Though Black Friday kicks off this week, it seems customers and brands alike have been in a holiday shopping state of mind for the better part of the last month.
A longer promotional period would suggest a bigger sales opportunity for the holidays. This is especially true since there are only 26 days between Thanksgiving and Christmas this year versus 32 in 2018. According to Adobe Analytics, customers spent $6.2 billion online on Black Friday in 2018, nearly a 24% jump year-over-year, and Cyber Monday also broke records with its staggering 19% yearly increase to $7.9 billion. But with almost a full week less to sell, brands are simply trying to do more with less.
Still, in the past brands like Gap have suffered greatly for their reliance on discounts. Once they trained the customer to buy on sale, those consumers never went back to buying full-price. Though that has been less of an issue for beauty and wellness brands, companies do need to make the holiday shopping season work for them beyond a one-and-done purchase. This is especially true of companies with significant DTC sales.
“It can be a downward spiral,” said Zak Normandin, founder and CEO of Iris Nova. “When a customer gets 15% off from West Elm and Pottery Barn every day, they come to expect it and it eventually devalues your product.”
Online sales continue to climb for holiday — in 2015, only 52% of customers did their shopping via e-commerce sites, whereas today, it is 59%. Still, brands need to safeguard themselves from being overly promotional and gimmicky, regardless of the channel. The key is to use the increased attention of Black Friday, Cyber Monday and every Christmas-timed sale to get fleeting eyeballs to convert into long-term customers.
Iris Nova’s beverage brand Dirty Lemon has created a Platinum VIP membership tier to offer to its superfans on Black Friday. For $5,000, customers will have unlimited access to Dirty Lemon products for their lifetime. This will only be available to the first 100 shoppers. It will also introduce an upgraded version of its VIP program, which currently boasts around 75,000 members. Members can get unlimited Dirty Lemon products every month for $100 per month plus tax. Currently, a monthly case of products for VIP members is $45 and it costs regular customers $65.
“It’s not traditional, especially when this is a time when shoppers are looking for deals, but we wanted to reward people who want the benefits of our products over time,” said Normandin.
Normandin approximated that if someone in their 30s had a daily Dirty Lemon beverage well into their 70s, the cost of the $5,000 membership would be less than a dollar a day.
“If you are able to define the lifetime value of a customer and their consumption over time, that shows you aren’t just pulling for their attention on a one-off basis. It can be very destructive to your business if you don’t approach your brand that way,” he said.
Birchbox, too, is trying its hand at added benefits for its customers for the holiday season. Between November and Christmas, the beauty company is offering Glamsquad services with a purchase of a six-month beauty gift subscription (two complimentary blowouts) and a 12-month subscription (two complimentary blowouts and one makeup service).
Though Birchbox has never incorporated beauty services into its subscriptions before, it is something that Amanda Tolleson, Birchbox chief customer officer, said is top of mind for shoppers during the holidays since they are going to events and parties.
“We’re in the business of creating relationships and not just thinking about holiday sales on their own,” she said. “The idea here is that you can give a gift to a friend and create an experience to make your own holiday better, too. We want to reward our shoppers as much as they are rewarding a recipient.”
Birchbox has also layered on a “25 Days of Cheer” program, offering free prizes and giveaways on its site daily to boost traffic. The first prize is a four-night stay in St. Croix. Tolleson said this is a way to gamify the shopping experience.
“This isn’t a sales opportunity, but prompting customers to come back every day to see what added benefit they could receive,” she said.
Tolleson said that when Birchbox did not incorporate this kind of traffic driver to its holiday 2018 strategy after running it for two years, it saw a double-digit drop in site visits from 2017. In 2016 and 2017, the “12 Days” promotion drove 820,000 site visits and 670,000 giveaway entries.
Beyond this, Birchbox will offer tiered discounts of 15%, 20% and 25% off beginning Wednesday through December 4.
For Birchbox, all of these tactics are meant to increase holiday shopping among its 1 million global subscribers. Last year, 55% of sales came from subscribers during holiday. Tolleson expects that number to rise to 70% this year.
For Dirty Lemon and Birchbox, the lion’s share of their sales is done via their e-commerce sites. However, for the first time this year, Birchbox has a partnership with Walgreens that involves selling gift cards in 8,000 stores and displaying holiday fixtures in 500 locations. Birchbox’s full-service offering is only available in 11 stores.
For beauty and wellness brands that have a bigger retail partnership, this gets trickier. K-beauty retailer and brand Peach & Lily is offering a 30% off sitewide deal on its e-commerce site, but its Peach & Lily Collection products, which are sold at Ulta, are not included. Three of Peach & Lily’s sheet masks are available as a gift with purchase, when a customer buys a Collection item on the site.
Though Peach & Lily, which hit $30 million annual sales in 2018, sees around a 1,000% increase in new eyeballs on its site during the holiday shopping season, it too decided to avoid devaluing its Collection products by discounting them.
“This is always going to be full price, because [traditionally] it’s a $180 formula, and we knew we couldn’t pass that expensive price down to our community,” said Alicia Yoon, Peach & Lily founder and CEO, using its hero Glass Skin Serum that retails for $39 as an example. “It was more important to create this everyday value than promoting it on sale.”
However, Peach & Lily Collection is on sale at Ulta on Black Friday and Cyber Monday.
“It’s a limited time frame, but it’s a compromise we were willing to make when we decided to partner with a retailer,” she said. “We went into this eyes wide open, and we didn’t say, ‘We are going to sell with you and not play by your rules.’”
Like Normandin, Yoon is trying to dodge a promotional culture around its branded products and is hoping the brand’s built-in community efforts are the draw for Peach & Lily junkies.
