Black Friday: Big Biz vs. Small Biz
There has been a lot of talk in recent weeks about Black Friday and the heavy discounting. How are big businesses managing to slash prices so drastically? And why are small businesses matching this?
As owner of Little Hotdog Watson I understand small business well but I also worked in big businesses for most of my career. The below is a summary of the key differences between Big and Small Businesses and why Big Businesses can afford to discount so heavily. Hopefully it helps to dispel some myths and inform you to make purchasing during this period less stressful.
Big Business runs on a 50-80+% margin Every high street retailer and large onliner retailer will have a margin closer to the upper end of this scale.
Small Businesses run on a smaller 20-50% margin. They are running a leaner ship with less meat on the bone
2. Planned Discounts vs. Consistent Pricing
Big businesses are planning Black Friday into their prices for upto 1 year in advance. It’s built into the margin. Small businesses create a product work out a fair price and stick to it. They are not over-inflating the margin, nor are they increasing prices 28 days before Black Friday so they can get around legal loopholes for discounting.
3. Profit Focused vs. Family/Employee Focused
What do I mean by this? All that extra profit that big businesses are generating is staying at the very top levels of the business. It’s going directly to Top Management and Shareholders in excessive bonuses. It’s not filtering down through these larger companies fairly to the average worker. In smaller businesses the money is more fairly distributed and it’s very clear which family/employees will benefit.
4. Clearing Stock vs. Made to Order
Here’s a huge difference between Big and Small businesses. Big business are using Black Friday to clear stock that is either underperforming or they have simply bought way too much off. This in itself shows the huge amount of waste being bought by big businesses. Small businesses on the other hand are either creating specifically to order OR are simply buying smaller quantities so there is no excess.
I hope this helps to explain the key differences. There are very definitely bargains to be had on Black Friday from both big and small businesses and some of them will be genuine. It’s important to remember if a small business does do a Black Friday deal it is a huge undertaking for them. Often they are doing this as a thank you for loyal customers, or perhaps in exchange for an email address or a share on social media.
For Big Business Black Friday shopping do your own research and check the prices 2 months ago not just the week before.
Happy shopping and if you have any questions please do shout or ask below!!
PS. In case you are wondering Little Hotdog Watson newsletter subscribers will be receiving an email at 8pm tonight (Thursday 22nd 8pm) for a special Black Friday thank you. If you're not signed up to the newsletter you can do that here.