👋 Hey, it’s Sundar! Welcome to a  paid subscriber only article of experiMENTAL: a weekly newsletter on B2C Marketing & data science how-to guides, frameworks, and stories from 15 years including early Uber. Free tier subscribers can continue reading for limited preview of the article.

Thanksgiving is my favorite holiday of the year. It’s an amazing combination of family, friends, and food (plus football for those that watch). It’s also the best representation of why I love America: gluttony, over indulgence, and polarizing political discussions. What a beautiful day. No seriously. It’s my favorite.

Every year as we carve the turkey, I can’t help but think about the poor brands that wait for Black Friday and how they’re just like the turkeys on the plate. They’ve been raised for slaughter just so advertisers and customers can feast and celebrate.

Below, we’ll explore the Black Friday/Cyber Monday (BFCM) journey from the perspective of a company planning around the 4 day weekend and why it’s not worth it.

The E-commerce cost structure

First, let’s step back into our favorite college class: Accounting 101. The cost structure of an E-commerce is one of the most unforgiving of business models, but it’s an important one to understand as to why BFCM is a money pit for companies.

Revenue: Product + Shipping revenue

Revenue a company generates based on what they charge the customer for products + shipping. This incorporates discounts and any other promotions.

Cost of Goods Sold (COGS): Cost of the product

Cost to make or buy the product that a company sells. Think of a T-Shirt that costs $5 to make and sells for $30. The $5 is the COGS.

Delivering costs: Shipping + Processing + Customer support

Cost of delivering the product including shipping costs, transaction costs (Stripe ain’t free), and costs to man a customer support team.

Marketing costs

The cost of advertising. This doesn’t account for Marketing staff costs.

Net profit: Revenue - COGS - Delivering costs - Marketing costs

The best ecomm companies have a net profit margin at 20% with the average at 10-15%. This means that for every $100 a company sells, they have $15 to spend on staff costs and other corporate expenses.

BFCM impacts every one of these line items.

The Black Friday journey

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