Growing Ecommerce – The Retail Growth Podcast

Black Friday Bloodbath: ROAS Down 12%, Gross Margins Down 9% | Post-Mortem Data

• Smarter Ecommerce • Season 4 • Episode 19

Share episode

In this post-mortem episode, hosts Mike Ryan and Chris dive deep into the data behind the last peak season to reveal the true cost of Black Friday. They confirm what many performance marketers feared: the event is a "promotional bloodbath where margins are lost".

The numbers are shocking: Google Ads spend was up over 31% year-over-year, but revenue only grew 15%, resulting in a massive 12% drop in Return on Ad Spend (ROAS). But the real trouble is profitability. Mike reveals an exclusive chart showing how the average gross profit margin dropped by 9 percentage points in the final week of November.

What else is covered in this data-driven post-mortem:

  • The Dilution of Demand: Why Black Friday search volume has been on a secular decline since peaking in 2018, and why the "doorbuster" concept is dead.
  • The Hourly Opportunity: A never-before-seen hourly analysis that pinpoints the exact time when Cost Per Order (CPO) cools down and conversion rates peak, revealing the best time to run your budget.
  • Competitor Strategy: A look at how Amazon is continuously ramping up spend, while the competition from Teemu drastically fell off on Black Friday itself.
  • The Final Warning: Why the relentless increase in CPCs is the single biggest threat to the middle-of-the-pack online retailer.

About smec (Smarter Ecommerce):

At smec - Smarter Ecommerce, we specialize in transforming business goals into optimized ad campaigns. With over 16 years of experience in Google & Microsoft Ads, our intelligent software and expert services help retailers achieve superior results.

We're committed to giving you the tools and insights needed to stay ahead in the ever-evolving world of digital advertising.

Make sure to follow smec - Smarter Ecommerce for more performance marketing insights:

SPEAKER_01:

Welcome to another episode of Growing E-Commerce. I'm one of your hosts, Mike Ryan. My name is Chris.

SPEAKER_00:

The other one of our the other one.

SPEAKER_01:

So, Chris, um, you got a haircut?

SPEAKER_00:

I knew it. I knew it. Yes.

SPEAKER_01:

And you are. That's good.

SPEAKER_00:

You somebody got the new haircut.

SPEAKER_01:

It's it's quite yeah, it's you've you've trimmed a lot. It's very Roman look, right?

SPEAKER_00:

Man, you know what? I I I'm 41 years old. Um and I think this is a this is an age where you have to do everything in your power to look as sharp as possible. My hairdresser convinced me that short hair just make you look younger. Okay. And for me, then it was a no-brainer. Yeah. Make it as short as possible. All right.

SPEAKER_01:

Trim it. Trim it. I have to, I saw so Chris. I saw you. At first I had this sinking feeling in my stomach because I I got a glimpse of you out of the corner of my eye, and I saw that your hair was dramatically shorter. And uh are you familiar with the Edgar cut? No, what is it? Oh man, I'm gonna have to send you an image. The Edgar cut, I didn't know, I just found out what this is called, and I'm really proud of myself for even knowing. But I was like, what is this hideous haircut that the young the the young people have? Is it uh uh similar to a bus cut or kind of it's hard to describe. It it looks like someone made a mistake. But I start the first time I saw one of these, I was like, what is wrong with that guy's he cut it, he definitely cut his own hair.

SPEAKER_00:

And then I stood realized that uh honestly speaking, give me give me honest feedback. Do you do you feel like uh my hairdresser made a mistake?

SPEAKER_01:

No, no, it looks like it looks good, looks good. But I I it's funny because I was musing to myself on the on the bus ride in this morning, I was like, you know what? Like because I feel like a lot of things haven't changed that much. Fashion. I feel like this stuff is actually everyone talks about accelerated culture, but to me, some things are slowing down. Massively, massively. And um Yeah, and I was like, actually, but now with like these barrel leg jeans, if that means something to you, the Edgar cuts, and they're these young people are really choosing to to me, these are avant-garde decisions.

SPEAKER_00:

Yeah, there are a lot of teet young people running around on the streets where I'm like, but again, I'm man, I'm 41, I'm I'm I'm old. Where I'm like, holy shit. I just hope that I wasn't running around only remotely crazy when when I was young.

SPEAKER_01:

You you were, you were. You're sure about that? I was wearing cargo shorts, and cargo shorts um were the barrel jeans. Cargo shorts by any objective measure are hideous. Okay.

SPEAKER_00:

As hideous as barrel barrel jeans, but by the way, I had the the craziest the craziest short I have was uh a Fubu, uh which jeans. Yeah and I can remember the discussions I had with my father back in the days. He literally he he he was sure about that it was the wrong decision. He was right now. But uh I pushed through. I wore it for roughly a year, and then I don't know. I realized that there's there are better ways to dress.

SPEAKER_01:

You know Fubu? Yeah, yeah, let me guess you had the saggy jeans with the boxers. Of course, of course.

SPEAKER_00:

I was massively into basketball and I wanted to be but what's up for today? Um second to last episode, or is it yes?

SPEAKER_01:

Yeah, we're uh uh no, no, that's not right. We'll have one more. One more. Yep. Uh and then we'll then we'll have uh we'll we'll wrap up the year. Um so this is our third to last episode for the year, and we are gonna talk about Black Friday. What else? Yeah. You know, we Chris and I were talking about um about doing a Black Friday episode in the run-up to Black Friday, but it's you know, it's hard to be really sharp because you can just talk about guesses, exactly, expectations, and we thought it would be more entr interesting to just look at the numbers once they land.

SPEAKER_00:

Guessing is over.

SPEAKER_01:

Yeah, exactly.

SPEAKER_00:

The numbers are here. And we have the guy, the lord of the numbers, sitting in front of us. Well, I prepared a few things. Uh I had a look at it, by the way.

SPEAKER_01:

All right, glad you don't call me I don't know off guard.

SPEAKER_00:

That's a cr that's some interesting stuff in there.

SPEAKER_01:

I think so too. I mean, let's start zoomed out, zoomed way out. Um, because we're gonna zoom in to the hourly level at one point. But but uh to we're by how zoomed out do I mean? I prepared a 20-year view of uh of peak Black Friday search volume. This is Google search volume in the U.S. We're mostly gonna talk about European data, but um I think to properly understand what's happening with the overall trajectory of Black Friday, you need to look at the country where it all started. Where it all started, right?

SPEAKER_00:

A lot of great ideas come out of the US. Some bad ones too. Some bad ones too. But Black Friday, I think in general is a good idea.

SPEAKER_01:

Aaron Powell Well, we'll see we'll find out when we look at the performance, Chris.

SPEAKER_00:

Yes. That's true. That's true. And it loses, as it seems, a bit of steam.

SPEAKER_01:

Aaron Powell A lot of steam. I mean, uh it's hard we don't have a counterfactual here, but um and we'll throw this up on the screen for viewers. We'll throw up all these charts on the screen for viewers, but let me describe it to listeners. Um we've got a bar chart from 2005 through 2025, and it's uh basically the yeah, the peak search volume of that year for each year. And you can see that uh the trajectory of Black Friday, I mean it it proceeds it's it's older than 2005, of course, but um it was really just gaining steam, gaining steam every year basically, right through when it peaked in 2018. And um then And guess what?

SPEAKER_00:

I think a lot of retailers thought this is this this is gold.

SPEAKER_01:

It will never stop. It's just gonna keep the numbers just gonna keep going up. Um and I mean in some ways like the sales volumes do somehow every year, you know, they're all costs, but we talked about that in a minute. Yeah, exactly. But when we're looking at the search volume, it dipped a little bit in 2019, but something dramatic happened in uh 2020. It just fell off a cliff.

SPEAKER_00:

Fell off a cliff, which is really crazy. It yeah, what what what do you think and by the way, the interesting thing is once it fell off the cliff, uh, as you see on the chart, it it it never never recovered. Uh quite the contrary can be can be observed that there is now a a downwards trend, more or less. Um But before we talk about make the reasons for the downwards trend, I would really be interested in I mean 2019, uh 2020, what what was the reason for this massive, massive draw? What do you think?

SPEAKER_01:

I mean uh with I think I think there were probably some structural things going on with Black Friday that we might start to see in 2019. But then in 2020 there was lockdown. Um so there was the pandemic, there were these store closures, store restrictions, and so that to me explains the massive drop there. Um and we're talking the volume nearly fell on half. It's crazy. Um that to me is because a big important half of Black Friday, the stores, just they just fell away.

SPEAKER_00:

Because Black Friday is not just an online phenomenon. Yeah, we we always focus on that.

SPEAKER_01:

We have tunnel vision almost on that.

SPEAKER_00:

Yes, of course.

SPEAKER_01:

But of course. And and you know, that's it originated with the door busters and you know the cliches of people getting run over at four in the morning waiting for some electronic store to open. I by the way, I love this video.

SPEAKER_00:

I love this video. I mean, it i there are rough videos where people really get hurt, but there are this this videos where people wait to get in and to get I don't know, a new PlayStation or new Xbox.

SPEAKER_01:

I love gonna end up under the Christmas tree, you know. But but but that's that's also but I think you know we saw that there were these like you know, there was also a massive leap in e-commerce penetration in 2020. Um but then things regressed to the mean over time. And like the question to me is we we don't have a counterfactual for what would have happened with Black Friday, but um I think that uh it w it was going to start trending down anyway. And this be because the like why didn't Black Friday return? Okay, there were the store closures, um but why didn't it return? And if we think about those door busters, that was that's something that doesn't really exist anymore, not in the way that it did. Like these would be deals uh that were limited in quantity. Only Black Friday and limited in quantity. Exactly. Only Black Friday. That's the only day, the whole year you're gonna get this deal. And if you have to be there at that store, you have to be one of the first people. And that is just gone now. That's gone. The deals are categorically different in nature.

SPEAKER_00:

Um let's face it, there it's it's certainly it there's a Black Friday inflation. Um, maybe also kind of kind of if you call it the people are maybe even a a bit tired, you know. Sure, sure. Because it's it's not that pointy anymore. As you as you as when we talked about that before, the the there this there there are hardly any deals which are just there on Black Friday. So this by design will of course, right? Uh yeah, cause I don't know, a negative effect on on the peakiness of of Black Friday. However, for me, this still doesn't explain this massive drop within one year, because I I can't imagine that from one year to another uh the retailers began to, I don't know, have Black Friday these deals not just on Black Friday, but let's say for the whole month of December or November. This this this massive drop is still, I don't know, um big, big unknown to me. Yeah. I mean, can be hardly explained with the pandemic for sure. But it's like you said, it's almost 50%.

SPEAKER_01:

It's it's really steep and you would have expected some kind of rebound, but um it's not there. Yeah, I mean, I think what's interesting, I looked at some other queries, uh like Black Friday opening hours, Black Friday um store hours, different kinds of things like this. Yeah, that are related to offline, related to local search. And you could see that even preceding this, there was there was already kind of a let's call it a secular decline. And so I think these are the structural factors. I think that there was something happening. It was maybe already disinflection point had occurred, but was maybe just becoming visible to us in 2019. And then you know, well, we're just talking about this meanwhile, this new phenomenon, Black Friday week, Black Friday month, month, Black Friday decade. Yeah, why not? Black Friday century. Yeah, but uh this this really dilutes it. Um and also competing sales events, um more recently in the past few years, Amazon has a fall prime day event. Uh singles day is something there's so I just think that all this comes together to form this picture.

SPEAKER_00:

Um by the way, one of one of our bigger clients, Emac, uh one of the bigger online retailers uh in Eastern Europe, they just created their own Black Friday. I think before the Black Friday. That's one or two weeks before. Yeah. Um so yeah, I I think there plays a lot into it that that Black Friday as a as one day uh loses this this let's say peakish character. But I would have assumed just uh not not that steep of of a decline. Uh and by the way, if you look at the years 2020 onwards, it's more or less stable with it with a slight downwards trend. So this I think this certainly can be explained with this longer and longer discount periods. Yeah. This falling off a cliff is is for me, it's it's really it's it's crazy. Hard to explain.

SPEAKER_01:

I I think the counterfactual here would be you'd see this slight downward trend that we're seeing now. And it would be if the pandemic hadn't happened, it would be you know from that 2019 level. But the pandemic did happen.

SPEAKER_00:

Would make more sense, by the way. Yeah. The pandemic happened.

SPEAKER_01:

We don't we all regret it.

SPEAKER_00:

Yes, yeah. What wasn't the best time uh I had in my life.

SPEAKER_01:

But well, and I was I was personally responsible. I'm sorry. I was in Wuhan that day. No, I shouldn't have joked about that.

SPEAKER_00:

You were patient here. Now we know it.

SPEAKER_01:

Someone's someone's shaking their head and giving me a stern smile, a stern frown right now.

SPEAKER_00:

So was it both a phrase time for sure, yeah. Yes.

SPEAKER_01:

Uh but all that's we have like Yeah, let's let's interesting. Yes. So that was our zoomed out view. Let's uh let's zoom in. Um I made a I prepared some data here that looks at the um basically the volumes in terms of impressions, clicks, and orders, um also revenue and spend. So looking at those volume numbers for the day. Exactly, year over year. And then to help um, because you can get a wrong impression when you look at those alone. So for each of those, I've also added a rate or a ratio to help um help give a picture about the efficiency, what was going on there. Um yeah, I'm proud of this one. Yeah, I love it. Thanks.

SPEAKER_00:

Um It's a powerful, powerful chart. A lot of a lot of a lot of things to to discuss.

SPEAKER_01:

For sure. I mean, um if if we walk through it, if we look at these kind of um these the the funnel here, the impressions and the clicks and the orders, um, we see that impressions were up 13 percent year over year. Um clicks were were up six percent year over year, and then orders looking pretty respectable, up twenty-three percent year over year. Wow. That's a lot. Yeah. It was a great Black Friday. Yeah. At what cost? Uh yeah. At what costs? Because revenue, here's the first sort of sign of trouble. Revenue, so conversions were up twenty-three percent. Revenue was only up fifteen percent. And um by smaller baskets. Yeah, exactly. And that's because average order value was down six, seven percent year over year. Um and the biggest number of all the numbers is by the way, good for Google. Yeah, good for Google. Good for earnings. Looking forward to the looks cool. If you're an alphabet stakeholder I'm not, you are? I'm I'm not, I'm not. No, I have no skin in the game.

SPEAKER_00:

I was thinking about it, looking at these numbers. Yeah, change them, change your mind. No, but I mean Mike, let's let let's let's uh call call it what it is. This is a perfect perfect picture for Google because the spend grew by 31.4%.

SPEAKER_01:

Exactly. Yeah.

SPEAKER_00:

Um mainly driven by Weiha CPCs. We talked about that. By the way, we had this awesome live tracker, what was going on during Black Friday. Yeah. And I was looking at it and I was like, what is happening with the CPCs?

SPEAKER_01:

Yeah. We've been we've been plugging the market observer on some recent episodes and just one more plug, because we we every once in a while just get a crazy idea and we just do it. We put in a live hourly live tracker.

SPEAKER_00:

What was going on Black Friday? It was it was an awesome live tracker. But uh ladies and gents, uh the the picture is um I would say a mixed bag. I mean, yes, there was more more orders, there was more revenues. By the way, at uh uh at uh smaller baskets and average, which is in general not a good thing because it it probably costs you absolute basket margin. Yeah. But the major thing is um you the the spend drove the growth. Yes. Uh um to a relation which is uh just just unhealthier than the the year before. Yeah.

SPEAKER_01:

Well, and but I mean uh on on here we have like the the CPM, which is not so relevant for shopping and and PMAX ads typically, but um for what it's worth it was up 16%. So the that visibility cost more.

SPEAKER_00:

30% more spend for roughly 15% more revenue.

SPEAKER_01:

Yeah. And and but the the figure that's not on here is the return on ad spend, and that was down 12% year over year.

SPEAKER_00:

Logical consequence.

SPEAKER_01:

Yeah.

SPEAKER_00:

And by the way, uh Mike, the good old conversion rate bump was 16.1% year over year. As crazy as it sounds, because this is not the the best possible picture some could imagine. But the the increasing conversion rate saved today. Yes.

SPEAKER_01:

That was the saving grace because basically every efficiency metric is in the red except for conversion rate. And that was really the saving grace. So the demand was there. Um the problem was as I see it, I I really think there was good consumer demand, but I think that the advertiser demand was just or or the supply of advertisers was just higher.

SPEAKER_00:

Yes. And the the the the CPC increase throughout the year, we talked about that. Exactly. Probably the biggest nagging problem for anyone um being active now in in in in Google particular. Um yeah, yeah, that this is this is the the CPC is ruining the party. Because else, like you said, the demand was there, people were buying. All good signs, but at way higher costs.

SPEAKER_01:

Yes. So this was just it was the price of competition. Um yeah, so that's a picture. Yeah, and by the way, like these the volumes, um this this this sounds about right. Like I think uh overall volumes for Black Friday were not up this high, but e-commerce was was up um uh you know, I think I was reading 12% from Salesforce or Adobe. And um so seeing the revenue at about 15%, it seems it seems right to me in this channel. That's what we saw in the in these uh shopping channels. But um, you know, to look behind the scenes a bit, this is uh I did something new this year. Crazy chart. I haven't I have never done this before, um, but I I looked at the average gross profit margin um and uh for from October 1st to get a feeling of the baseline through November 30th. And um what you can see is that the average was I mean, I think strictly speaking, the average was like 34.6, but it was right about 35 percent. Um and that's that's benchmark. Yeah, that's kind of benchmark. You know, I think you'd I think you'd see you'd probably see a lot of places list that as a benchmark e-commerce gross profit margin. And I think above thirty percent. It always depends on category, yeah. But that's probably considered healthy above thirty percent. Um and that's where those numbers were with a little fluctuation. Then really you start to see the first signs of trouble. Um still the first week of November was maybe still within a standard deviation or something like that. But the second half of November, it just starts falling. And particularly uh that final week of November. And so it's down like nine percentage points um to yeah, uh like tw 27% um from where it had been. Yeah.

SPEAKER_00:

No big surprise if if we we we go circuit back to the to the slide before. Uh and uh that's uh it just cost way more money uh to to to get to get my my revenue as an online online retailer. And it's there. Exactly. This is this is not which is coming on top, right? Yeah. There's this massive discounting. There are the channel um things that are occurring, and then also the discounting, yeah. If you want to join the Black Friday party, it's not possible without the discount. And the discount periods are getting longer and longer, right? I mean, we talked about this. This is on the one hand, I don't know, yeah, making the Black Friday just less of an a special day. And just to put it in perspective, we talked about in one of our last episodes, the Black Friday is still the biggest day in the year, but it has been bigger before. Yeah. So this this discounting combined with with just the depressure within the let's say Google ecosystem. So for me it's no surprise there. Yes. The bigger question here I I would have uh Mike is I mean it's it's not a super smart question, but I think an obvious one. Let's assume you are now the owner of an online shop. And let's assume that you are your your watch list is not not miles deep and you have a limited budget for the year.

SPEAKER_02:

Yeah.

SPEAKER_00:

What are you doing with let's say Black Friday and Black Week? Because you know by design that the orders and revenue you get during this couple of days week um will be probably from a cross marching perspective not as attractive as the time before or after.

SPEAKER_02:

Yeah.

SPEAKER_00:

W what what what would you do? Because I think there's a question a lot of online retailers might have, right?

SPEAKER_02:

Yeah.

SPEAKER_00:

Do I want to join the party? Yes or no?

SPEAKER_01:

Yeah. Um it's it's not a dumb question and I don't and I think it's non-trivial to answer as well. I mean it it's just it's always been a devil's bargain. Economists have been criticizing Black Friday for all 20 years of that chart that I showed before. You know is this is this actually generating new demand? Are are are these advertisers acquiring new customers or is it just concentrating the existing demand into a promotional bloodbath where margins are lost. And um it it's it's really I think not I mean that probably is what's going on but what are you going to do? Like back in the day when the peak was much more acute and it was much more a an event with boundaries if you didn't participate you probably were like yeah the demand was being concentrated then you have to be there if you want to be be visible for that demand. And now that it's become so borderless, it's it's hard because what does it mean to not participate when there are people running these promos all month. You know Adobe I think they I can't I'm sorry I can't remember if it was Adobe or Salesforce, but they had uh both of them were running some dashboards with different numbers. Yeah but there was an average discount and it was like 26%. And um that I you know I think that peaked at Black Friday but people have been running the discount has been high all month and it's um they're just intensifying. And so what is what does that mean to not participate?

SPEAKER_00:

Now it it doesn't stop. Well am I going to take the month of November off? Yes or December? Because let's face it right it it's yeah the the the statement of of having a quarterless black Friday we talked about when we talked about it right black Friday black week black month what is it black quarter? Yeah um so yeah this is a fair question right okay I I just don't try on black friday but is the situation post Black Friday that much better right yeah what what I just what what I'm what I'm thinking is and this is of course I mean the the online retailers should should should know their numbers but if if you if you see let's say you look at the last five years and you see that the the demand for your assortment is not falling off a cliff post Black Friday. And I I I would still assume that the discounting pressure is at at least a little bit less post post Black Friday and you see okay I have a limited budget I I know that there's still demand after Black Friday I think it could be it could be interesting to to have have some strategies not to put all eggs in in one basket right uh and that's what a lot of online retailers do focus very very much on Black Friday which is by design a bloodbath. But it's yeah man I think it's it's a very very tricky question. Yeah. The gross margin however I mean this data is is by the way ladies and gents just to be clear we looked at more than 150 accounts this is an aggregated number.

SPEAKER_02:

Yeah.

SPEAKER_00:

So of course there are outliers and and some there's still better than others.

SPEAKER_01:

For for sure this is the you know it's it's a m it's a it's an average it's a fictional number in the end.

SPEAKER_00:

It's it there's but the average tells a story. Yeah you you just buy revenue at at a significantly lower gross margin.

SPEAKER_01:

It's yeah yeah and I mean something or maybe it's actually let's jump in the hourly because we still have a couple more I'm not sure where we're on time, but let's like I I just want to look at this hourly chart with you here because I think it tells a really interesting picture. I have put revenue share like hourly revenue share, hourly conversion rate and hourly cost per order or cost per acquisition um next to each other and then heat map them. And what I think is interesting is that um all three of them have a different pattern a different kind of intraday seasonality hourly seasonality. But it reflects something about consumer behavior, I'm sure. And maybe something about also the auction environment um but I I I want to reflect afterwards.

SPEAKER_00:

Did you shop on Black Friday by the way? Yeah I was I was the one person shopping at 3 a.m. Okay. Okay. Yeah I I didn't honestly speak I did I did yeah but uh looking at at uh this intalis I I I I I understand the patterns to a certain degree because it it probably would would map to my my shopping behavior. Yeah. The the the late the revenue share that it so there's there's a route yeah what or walk us through Chris you want to tell us of course yeah because uh so what what you see on the chart here chart here is uh split uh um into uh basically an hour hourly um uh view and you we have the revenue share the conversion rate and the cost per order and uh you can see basically the development of the revenue share if we we can start with that one. No surprise there um there is a certain peak uh I would say around pretty prototypical shopping hours which is uh yeah let's say around 6 p.m to what is it nine nine ten pm um there was uh a a certain peak in terms of revenue share this is some something I can relate to because it's post-work you have some time the kids are in bed probably and you you do your shopping so nothing surprising surprising here and we should but we should mention by the way like I think in the US more people have black like Thanksgiving is a holiday a lot of people take Black Friday off or they have it off but in Europe that's not the case people are working.

SPEAKER_01:

Absolutely so this is pretty that there's a a a a peak in revenue share let's say around the 7 to 10 p.m mark make makes a lot of sense yeah um what's interesting is that the conversion rates right behave a little bit different to a certain degree might what's your take on sure well they they peak really early in the morning with the there's kind of it's kind of bimodal they they peak uh really early in the morning actually around 5 a.m and and it's a very high conversion rate that we picked up there it's it's like 10.6%. And that might be a bit somehow skewed because it's not a huge data volume that's in there. That's only less than a 1% of of the revenue for the day. But I think that I I I'm I'm really split here. It's like should you go in there and advertise and capture that conversion rate on the other hand I bet these are people they've been shopping all week long. They know they've chosen what they want to buy um they know the product they've done the research and they're you know they're the early birds. They're doing that because they want to make sure the deal doesn't run out or the stock doesn't want run out or they have to squeeze that purchase in quick before work or whatever.

SPEAKER_00:

And I actually think that it's very low incrementality in the morning doesn't it's low incrementality at the same time Mike we discussed about this is what's an existing client what's a new client? Yes. It's demand and I I want the demand to be captured.

SPEAKER_01:

That that's the thing they've decided what product they want to buy but maybe they don't care who it's from or and I think that's why they jumped onto Google, right?

SPEAKER_00:

Because else they would probably uh jump to your website directly. So I would say look looking at these numbers these high conversion rates in these early bird shoppers it makes sense because they probably know what they're looking for.

SPEAKER_01:

They want to you know do the shopping before work yeah I assume so I think this is um yeah um seems like a good idea to to also be active very very early in the morning yeah definitely from a demand capturing perspective and and then there's this then there's a second peak um and it's even more acute and more and later than like the volume peak from from seven to to ten let's say this conversion rate peak is really at 9 p.m, 10 p.m 11 p.m and that's the oh shit people that's the people the the urgency is back. The urgency is back. They're like ah Black Friday's ending I've got to buy and that's happened to me many times. Yeah and you and you could I mean I think probably there are also people maybe they've been waiting all day looking around considering but I'm this is prototypically me. You know Chris am I everything's prepared well in advance person or am I a last minute crunch person? Oh you put me on this box it man you can say like it is Chris no I I don't want to I'm a last minute crunch person. It's fine so yeah that that's that's me right there. So um yeah I mean we see that the conversion rate has this early morning and late evening these speak these peaks. Um I make sense and then and then cost per order behaves differently than either of those um where it has a peak it has a midday peak. It's kind of a bell curve across the day if you can imagine that um it really ramps up and ramps down at at noon. And that to me I don't know what to think about that.

SPEAKER_00:

That that that's that's that's that's a tricky one yeah that's certainly a tricky one. I don't know what to make of this one. It's certainly interesting. I I wouldn't have expected that to a certain degree because I I thought you know there's more density especially in the evening and that that probably drives also the cost per order. Yeah. Hard hard hard to say honestly but it's certainly interesting.

SPEAKER_01:

Yeah I mean I have a feeling that this is driven by the competition piling on and lower conversion rates I mean you you see right yeah the conver y you know the volume is is really sizable through the whole midday um the conversion rates are kind of stuck in the middle and everyone's competing for that volume. Yes. And I I think you know there could be probably when I look at this the greatest opportunity that I see is that that cost per order is cooling down in the late hours of the day and the the revenue share is still sizable as we said. The conversion rate is good as we said and I don't know if people have are running a budget at that point. But I think it's really worth pushing hard yes yeah and making making sure you're there.

SPEAKER_00:

Sorry that's no no that that's what I wanted to say. Balance the budget and be be there when when it counts and I mean basically it should count the whole Black Friday but i it based on that number uh it's certainly important that you have enough enough a big enough war chest for the the late hours yeah because that's where volume is is still there. Yeah high conversion rates at the cross borders it seems like like the m the most appealing one.

SPEAKER_01:

And and this is this could be a failure of Google's biddy models as well by the way because you know the question okay Google knows that conversion rate increases on Black Friday but I don't know what they've built behind the scenes. Do they have you it you think they have enough data that they could build an intraday model for it. But I you know is is it that the algorithm is seeing the typical hour of day and then what is it?

SPEAKER_00:

I I but I think that that that's to me the window of opportunity now that that's something how you how you could read this chart. Yeah. Yeah. Certainly very very interesting. And can we zoom in a bit more then maybe next year right?

SPEAKER_01:

No, no. Okay No I can't but um last chart? Yes but hold on I we said I'm a last minute crunch person Chris and I want to tell you an anecdote here. Okay. Sample size of one um this whole Black Friday thing has become so blown out with like the the lack of a peak and stuff like that um that I I just had a very busy weekend to be honest. And um I knew that the deals weren't going anywhere. And I I I did one big purchase this year on Black Friday. It was a it was a robotic lawnmower.

SPEAKER_00:

Yes. Yes. This is something I should man this is something I have to to tack it. Yeah. Yeah earlier than later. I missed out on that. And I assume the discounts are still there anyway.

SPEAKER_01:

No well I did it I did this I did this um in the late evening hours of Cyber Monday because that's when the deals were actually expiring um be because you know I knew the deal wasn't going anywhere and and I was just busy. And then finally I had time and the urgency was high enough and I finally converted.

SPEAKER_00:

Yeah and by the way it makes makes sense look looking looking looking at the chart here mark uh it it makes sense. You you are you're the one person you you knew what you were looking for you chomped on Google high conversion rate uh revenue share and a uh efficient cost cost per order so again I think this is the wind of opportunity to have this open budget on Black Friday if possible if not yeah be there when it's these these late late late hour shopping uh time period and get the late late birds on Cyber Monday too exactly be be there as well there are a lot of my grants out there yeah um last chart so last chart for today okay also an interesting one yeah bit of a zoom out now again exactly I mean um you can see the you can see the the daily uh uh levels in there too but I want to show what happened with competition levels um and I chose two of our favorites on this podcast you were called Mr.

SPEAKER_01:

Timu for a reason yeah I chose Amazon and Timu and again this is this is European data so Amazon is absent in the US still um I I still can't believe we we broke that story in the summertime um and they're still gone but um t you know Amazon they uh they just ramped s from October 1st through November 30th and they'll probably keep building in strength um as far as increasing the press yeah I don't think that this is because literally there's no Black Friday bump there in them they're just gonna keep ramping and ramping I think and they're about as dominant as they've ever been. Yes. So we're talking about the percentage of advertisers facing competition and it's like 85%. And I do some I do a little bit of a filtering in here too. I mean the number could be if I would be a little less strict about the number would be even higher to be honest. But I do a little bit of filtering in here.

SPEAKER_00:

Aaron Ross Powell But by the way this is not not a biggest price, right? I mean Amazon has been this continuously chose this continuous approach throughout December and November, December.

SPEAKER_01:

And this and actually if we look at this pattern from last year it's it's pretty similar to what we saw last year. And so what Timu did, um they you can see that they have been kind of easing out lowering their spend all November long. Quite significantly all November long they were very comparable with Amazon in October and now they reduced to like down to a level of about 50% of advertisers were seeing competition from them. And then on right at Black Friday itself only one in four and that's very significant drop. Yeah it's it's extremely significant. Reason for that Mike anything on the news here or um no I I mean I again last year I think this is even more extreme than last year but I think they figured out that Black Friday doesn't work that well for them. I think they figured out that they have problems with uh as the holiday season goes on with shipping deadlines and stuff like this with the holiday cutoffs because uh they they've built up some of their local fulfillment but a lot of their stuff does take longer to arrive. Trevor Burrus And maybe the CEO said hey guys our gross margin is is negative on Black Friday like discount we can't discount any further easy yeah but interesting but one and one really notable thing happened um and and part of the picture is not visible here because I excluded AliExpress. AliExpress on Market Observer but um in in mid-November Timu uh had a really acute drop and so at that point I was wondering what's going on here because at the same time AliExpress jumped up massively and it wasn't clear to me what was happening or how or what yeah like I couldn't tell okay is Timu drastically reducing is is AliExpress drastically increasing a little bit of both and I think it was a little bit of both Timu had this plan to wind down in November um but then what happened is that AliExpress for Singles Day massively turned up their advertising pressure and I and I didn't know if if AliExpress was going to be pushing hard all through November. That's not what happened. Yeah it was a campaign it was you know a couple days before and after Singles Day they they pushed really hard um if you're not familiar with Singles Day um yeah neither am I or I'm I'm I'm hardly you're not a singer no well it's become I mean I I am famili it's it's a fascinating holiday do you know about Singles Day Chris? Yeah I think it's uh uh it's it's something special it it was it invented by uh it was it's it's a Chinese uh holiday and it might have been invented I don't know by JD or Alibaba I think so yeah one of these yeah they started it yeah and it was it it was like kind of an anti-Valentine's day at first but isn't it's an Asian thing or or originally it's from it's originally from China and from from East Asia and um and but somehow it became a major sales event and then and then it's starting to um you know they're trying to make it happen in other markets as well. So stop trying to make singles day happen.

SPEAKER_00:

By the way what's your prediction? Since Black Friday loses think will be there something new in line?

SPEAKER_01:

Maybe we need maybe in Europe or in the US right someone I I don't know Chris it feels like um I don't know what where this is headed. Black year I don't I just imagine like if Black Friday gets kind of the stink of I think the stink of death around it it depends like what the vibe is here. And I like people right now they're unsure like is this discount genuine? The urgency is gone. This gen this discount is a week it's a month like what I think it feels for as a consumer it feels really weird.

SPEAKER_00:

Yeah it's not what it is the question about is the is the discount really really genuine there was this great memo from LinkedIn I I don't know who shared it. I think it was uh um Mr Decker I think who shared it yeah uh one of my favorite movies uh uh Brayfark like are you hold on on on on Wednesday like this one scene famous scene where they fought the the English knights and uh yeah and then on Friday let's go and basically it's it's it's the same price they just you know came from from a different diff different starting point which has never never existed. So I think this ch like how how channel is the discount. I think it's a very very real thing. It's a very real thing.

SPEAKER_01:

Yeah. Yeah. And this is probably if we want to talk predictions and maybe we'll do that in the final episode of the year two, let's see what we have on the agenda. But I think price transparency is going to be a major theme in 2026. I think consumers demand it and the the platforms are like I also I look at price trackers all the time. I look at um in Europe there's idealo. I don't know how you would say that in English. Idealo? Ideal. Idealo. It sounds funny doesn't it? But um yeah but this is a big value proposition of agenda commerce in the first place is tracking prices, acting on on prices when a real price dropping with with with with the eye in some way, way, shape or form. So it's one of the early use cases um Amazon's doing it, Google's doing it. And so I think that that question could get resolved in the earhead which is a interesting like it's a great proposition as a consumer and it's a terrifying proposition. Super terrifying as as a retailer or a brand.

SPEAKER_00:

By the way we have to show the meaning Okay yeah we'll get on that let's make sure yeah I loved my ass really really good one.

SPEAKER_01:

Yeah.

SPEAKER_00:

Mike man this was longer than than planned right? Oh boy. Well there's a lot of data so about the Black Friday yeah it it's worth it. Yes. What's what's what's uh the summary what's the exact summary?

SPEAKER_01:

The exact summary was that um we we we hit the numbers at a cost at a at a terrible price. No it's I mean really the advertisers seemed motivated um to spend they there was a I think they kind of brute forced this the demand was there um but the competition was even more there and it was and and it was to be honest I think everyone talks about the revenue figures and it was a good year but it was it was out of cost. It came out of cost.

SPEAKER_00:

Yes really the the concept of diminishing uh r returns with regards to of course in in that context I think gross margin it it's just every euro growth you you you realize this year came came at different cost but and I hope I really hope that there is some some way of a turnaround with with the CPC um development because I'm I'm really worried I'm not kidding for this middle of the pack online retailers they're doing a great job but the watchest is just limited. Yeah um CPC is directly leading into cross much. Yeah unless you have some uh I don't know rabbit you can pull pull out of your head with regards to your conversion rate but this is not that easy so I hope for honestly uh a different picture next year I would be very happy with maybe similar revenue numbers to this year but at at at lower costs for instance.

SPEAKER_01:

Yeah same same I mean yeah just that improved efficiency. Yeah I used to say I used to say it's time to stop worrying about CPC so much. Let's focus about your value per click, your revenue per click. But that was then and like CPC is is a topic right now.

SPEAKER_00:

It's it's a topic and I for what it's worth and and they probably won't care that much but I I I talked to two high high Google reps and they asked me what what is the one big concern I have and I said look guys it it's not even about us as a partner for retailers of course yes we we care a lot but it I think it's also potentially threatening the the the long term overall business model of Google. If if they lose this this middle of the pack online retail right this backbone. Yeah and I think the high CPCs um increase the press and the pressure so much so I hope to see a slightly different big picture next year. Same. Looking forward to hopefully an episode then next year.

SPEAKER_01:

Yeah yeah let's why not yeah let's aim for it let's aim for it let's aim for the stars Chris Mike it's outro time let's kick it off let's kick it off and kick us out yes all right it's time yeah all right this has been another episode of Growing E-Commerce brought to you by Smarter Ecommerce also known as SMEC to learn more visit smarter ecommerce.com where we have all kinds of great free tools and resources like Market Observer and um see you soon.

SPEAKER_00:

Yeah see you soon again if you enjoy this podcast please give us a shout out share it with a friend we really appreciate it and give me a feedback uh um with regards to my haircut yeah I'm a bit I'm unsecure now it's you like it right it's not the Edgar cut it's fine I thought it was the Edgar cut all right thank you ladies and gentlemen