eCommerceNews Australia - Technology news for digital commerce decision-makers
Story image
Expert Paul Waddy warns of risks in Black Friday reliance
Mon, 16th Oct 2023

The approaching season of Black Friday and Cyber Monday may not spell ripe success for all online retailers, warns award-winning eCommerce executive and strategic advisor Paul Waddy. Despite the traditional celebratory surge in sales, many businesses could be at risk of losing profits, heralding a cautious approach to the usually lucrative period.

Speaking on the complexities of the cyber-retail world, Waddy, strategic advisor to some of the world's most successful online businesses, warned, "There are plenty of retailers who make higher profits in October than they do in November - and there are also plenty who bleed money during this period." He outed this controversial stance, downplaying the excitement usually surrounding the period by likening it to a restful period for consultants such as himself, highlighting how even some businesses just bank on this period to make up for losses incurred throughout the year.

Waddy pointed out one of the fundamental flaws with retailers heavily relying on Cyber Week, stemming from a false sense of success it can breed in online retailers. Key business principles that distinguish good from bad businesses - training customers to wait for discounts, using price as a differentiator, neglecting profit margins and not building a consistent, predictable business - all falter within the Cyber Week perspective.

Commenting on the perilous position in which many retailers find themselves, Waddy said, " It concerns me how many online retailers are going through the bulk of the year making little to no profits, banking on a big November/December to pay the bills. What an incredibly risky business - and not a very valuable one at that."

The upscaling of marketing spend and downscaling of gross profits through heavy discounting leads many businesses to miss out on potential profits. An additional problem, as Waddy highlighted, is that "Easily over 50% of businesses I've worked with are recording COGS incorrectly, giving them a wildly fluctuating net profit." Waddy underscored the necessity for businesses to be aware of their gross profit, in turn leading to a better understanding of their net profit.

Finally, Waddy implored online retailers to not only rely on seasonal sales to nourish their profits. Instead, he suggested that owned channels should be doing the heavy lifting, such as email subscribers, organic socials and SMS lists. Urging businesses to rethink their strategies if reliant on sales to cover overheads, Waddy added, "If they have to go on sale to cover overheads or make the year work out okay, then they likely need to rethink their business, brand or product."

Paul Waddy, recognised among the top figures in eCommerce, has been on a mission to improve the people he works with. With a legacy encompassing inspiring positions as former CEO at The Horse and Head of Operations at Showpo, Waddy continues to foster eCommerce excellence through his platform, Learn eCommerce, sharing his proven strategies for business growth.