Does Black Friday Hurt Micro Businesses?

Black Friday is the worst best idea that capitalism ever had. Let’s start with this though – do you even know the origin of the term “Black Friday”? When I was a kid I remember thinking it must have something to do with Black people, but I could never figure out why that would be the case, or why everyone seemed to be okay with that. Later when I learned that it’s because it was designed to get businesses out of the red (negative financial territory) and in to the black, things made a lot more sense. (Context note: positive numbers in finance reports are black, negative ones are red, or in italics, or in parentheses, or some combination of these).

As a microbusiness owner trying to comply with “minimum advertised pricing” (MAP) rules, black Friday is a slap in the face – an even harder slap than the rest of the year when big online retailers routinely also don’t follow MAP rules. On Black Friday not only are companies selling for cheaper than what is supposed to be the lowest price that we’ve all agreed to sell for, but they’re marking THOSE prices down even LOWER.

Why? Because they can. Except technically they’re not supposed to. Except manufacturers often decide to lower or suspend minimum pricing rules during holiday sales periods.

The end result is that companies are selling their products at sale prices even lower than I can purchase those products at my “wholesale” cost. I’m using parentheses around the word “wholesale”, because that too is somewhat of a joke. “Wholesale” pricing isn’t created equal – there are different prices for different buyers. This can vary based on a number of factors, but it’s usually dictated by the volume of merchandise a retailer purchases. So here’s a direct example:

Product: Cargo trailer to haul gear behind your bicycle

Manufacturers Minimum Advertised Price (MAP): $479

Price advertised by a large sporting goods retailer: $349

Price we can purchase the trailer at “wholesale” from the manufacturer’s distributor: $352, plus $15 flat rate shipping

And by the way – this was the week PRIOR to Black Friday. So not only are they selling for less than they’re supposed to be per the manufacturer’s dealer agreement that we are all supposed to be bound to uphold, but they’re also selling for less than I can even buy the product to begin with. I couldn’t match the price even if I wanted to without losing money. I’d consider selling for less than I purchased if I thought we would benefit from the person purchasing other things while they were in the store, but I’ve found that that is unlikely. Black Friday shoppers are PRICE BUYERS. They’re not interested in anything aside from the lowest possible price, regardless of anything else, period. If you haven’t had a chance to study up on different buyer types yet, this is a great time to do so – I’ve got other articles and podcast episodes discussing them as well.

For now, as I sit here typing this on “Small Business Saturday” while reviewing the numbers from yesterday, Black Friday seems like a farce. I sincerely hope that you all had different and better experiences, but at my bike shop our revenue was 57% lower than a normal Friday. Today isn’t looking much better, although it’s only 1230pm – so far it’s 42% slower than our average Saturday. This despite beautiful weather yesterday and today, which is a key factor for us as you can imagine. So perhaps it’s because everyone from this area is out of town or has family visiting and they’re just not thinking about biking?

What I do know is that I just read an article from my local NBC news station that said there were $9 BILLION in sales worldwide on Black Friday, compared to an average day in world commerce at just $2-3 billion. What I do know is that despite doing more advertising than we’ve ever done before, including several emails to our list of over 2,300 past customers, sales have been miserable. Maybe it’s not the effect of Black Friday on microbusiness, but it sure is hard to draw any other conclusion from here right now.

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