitement among its existing customer base. 

For beauty brand Three Ships, text messaging played a big role in its Black Friday marketing plans. Hemani Kamdar, director of marketing at Three Ships, said that the company decided to give its SMS subscribers and loyalty program members early access to its Black Friday sale this year.

Kamdar said that although there was a risk in making the initial sale available only to a portion of Three Ships’ customers, the thinking was, “if [a customer] is subscribing to us on SMS, they are clearly very engaged and want to be in contact with the brand.” Kamdar said that Three Ships ended up generating the same amount of sales within the first few hours of the early access sale as it did during the first day of its sale last year, with a conversion rate of 18%. Month-to-date, Three Ships’ revenue from SMS campaigns is up 103% compared to last year. 

“SMS list building was a huge priority for us going into Black Friday,” Kamdar says. She added that while paid social is still a focus for Three Ships, the company is also increasingly prioritizing “channels that we are able to personalize and have access to first-party data,” and that includes SMS. 

Shoppers are planning for a week of Black Friday deals

Yes, Black Friday starts earlier and earlier every year, but one of the biggest changes I noticed this Black Friday was nearly every startup starting their Black Friday sale on — at the very latest — the Monday before Black Friday.

Home goods brand Parachute was one such example. CEO Ariel Kaye told me in an email that for years, the company’s sale started and ended during the biggest tentpole sales days — Black Friday and Cyber Monday. In 2020, however, Parachute started making its sale available to loyalty program members the Monday before Black Friday. This year, Parachute made its sale available to all customers for a week starting on Nov. 21 and ending on Nov. 28. 

“The behavior around the BFCM ‘weekend’ has changed,” Kaye said. “People are prioritizing differently – shopping online during the week and spending their holidays and weekends with their families. We want to accommodate those folks and not put too much pressure on a limited duration sale while still creating a moment.” 

This also means that increasingly, shoppers aren’t enticed — and are sometimes even irritated — by last minute, “surprise” Cyber Monday deals. As I wrote about last week, more startups started giving their customers a heads up as to when their Cyber Week sale would start.

Three Ships was one such brand. On Nov. 17, Three Ships published a calendar of all the various gift with purchase incentives it would be offering from Nov. 23 to Nov. 28 — in addition to a buy one, get one free deal all week long.

Kemdar said that her line of thinking in wanting to publicize Three Ships’ deals ahead of time was that,” is already such a chaotic time for consumers, not to mention that there is probably some added pressure to find the right price, and the right deal given the financial state of the world.”

Inflation didn’t topple Black Friday, but that’s not the full story
While there was a fear that inflation might put a dent in Cyber Week sales, by and large that didn’t appear to pan out. Black Friday has become an event that, year after year, the majority of shoppers still plan to participate in and plan their purchasing around. According to the National Retail Federation’s annual survey, more than two-thirds of respondents planned to shop over the Thanksgiving weekend this year.

People still planned to use Black Friday to stock up on certain products, but what they were willing to stock up on — and by how much — changed. Parachute’s Kaye didn’t share exactly how her company’s Cyber Week sales compared to last year. She acknowledged that Parachute did plan for some softness this year in light of inflation, but said that the company was still meeting its forecast for Cyber Week, “and we are happy to be meeting our forecast.”

“In addition to the holiday-ready giftables that are a big hit every year — robes, loungewear, slippers, etc. — we saw a genuine emphasis on core bedding, utility and bath,” Kaye said. “This isn’t inconsistent from past years, but it does continue to showcase that regardless of what’s happening in the market, people are looking for quality goods.”

However, Black Friday performance is only one indicator of how brands will perform the rest of the holiday season. The NRF’s survey also shows that 60% of respondents already started their holiday shopping in early November, with 18% having already completed more than half of their holiday shopping. If inflation continues to rise — and more of their core customers have already completed their holiday shopping — it could be harder for DTC brands to juice more demand out of their audience through December.

“I don’t know if any macro headwinds [around inflation] played out for us,” Huron’s Mullenax said, citing the fact that Huron’s average order value between Black Friday and Cyber Monday was up roughly 50% compared to last year, indicating that people were willing to buy more products from the brand.

“I think it’s pretty insightful that people weren’t hesitant in shopping the brands they were super passionate about.

What I’m reading

  • Showfields, the self-proclaimed “most interesting store in the world” is still opening new locations. Retail Dive reports that the company just opened a new store in D.C., just a few weeks after opening a Brooklyn location
  • Faced with exorbitant shipping costs, more retailers ranging from Abercrombie & Fitch to Zara are starting to charge online shoppers for returns. But some surveys show that may hurt customer loyalty in the long run. 
  • Thingtesting has a guide for getting onto gift guides

What we’ve covered

  • Subscriber exclusive: As wholesale gets more competitive, startups like Aura Bora and Stryx are increasingly using digital vouchers and social media giveaways to get more of their customers to retail stores
  • DTC jewelry brand Brilliant Earth is on track to nearly double its store count by the end of the year. 
  • Buy now, pay later companies like Afterpay and Affirm are pulling out all the marketing stops this holiday season, hoping that inflation will lead more people to use their services. But the jury is still out on just how big of a role BNPL will play this holiday season.