Breaking The Black Friday Fever

DollarsAndSense.sg looks at the latest shopping trend in Singapore –Black Friday.

Was your social media feed flooded with tons of discounted Black Friday deals posted by friends over the last week? Have you been receiving numerous spam emails suggesting that you should likewise be taking advantage of great promotional prices on Black Friday by retailers who have absolutely no idea what the event actually is?

What Is Black Friday?

Black Friday is a holiday that originated from the US, and it refers to the Friday that immediately follows Thanksgiving, which is a Thursday. In some (not all) US states, it is a public holiday. This makes it, in Singapore’s context, a “long weekend”.

Why Black Friday Works In The US

The reasons are pretty straightforward. Firstly, a “long weekend” means that people have time to shop, and more importantly, queue overnight for shops to open at 2am under the pretext of an incredible and more importantly, limited deals, which the shops are offering.

Secondly, Black Friday usually falls about one month before Christmas. Therefore giving more reasons to head out there and purchase “discounted stuff” which could easily be gifts for Christmas. At least, that is the justification.

Why Is Black Friday Coming To Singapore When We Have No Holidays?

A few years ago, most of us had no idea that Black Friday even existed. What has changed?

The biggest factor, in our humble opinion, is that online shopping has taken off in recent times in Singapore with US e-commerce websites such as Amazon now part and parcel of our overall shopping experience. This article from Mothership.sg explains easily how a pair of Levi Jeans can easily cost 40% less on Amazon.com as compared to a pair sold in a retail outlet in Singapore.

So with more Singaporeans shopping online on US websites, the Black Friday fever starts getting exported over to our country.

Some Microeconomic Tricks Which Takes Place During Black Friday

The economics of most sales in Singapore are usually pretty straightforward (NATAS Fair, IT Show, Furniture Sales), since the people conceptualizing them are never too creative.

1. Doorbuster

Usually, retailers simply take a few items (which they are desperately attempting to offload from their inventory anyway) and put a really good discount on them. This is known as “doorbuster” deals.

These items may sometimes be sold at “cost” or “below cost” prices, though there is a way for us to ascertain if that is indeed the case, or simply a marketing gimmick. All we have to do is google and search for the actual price of the items or look at the prices at which people are selling similar (but perhaps used) items online and we will have a gauge of whether purchasing such items are a steal or a scam.

In all fairness however, these “doorbuster” deals are generally a good deal in most situations. The purpose of these deals are to get you through the doors of the shops, or onto their main website.

2. Lack Of Information, Or The Ability To Assess True Value

People usually assume that deals in sales are value-for-money. Sometimes, it is as easy as marking up the price of an item to $80, before selling it at 40% “discount” at $48 to convince people that a deal is good.

Think about it just a little harder. The item is sold at $48 precisely because the retailer was unable to clear their stock at $80. So surely that should tell you something about the true value of the product.

More often than not, people fall victim to these “discounts” because they do not know the true value of the product, and hence rely on the ‘discount’ to justify their purchase.

3. Making You Queue Really Long…Works!

It’s a funny thing but chances are that waiting in line to snatch a deal somehow makes the deal a lot better than it actually is if there isn’t a queue in line. For example, think Hello Kitty in Singapore.

The same works for Black Friday. Because people have to queue and wait overnight to snatch the best deals during Black Friday, it somehow creates the urge for them to buy as much as possible to make their time worth. For example, you wouldn’t queue hours just to buy a simple coffee machine at $80. You will want to buy a TV, Blu-Ray Player, Sound System, Kindle and maybe even an X-Box console – just to ensure it was a worthwhile wait.

In the process, you probably end up buying a lot of things that are not really on any discount…and stuff that you probably do not actually need to begin with.

4. Retailers Utilizing Black Friday As An Excuse To Get People To Spend

The truth is that Black Friday is only meaningful for people in the US, who are able to spend their long weekend doing some pre-Christmas shopping. In Singapore, it has absolutely no meaning.

That has not stopped local retailers from swamping Singaporeans with ‘Black Friday’ deals. What was initially and primarily focused around electronic gadgets and appliances have now ventured out into other local favorite shopping areas such as food and holiday packages. It appears as if every single retailer just want to capture some of the Black Friday hype even if the discounts they are giving are no better than their typical everyday in-store promotion.

5. Once You Spend, You Keep On Spending

This is the best part about Black Friday that all retailers love. Typically when a customer commits to purchasing a product from a shop, or from an e-commerce website, he or she will be more susceptible to further purchases even if the discounts are not really that attractive.

For example, if you have already spent $1000 on a brand new TV and a state-of-art sound system, you will be more open to purchasing an additional Playstation 4 at $570. Once you purchased the Playstation 4, adding an additional Kindle for $150 would seem rather reasonable given how much you have already spent.

Most of us should be able to relate to it as we probably have experienced this before.

Remind Yourself Who Black Friday Is For

This article from The Atlantic says it really well. Remember for whom Black Friday is. Their answer to that question is that Black Friday is a day for retailers, not customers. The point made  is that people mistakenly assume that it is the best day of the year to spend. It is not.

For those of us who cannot resist spending on Black Friday, an easier way would be to tell yourself that you would only want to make ONE purchase on that day, not a few.

What are your experiences on Black Friday in Singapore? Are the deals you see even legitimate? Share this with us on Facebook.

Listen to our podcast, where we have in-depth discussions on finance topics that matter to you.