This week on the Friday 15 podcast…

Andy & Brian discuss whether Black Friday, Cyber Monday, and the holiday season more broadly drive sales in B2B. Andy shares how the season is like the Super Bowl where even if your television network isn’t showing the Super Bowl, it’s going to impact you in one way or another.

That said, we hear from one practitioner who says that they’ve tried holiday promotions to no avail.

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Brian Beck: Good morning, afternoon, I don’t want to say Vietnam, I want to say the world of B2B e-commerce, Brian Beck here with Andy Hoar. It’s the Master B2B Friday, 15… nice fall weather outside, it’s the end of October 2024. Everyone, we’re excited to talk today about the holiday.

Andy Hoar: So Brian, did you just finish your radio show or are you going to start your radio show? Are you spinning the hits?

Brian: I am. Actually, yeah, let’s spin the hits, I don’t have any good hits to spin here, man. So no, it’s an exciting time, lots happening, we’re getting to the end of the year, elections around the corner, my goodness, lots of change, so impacting companies around the world. So Andy, great to be here with you, we’re here for Friday 15, but let’s hit our news first, Andy, I don’t know if you saw this but MDM just released some research, MDM is the Modern Distribution Management company that does research and their partners, they just released some research around distribution companies spending less on industry events and what they’re referring to is trade shows. Those traditional events with buyers and sellers getting together to swap products and make deals and things like that and the fact that what they found in interviewing 200 distribution companies is that those folks are spending more on things like digital media and other things and spending less on traditional trade shows. To me, it’s fascinating to see this but I see it anecdotally, too. In terms of the companies that I talk to that go to those shows and I go to those shows, you go to those shows sometimes, these are traditional tools or industrial products and just there’s less business transacting there and I think that’s a sign of the new buyer. What do you think?

Andy: Yeah, I think part of the issue is that these used to be places where you would learn about new products. Well, you don’t need to go to a physical location to learn about new products anymore so you can do that online and so there’s still this online and offline one-plus-one equals three sort of situation. But these events have to be about people learning things and learning about new products, and this isn’t really a great way to do it unless the products are large and you’re showing tractors or whatever that’s different. If you’re just talking about stuff that can be done online, then I think you’re going to have more of a struggle to get people to come now. With our events, which are kind of regional events and niche events, we’ve actually seen a growth in those where people are going after local connections, very specific and particular areas of expertise, but broad industry events where we get together and kind of the CNBC thing, I think those are isolated now to very, very large events like CES and Dreamforce and stuff like that, or really large industry events. But it’s the small ones that are great, the really big ones are great, it’s the ones in the middle that kind of struggle.

Brian: Yeah, we’re seeing that for learning purposes and new areas of growth like digital and e-commerce, we’ve seen consistent growth in those events over the years. It’s really the traditional ways of doing business for changing and this is a reflection of that. So anyhow, let’s get to our topic today which is does the Q4 holiday peak matter in B2B e-commerce?

You know Andy, this is something we’re going to revisit every year. We talked about it last year around this time, and asked questions of our B2B audience because it’s such a peak, I mean I’ve lived this myself and being on the B2C side of things for many years, it’s a frenzy, everyone is really heads down. All your e-commerce and retail folks are working really hard this time of year all the way through the middle of December, almost end of December, because a lot of businesses make, they call it Black Friday for a reason, that’s where companies move into the Black, this is where they make their money in the retail sector. So does this impact B2B is the question… We found some data – this is some data last year that I’m sharing here for those of you watching, for those of you listening, you know the cyber five last year, cyber five being the five days between Thanksgiving and Cyber Monday set records, total sales of $38 billion, 7.8% year over year increase, it was the biggest, Cyber Monday was the biggest online shopping day ever in the United States, I’m talking about 2023 now, and shoppers spent $15.7 million every minute. It was a frenzy. Analysts expect a similar kind of growth this year. The economy seems to be changing every day here, but anyhow this is some data that eMarketer shared a couple of months ago, I think in August, indicating they expect a 9.5% growth over 2023, and this is November and December numbers $266 billion, 9.5% growth. In fact as of now Andy, this is an interesting stat, 24% of consumers have already started shopping as of early October, and you know it’s this deal thing. I learned this in consumer retail, 81% of consumers are looking for deals and discounts during the holiday, and you’ve got the retailers out there and Ecom and Brick and Mortar investing heavily in things like social media to drive all this, 69% of U.S. e-commerce decision makers plan to increase investments in social media advertising this holiday, meaning 2024. So the top two things they’re investing in, over other things like supply chain, AI, diversified digital payments, etc, they’re really focusing on social. Again, this all begs the question what does this mean, is this even relevant for B2B, right, any thoughts on any reactions to the B2C data, Andy?

Andy: Well, not surprising, I think we’ve seen a transition away from offline to online, the pandemic accelerated a lot of that. It’s not new. The question is how does this impact B2B? A couple of interesting notes: One is there’s always been a “B2 Big B” and a “B2 Small B” when we say B2B. There’s also B2B2C, so those are brands. These two things are kind of inextricably bound. There are some pure B2B companies for sure, heavy industrial, etc, it’s not like you or I are going to decide to buy a hundred thousand dollar earth mover for the holidays, or maybe you did. I haven’t. But the reality is these companies not only make B2B products, they make other products as well, so there are companies like Toro for example. They make business versions, industrial versions of things, like mowers for golf courses. But they also make consumer products, and so consumers are primed for these things, the companies are primed for these things. It’s inevitable that there’s going to be overlap, so there’s the B2B kind of B2C, B2B2C, B2 Small B kind of a block. But there are companies that straddle those both. I mentioned Toro, Home Depot, Lowes for example, you worked at Harbor Freight Tools, you guys are mostly B2C, but you have B2B as well, so that’s on the sell side. But on the buy side, you’ve got people who put on this hat as consumer, and they would expect them always to take it off and put a new hat on for B2B, and it’s just not the case. So we live in an attention economy where you get emails all day long, you’re seeing deals, etc, and so if you see this as a consumer, there’s just too much opportunity for B2B companies to capitalize on that being primed for that. So whether it makes sense to do it or not is a different issue, but I think it’s inevitable and it’s inarguable that it’s actually happening because there are companies where we’ve seen it. Amazon’s an example of this. Global Industrial is an example of this – they serve a certain audience. Amazon Business, they’ve got consumers, people are paying attention to these things, so they can’t help themselves. But again, whether they should do it is an interesting discussion, but are they actually doing it? I think it’s an unequivocal, yes.

Brian: A lot of this ties in to your point, that the majority of buyers are either Gen Z or millennials now. The oldest millennials are now in their 40s, they are the majority of your B2B buyers, our younger folks who are all digital natives, to your point about the behavior, the consumer behavior, the consumer, the B2B buyer is a consumer who is a digital native and there is some level of expectation that hey, during this period of time, I want e-commerce deals. We just saw that data a second ago – 81% of consumers are looking for deals and discounts during the holiday. So yes, is this relevant, you know, of course it’s relevant in that regard. The question is what would B2B companies do about it. So we asked that.

Andy: One thing to mention about this is that obviously we need to point out there are two different types of buying scenarios in B2B. There’s planned spending, which is like spec-ing kind of spending, and then unplanned or spot spending, this doesn’t affect the first one. That’s not real, I haven’t seen evidence.

Brian: I’m not so sure, I’m not sure about that, but go ahead.

Andy: Somebody’s going to build a building and they’re like, we’re going to have a sale and stuff, so it accelerates somebody’s building of building plans.I don’t know, maybe? But on the spot market, for sure, this is what we’re really talking about, it’s the unplanned spending, but there may be an argument for planned spending.

Brian: I’m not so sure. Let’s think about it. I know that on its surface that’s what it feels like, Andy, but remember that things change as you’re doing projects, and if you have a budget allocated, I think a lot of this is driven by timing and in budget cycles more so. I’ll prove it to you as we get further into our data here, but it has to do with, I think, the unused portion of budgets. And the fact of the matter is, those folks need to use that, and in the planned spend portion, that does apply. So those are budgeted dollars that are allocated to certain categories. So guess what, when the budget’s coming to an end if you don’t use it and it goes away. So that’s where I think we’re going to, we see a lot of this behavior manifesting, less to do with holiday, but we’ll get into that in a second. We asked last year – our community in 2023 – Do cyber Monday and Black Friday, the cyber five, have a material impact on B2B e-commerce sales, or just B2C? Well, 63% of the audience a year ago said, yeah, it does affect us while 37% said no. So the audience, the community of ours believes that this, there’s a real impact here. Here’s what Justin Rinaldi, director of marketing e-commerce at SafetySpeed Manufacturing said in our Forum.

Andy: Yeah, just saw him days ago, Minneapolis actually.

Brian: Oh, that’s right, he was in Minneapolis at our roundtable.

So Justin’s been very active in our community, thank you Justin for your contributions to the conversations. He said, “we see a slight increase in sales during the holiday period, primarily because a lot of smaller businesses have use it or lose it funds, and these are the main catalysts for cyber week spending.” Interesting, so more to do with budget. When I saw his quote, Andy, I asked myself the question, well, okay, but you know, use it or lose it, so how many companies actually have cycles that are annual? I asked, of course, ChatGPT, which is the authority of everything now, used to be Wikipedia, now it’s ChatGPT. I asked how many companies have fiscal years or calendar years, it said approximately 70% of US companies use a calendar year as their fiscal year, and this is especially common to Justin’s point among smaller companies and without significant seasonal variations, in their business. Andy, is this peak behavior really just an illusion? That it’s not about the holiday, it’s about budget cycles, what do you think?

Andy: I agree with you on that, but some of them kind of draw the line between the budget cycles and planned spending. So I’m building a building, and I’m going to decide, based on Christmas sales, whether I’m going to put certain wiring in the building, I mean that’s what I’m kind of curious about.

Brian: Andy, do you think those projects work perfectly and all the spend happens right when it’s expected to? No, that planned spend is allocated to budget years. And if your budget’s going away, you’ve got to use it. You’re going to buy it in advance, you’re going to buy it before the year’s out.

Andy: I do see that point about the budget cycles, and the user will lose it. I also think it’s the case that some organizations buy like consumers do, and they’re getting deals from retailers, let’s say, on products, and so what are they going to do? They’re going to think to themselves, “I got all these power drills at Home Depot on sale, and then yet I go over to Grainger and Fastenal and I buy the same power drills and they’re not on sale?” It puts pressure on Grainger and Fastenal to put those things on sale, to compete with the retailers.

Brian: I agree with that, I think some of this is also self-fulfilling, and it’s pulling demand forward. We used to say in the retail market, we want to stop discounting so much, we want to sell more at a regular price. Tthat was like the mantra of every freaking retailer I ever worked with, because everyone’s trying to get their margins up. Well, B2B seems to be giving away a margin that they may not have to, Andy. To your point, look at this, last year, Global Industrial offered, this is a Cyber Monday sale that I’m showing on the screen here, and for those listening, it says,
“shop, click, save 20% off, extended to Friday.” That sounds very consumer. The question is though, is this self-fulfilling? Meaning that they’re doing it because they think they have to, and because, obviously the majority of people think this is important, it influences them to put their own sales up, just to your last point, right?

Andy: Before, and they’re seeing your favorite thing, which is, they’re seeing people steal, ready for this, wallet share. They’re studying it and found that they’re losing to retail competitors on those particular days, and to blunt that, they’re doing this.

Brian: No, that’s a good point, and in fact, we looked at, we asked of course, right before our broadcast today, we asked ChatGPT, sorry, and everything, hey, does Amazon Business run deals during the holiday? And ChatGPT of course answered this, yes, Amazon Business often runs deals and promotions for B2B, including during the holiday season, because around major events like Black Friday, Cyber Monday. And while the promotions aren’t always as heavily marketed as consumer deals, they aim to support businesses looking to restock, upgrade, or prepare for their own holiday demands. Amazon Business is doing it, obviously Global Industrial here with this example. Rick Wingander said, who is the director of Integrated Marketing at Mueller Sports, and again, Rick, thank you, you are contributing frequently, we appreciate that, “B2B sellers provide promotional incentives to customers to make their own numbers before the end of the year.” Thank you for that, Rick. And we also got a comment from Dan Stepchew, who runs digital marketing, the senior guy at Zest Dental Solutions, which sells dental products. He said, “there’s a good enough number of customers who call on asking for Black Friday deals, so it seems there’s some spillover from the retail culture to justify some additional promotions and ad spend to capture that subtle spike.” He went on to say, this is how we do it – we integrate winter sale across all of our channels, the site, emails, SMS, social, social, this is a business, business company, and we send it to all our sales reps. So it’s not just digital, they send it to their sales reps to close deals, and pull forward repeat orders.The question is, is this self-fulfilling, and in some ways our community is saying, hey, we’re buying into this, and they’re putting out promotions in B2B, what do you think?

Andy: Well, this is interesting with the dental stuff, there’s a third reason for you to lose it, because people have deductibles that are going to expire at the end of the year, and so the dentist, that’s one of their busiest times of the year is at the end of the year, when everybody’s going to have their deductible flip, so it’s an accentuation of what you talked about with the user to lose it. I’m going to go back to Amazon for just a moment. Amazon’s kind of an interesting case study. And the chain of effects, because Amazon Business, when it was Amazon Supply, would never have kind of done this sort of thing. Because Amazon Business is now part of Amazon, and Amazon is doing this stuff, there’s subtle pressure on Amazon Business, either opportunistically or otherwise. And then of course Amazon Business because it’s such a large part of B2B now, is putting pressure on at least the dot-coms of the traditional distributors, like the Graingers, the Fastenals, and this is where you get this follow-on effect, right?

Brian: Yeah, that’s true, and this by the way, so these folks need to kind of feel like they need to participate, but not everybody does, I mean you think about, like we got this comment from Ben Geyer, the digital product manager at Caterpillar, what does Caterpillar make, Andy?

Andy: They make giant equipment, right?

Brian: He’s also a Forum member by the way, he said while some of our North American dealers take advantage of Q4 timing to put offers out there, any results have been insignificant. So I think there’s a lot of category variants in this behavior as well, even if they put out deals, if it’s something like a, I don’t know, like an earth mover to your point, you know, earlier, maybe it’s not going to move even if we do offer deals. So you know, we wanted to ask again, our audience, Andy, this year, what do you think is going to happen? So we asked the question, “Does Q4 holiday peak and consumer shopping impact B2B e-commerce?” And guess what, 78% said yes, this is a LinkedIn poll we just put up this week, 22% said no, no impact at all. I think you’ve got to look at your category and make a decision as to whether it’s something that’s meaningful for you. You need to look at your competitors and see if they’re doing something to your point so you don’t lose wallet share. But to me, the bigger driver in all this is more about budget. Any final reactions on this point, what do you think a business should do about this?

Andy: You know what, it’s just inevitable spillover because it’s such a large event, it reminds me of the Super Bowl. The Super Bowl is on television, every other network is just programming either really nitchy stuff or running repeats or what have you.Is everybody in the United States of America watching the Super Bowl? No, there are plenty of people who aren’t into football, but you can’t really be unaffected by it, right? And so whether you like it or not, you have to think about it. And I think that’s where B2B is with regard to the holiday season. It’s just such a large event, in addition to all those intersections we talked about, the gravitational pull is so large that you’d be almost forced not to try and take advantage of it, if you can, like Ben’s point at Caterpillar, $300,000 back hoes or whatever it would cost is not going to be affected by it. But there are adjacencies here and maybe some parts of the business are affected by it.