Egypt’s Black Friday: Paradise for customers and calculated loss for businesses

It seems like only yesterday when Black Friday was only a concept we became familiar with in Hollywood movies. Traditionally being the Friday right after Thanksgiving, when US customers do most of their Christmas shopping, it didn’t seem like it was even culturally fit to be exported to countries where Christmas isn’t as big a deal as in the US.

However, golden business opportunities don’t know cultural boundaries. And so, out of the blue, Egypt got its very own Black Friday, around the same time of the year as the US. Initially, it was launched in the wake of the floatation of the pound in November 2016 and the subsequent decline in purchasing power of Egyptians, according to Al Ahram, but it soon expanded to include almost every retail, lifestyle and even luxury brand in the country.

In a recent session by the AUC V-Lab, bringing together Jumia’s Chief Marketing Officer, Karim Ahmed, Cofounders and Managing Partners of e-commerce fashion brand In Your Shoe, Amr Qashty and Ezz Tarek, and CEO of shipment company R to S Logistics, Mahdy El Olaby, the story of Egypt’s Black Friday was brought under the spotlight, further focusing on how businesses and consumers can make the best of it.

“The Black Friday season is one of the most important seasons in the market now. Three or four years ago, this season was exclusively on e-commerce platforms, and people bought mostly physical goods [not services],” explains Karim Ahmed of Jumia. “When offline markets, like huge malls, started doing their own Black Friday activations, the concept became too widespread, and now there isn’t an industry that doesn’t do Black Friday offers – I mean even personal trainers now have Black Friday offers.”

It’s simple to understand what consumers may be getting out of it; products and services for a much cheaper price. But what pushes a business or a startup to go all the way in with their Black Friday offerings?

“Part of [Jumia’s] objectives to launch big Black Friday campaigns is to actually satisfy the customer,” explains Karim. “Since we work with a lot of vendors, we can’t really give aggressive discount prices all year. So Black Friday is an opportunity for us to satisfy our consumers with offers they would like.”

As nice as that sounds, we all know that nothing speaks louder than profit in the world of business. How is profit attained when you’re selling at a loss?

Customer acquisition

“The main objective is honestly to acquire new customers,” adds Karim. “Many people are reluctant to try e-commerce services, and a lot might not even need e-commerce because all the products and services they need are physically close by. But when they see a great offer that they want, however, it’s the time for us to acquire the customer.”

Seconding that notion is In Your Shoe’s Amr Qashty.

“In November, customers go on a shopping spree now. As a startup or a brand, if you don’t do Black Friday offers, you’re missing a huge opportunity to acquire a customer in a cheaper cost acquisition. This helps later when customers come back for more purchases. “

With thousands, if not millions, of customers taking advantage of Black Friday offers, attempting to understand how successful the customer acquisition process has been becomes a challenge. A simple formula solves that dilemma.

“Following the initial purchase, we do our calculations on what we call Customer Lifetime Value. Now after we have invested this money through the offer in that customer, we ask ourselves: did we give him/her the right experience? Is the cycle fully complete? Did we find the right offers to give to that customer a while later? Did he/she come back and purchase again? This is the full journey. If you manage to acquire them and have them come back, then your campaign was pretty successful.”

Another factor, according to Karim, can greatly impact a Black Friday campaign’s chances of success.

“It’s about the ‘top-of-mind’ concept – when you start first, you always become foremost in the customer’s mind. In the past two years, we started three weeks earlier, and sometimes we extend for 2-3 days based on consumer feedback,” recounts Karim. “These extensions also present an opportunity to our vendors to make multiple offers through the campaign. That works for us because we’re a big market place with over 5 million products, it may not work for others.”

How to prepare?

The explosion in orders around that time of year poses a critical logistical challenge, not to mention the challenge of deciding what goes on offer.

“Before Black Friday, you have a long time to prepare based on insights from customers: products that are too expensive for the average customers; products that customers want but there’s a shortage of stock,”explains Ezz Tarek of In Your Shoe. “So you have an idea of what the expectations are, and you work on your offers accordingly.”

When it comes to delivery, “we prepare in advance, internally and with our partners,” explains Mahdy El Olaby of R to S Logistics.“From mid-October every year, we start approaching veteran brands, like in Your Shoe and Jumia, we hire more people to handle the extra load, which can reach five times the normal daily work load.”

“If we fall short, their effort would go to waste. If we do well, then we complement their investment, preparation and planning they’ve put into the whole thing,” adds El Olaby, further promoting that big retailers should work with more than one delivery partner. For one, it helps them ensure all deliveries are met on time, and a second advantage is that it gives them a benchmark upon which to measure the performance of the delivery partners.

Cash or card?

It’s no news that Egyptians mostly try to avoid non-cash payments. Even with the government aggressively pushing for adoption of digital and electronic payments, it was only Covid-19 that dramatically pushed the adoption rate up.

“We’ve seen an increase of adoption of digital payments this year due to Covid-19, bigger than any other year, at 25%,” says El Olaby. “I’d say its equivalent to the preceding 3-4 years. This is very healthy. It’s much easier for me to deliver a prepaid order, as opposed to receiving cash, storing it, and starting a reconciliation cycle to the merchant.”

Another issue posed by cash-on-delivery, according to El Olaby, is that whenever an order is late, customers immediately become more reluctant to receive it, and they may even end up spending the cash they’ve kept aside for it.

“The intent is more serious when it’s prepaid,” says Karim. “And the consumer’s perspective is that they’ve already paid the price and now they’re waiting for what’s [already] theirs.”

“In the MENA region, we invented cash-on-delivery. In most other markets, there’s only prepayment. Sooner or later, we’ll need to do the same. People just need to get comfortable around online payments,” adds Amr.

All the session’s participants are firm believers in Black Friday’s potential for any established business or new startup, calling upon all players in the market to take advantage of it to the absolute maximum, armed with a solid logistical plan, the right forecast and full internal alignment with that forecast.

“Egyptian startups were very smart to take advantage of the Black Friday hype. I think it’s a must for any business to try to make use of it – if they manage to define the right angle to make their debut in the season. I don’t see any good reason not to join Black Friday.”

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