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Chapter 01
Navigating the Challenges of the Peak Season
It’s no secret that Black Friday and Cyber Monday (BFCM) are becoming more competitive every year, making it a challenge for brands to effectively stand out and attract new customers.
With growing customer acquisition costs (CAC), higher operational expenses, potential loss of sales and revenue, and thinner margins due to heavy discounts, it's clear that the BFCM 2023 season comes with its own hurdles.
Let's break down these pain points:
1
Slowing eCommerce Growth
During economic recessions, consumers tend to become more cautious with spending. Although total retail sales have seen a 15% increase since 2020 and are projected to reach over $31 trillion by 2025, the growth of eCommerce has been slower than anticipated, likely as a result. The World Trade Organization has predicted a 1% increase in global eCommerce in 2023—down 3.4% from their previous estimate.
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2
High CAC and Low ROAS
Another factor taking a bite out of merchant profits is Apple's implementation of third-party cookie policies in June 2023, resulting in a lower Return on Ad Spend (ROAS). Additionally, the average Cost Per Acquisition (CPA) for search advertising has increased, leading to higher CAC.
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3
Growing Operations Cost
As growth has slowed and advertising becomes more challenging, brands are also grappling with increasing operational costs. Challenges in the supply chain, like port congestion and poor shipment visibility, have led to higher 'Where Is My Order' (WISMO). Furthermore, the labor involved in managing returns, inventory, and logistics during a busy season adds to these costs.
4
Potential Loss of Revenue
The peak season sees higher returns than usual, which can lead to lost revenue. Common holiday consumer practices like bracketing and wardrobing—essentially, buying multiple variations of the same item to try at home—and return fraud only compound this issue. When brands commit to direct, no-questions-asked refunds and free returns to compete for a share, the potential for recapturing lost revenue diminishes further.
5
Thinner Margins
For most industries, Black Friday is a time for deep discounting. The holiday season often prompts brands to offer hefty discounts to encourage customers to spend with them. While this can boost sales volumes, it also cuts profit margins by reducing average order values (AOV).
While there's no silver bullet to solve these challenges, improving return on investment (ROI) can help ensure that brands are not leaving money on the table this shopping season.
Using technology to help you maximize your ROI
As you prepare for what might be the busiest BFCM season yet, you must optimize your ROI.
During the post-purchase experience—where we find some of the most overlooked areas for generating revenue—the right mix of AI and automation can help you improve your ROI in the short and long term.
Over the past four years, the number of businesses adopting AI technologies has skyrocketed by 270%. One space where AI is truly transforming business is eCommerce, where it's being used for everything from creating ad copy to streamlining customer service to optimizing order fulfillment.
No wonder eCommerce titans like Shopify are investing in AI to reshape the shopping experience. Today, tools allow you to use AI to create personalized buyer journeys, predict consumer behavior, and deliver real-time insights that empower businesses to make data-driven decisions.
But automation can also help you enhance customer experiences. It helps businesses reduce costs by automating repetitive tasks, freeing up time and resources. Automation increases operational efficiency and reduces the risk of human error, leading to improved accuracy and reliability in order fulfillment.
And our golden opportunity lies in that one-two punch of AI and automation together. Over the following chapters, we'll walk you through how to tackle the biggest BFCM challenges to maximize ROI through AI and automation.
Let's dig into how AI-driven personalization can help you boost revenue and outshine the competition this peak season.
Want to get a better understanding of your ROI? Try our free ROI calculator!
Chapter 02
AI-Driven Personalization: Increasing Revenue While Keeping Customers Engaged
One of the best methods for maximizing ROI for BFCM is to find ways to boost your revenue. With AI becoming more readily available for eCommerce merchants, you can use machine learning-driven personalization to engage customers and increase sales.
And this is something that experts in the eCommerce industry have understood and are implementing now:
“AI and automation give brands next-level intelligence to help them deepen their relationships with customers and promote better retention. Customers want to feel like brands know them. With AI-powered tools for segmentation, product recommendations, and analytics, brands can ensure that all of their communications for BFCM and beyond are timely, relevant, and engaging. And with automation, brands can personalize every touchpoint along the customer journey, from welcome flows when a customer signs up for your SMS or email list all the way through to winback flows to re-engage lapsed customers.
A few ways you can use AI and automation to retain customers this Black Friday are:
- Invite customers who leave 5-star ratings on a product to leave a review or activate a subscription via SMS.
- Use AI-driven segmentation to recommend products that a customer is most likely to buy when they typically make their next purchase.
- Set up flows reminding customers of their loyalty points total, points expiration, and tier status to encourage repeat purchases.
With AI and automation, brands can streamline marketing operations, orchestrate multichannel communication, and give every first-time BFCM customer ample reason to become a loyal brand advocate.”
Sara Pereda, Sr. Partner Manager - West Coast, Yotpo
To encourage customers to stay engaged and increase their spending, offer personalized product recommendations based on their interests. Imagine infusing AI-powered recommendation tools into key customer touchpoints—checkout, post-purchase, thank you page, emails, order tracking.
You're not just selling products but offering tailored experiences that align perfectly with your customers' interests. This elevates your brand with the power of AI and turns every interaction into an opportunity for delight.
Boost AOV with product recommendations
Picture this: Your customer has just finished checking out on your website and is redirected to the post-purchase page. An AI-powered product recommendation algorithm automatically suggests complementary products they might have overlooked during their purchase journey—and they can add it to their order with just one more click!
AI-powered product recommendations can include:
- Cross-selling items from other categories.
- Upselling a better version of what the - customer already bought.
- Offering accessories or special offers for their recent purchase.
Your customer just bought a DSLR camera? Recommend a tripod, memory card, or a camera bag. Recommendations increase the average order value and provide a personalized shopping experience that helps them feel valued and catered to.
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DIME Beauty, a skincare brand dedicated to offering affordable, clean, and effective products for various skin types, witnessed a 45% increase in average order value, and a stunning 60x ROI with the adoption of AfterShip Personalization's advanced AI algorithms to cross-sell across their website.
Recapture lost sales by turning returns into exchanges
You can also leverage the power of AI to transform returns into exchanges. This strategy can help recapture lost revenue by encouraging exchanges for other products instead of refunds. To maximize the effectiveness of this strategy, AI-driven product recommendations also suggest best-fit products that are similar or related to the original item purchased.
For example, let's say a customer decides to return a pair of shoes. With the help of AI-powered product recommendations, we can suggest similar styles or even complementary items like socks or shoe care products. This not only enhances the customer experience by making the return process more convenient but also has the potential to boost sales and recapture lost revenue.
This will make it more likely for customers to select an exchange and help you keep revenue in your pocket instead of giving it back
“Automating exchanges took every problem away. It’s also saved a lot of revenue — saving us $125k in the last 90 days. Historically, those would have just resulted in a dead refund. That amount will only keep going up as we get more and more returns,” says Nikolas Callas, Director of Operations from Marc Nolan, an online shoe retailer specializing in modern classic men’s shoes.
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Get instant access to the BFCM report!
Unlock complete strategies for reducing costs and boosting revenue this holiday season.
Chapter 03
Automating Ops: Reduce Cost While Improving Customer Experience
Reducing operational costs without compromising on the customer experience is a necessity. Every dollar counts during the holiday season when you're already facing thinner margins than the rest of the year.
This is where automation comes in. With automation, you can reduce the time it takes to fulfill orders, resolve customer queries, and return requests without increasing headcount or expanding infrastructure.
“At ShipBob, we empower merchants to reduce costs by automating and streamlining operations ahead of peak seasons like Black Friday and Cyber Monday. Our platform enables the execution of critical tasks - from implementing fulfillment rules to dynamically displaying estimated delivery dates.
Automation ensures fast, cost-effective delivery, a key factor in keeping up with demand. That's why we advocate for proactive measures, including detailed volume forecasting, contingency planning, and investment in training. By doing so, merchants can confidently navigate even the busiest seasons, ensuring prompt product delivery."
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Kristina Lopienski, Sr. Director of Marketing Communications at ShipBob
Reduce WISMO inquiries with automated shipping updates
You can easily set up automatic shipping updates that quickly let customers know their delivery status as soon as they make a purchase, helping to cut down on WISMO inquiries. During BFCM season, customers tend to be more anxious about their orders arriving on time.
The right tools help merchants provide a seamless experience by sending automated notifications regarding order status and estimated delivery dates (EDD). AfterShip, for instance, developed an AI model to predict EDD for each shipment that’s typically 5-25% more accurate than the carrier’s promised delivery date.
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Vivino, the world's largest online wine marketplace, saw a 50% reduction in WISMO tickets with AfterShip Tracking’s centralized dashboard for real-time tracking of all orders and proactive updates to shoppers about their deliveries.
Save time with condition-based return workflows
Cost reduction strategies don't stop at shipping. You can transform the returns process as well. When orders are returned, condition-based return workflows and returns routing rules can automate the process—ultimately reducing your returns processing time.
For example, you can set up a rule that limits the options for return reasons based on the product condition. If the item is unworn and in its original packaging, you can offer an exchange or store credit instead of a refund. This reduces the time spent manually processing returns and helps increase customer satisfaction by providing them with alternative options.
Automation can also streamline customer service processes such as order inquiries, shipping updates, and tracking requests. Setting up automated email or chat responses for common customer queries saves time and resources, freeing your team to focus on more complex issues. AfterShip Returns also seamlessly integrates with AfterShip Tracking, making these automated notifications simple.
This means less time spent manually processing returns and more time focusing on what truly matters—growing your business.
“We focus on building relationships with our customers because Lume is a personal product. With AfterShip Returns, what used to take our team upwards of 8 hours a week to do, now only takes us 1 hour. I have a lot more time to listen to customers and make sure they’re happy with their purchase.” says Sarah D, Customer Service and Retention Manager from Lume Deodorant, a brand loved for its natural, aluminum-free products.
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Boost efficiency with inventory management synced with your 3PL
Another way to save on operational costs is inventory management. By setting up a returns management system and integrating it with 3PLs, you can reduce inventory mismatch issues due to returned products.
With the integration between the returns management system and 3PL, the returns data will be synced to the 3PL's shipping and warehouse management system, enabling real-time stock information and shorter restock lead times.
As a merchant, clearly understanding your inventory levels is crucial during peak season when stock availability can make or break a sale. By automating this process through integrations, you can minimize the time and effort spent on manual inventory management and focus on more critical tasks to drive growth.
Finding ways to automate your operations while delivering an exceptional customer experience can be challenging. Still, even small automation can save your business tons of time and money during peak periods.
Use our ROI calculator to calculate the return on investment you could experience using AI and automation.
Chapter 04
Enhanced ROI Is Just a Few Steps Away
If you're trying to maximize your ROI this BFCM, you're missing out if you're not using a powerful tandem of AI and automation throughout your post-purchase campaigns.
Driving higher ROI means delighting your customers with their shopping experience, boosting conversions, building stronger relationships, and finding areas where you can streamline operations. AI-driven automation and personalization can help you get there.
We'll leave you with these next steps for this BFCM season:
1
Identify areas of surprise and delight for your customers, especially in the context of holiday shopping
2
Use data insights to drive hyper-personalized experiences for customers and boost conversions post-purchase
3
Figure out some weak points in your internal ops and use automation to reduce manual labor
Once there, begin fine-tuning your BFCM campaigns and determining the winning formula to skyrocket your ROI—and if you need help understanding your ROI for this peak season, start with our free ROI calculator.
At the end of the day, BFCM has become more competitive than ever. And if you want to succeed during this peak season, you need to find ways to maximize revenue and reduce operational costs.
You've got this!
(Even if you don't feel like you do, AI-powered automation can help get you there.)
