Black Friday or Margin Blackout? How Not to Give Away Your Profits This BFCM
Shopify merchants alone generated $11.5 billion during Black Friday/Cyber Monday 2024. But at what cost to their bottom lines?
Every year, merchants slash prices by 30%–80% on clearance products with poor sales performance.
And every year, many find themselves not just clearing out stock, but clearing out their profit margins in the process.
But we have the fix!
Here’s what you’ll find in this post:
- The Problem with Black Friday (and Why Most Discounts Destroy Margins)
- The Fix: A Smarter, 3-Tier Shopify Discounting Framework
- How Data-Driven Merchandising Beats Guesswork Every Time
- What If Retailers Rethought Pricing Before Inventory Started Piling Up?
33+ industry leaders reveal their proven merchandising tactics for supercharging
Q4 sales while maximizing profitability!
The Problem with Black Friday (and Why Most Discounts Destroy Margins)
Black Friday has become synonymous with panic promotions and deep markdowns.
The result?
A rush of sales, which often sacrifices profitability.
Here's how it typically unfolds:
- You see a competitor drop their best-seller to 40% off
- You panic and match it
- Then another competitor goes to 50% off
Before you know it, you're in a pricing war where everyone's margins disappear, but no one can afford to be the first to step back.
That’s even without adding inventory anxiety into the mix. Those boots that didn't sell in October suddenly feel like dead weight, taking up warehouse space.
Yes, we want more sales, but we want profitable sales. That requires putting real-time data to work to:
- Promote high-margin items
- Push market-specific favorites
- Clear slow movers strategically
- Keep new arrivals and hero products at full price
But it doesn’t have to be that way.
The Fix: A Smarter, 3-Tier Shopify Discounting Framework
Discounting itself isn't the issue — it's how you structure it.
A tiered approach to discounting ensures you move the right products, at the right price points, without eroding your brand value.
There are three main tiers you want to group your products into when it comes to discounting for any promotion — whether it’s BFCM or end-of-season deals. These are your:
- Clearance products
- High-margin products
- Hero products
Let’s take a closer look.
Tier 1: Clearance (Deep Discounts)
Tier 1 is where you group all your end-of-line or aging inventory that you want to clear quickly. Think last season's winter coats in March, discontinued phone cases, or sizes that never sold (all those XS and 3XL items taking up space).
Tier Goal:
- Free up warehouse space and recover costs from stock that isn't moving. Breaking even is better than paying storage fees.
Tier Tactics:
- Apply steep discounts, between 60%–80% (you're prioritizing cash flow over profit here)
- Use urgency tactics like "Last Chance," "Final Sale," or "Only 5 Left" with actual countdown timers
- Bundle with other products to move multiple slow items at once ("Buy any clearance item, get a second for $5")
- Don't overthink placement (you want to put these front and center to quickly move them)
Tier 2: High Margin (Modest Discounts)
Tier 2 is where you place your core products - those with 40%+ margins, that bring in strong profits, even with markdowns. Think bread-and-butter items that sell consistently.
Tier Goal:
- Maintain profitability while still offering a deal that feels significant to customers.
Tier Tactics:
- Offer smaller discounts between 10%–30% (a 20% discount on a 50%-margin product still leaves you profitable)
- Cross-sell aggressively with complementary items
- Feature these prominently alongside clearance to encourage combined purchases (the idea is to let clearance draw them in, then upsell to your profitable items)
- Use tiered pricing ("Buy 2, Save 15%; Buy 3, Save 25%") to increase cart sizes
Tier 3: Hero Products (No Discount / Bundle Only)
Tier 3 is where you place your new arrivals, best-sellers, or brand-defining products that customers actually seek out. They are the products that drive your brand reputation and long-term value.
Tier Goal:
- Protect brand perception and maintain full-price expectations, as over-discounting products teaches customers to wait for sales.
Tier Tactics:
- Resist the urge to discount, even when competitors do (this is how you protect long-term brand value)
- Include in strategic bundles only ("Buy this hero item + get 30% off a second item")
- Position as premium, must-have items with language like "New Arrival" or "Limited Edition"
- Use them as traffic drivers while generating actual profit from tiers 1 and 2
- If you must offer an incentive, use non-discount perks like free shipping, extended returns, or exclusive access
How Data-Driven Merchandising Beats Guesswork Every Time
Your instinct might tell you to promote your bestselling item, but data shows that this bestseller only delivers a 15% margin while a slower-moving product nets 60%. But data is the only thing that should be guiding your eCommerce merchandising decisions.
And not doing it is one of the most expensive mistakes a Shopify brand can make!
When merchants discount based on panic rather than performance data, they are stuck slashing prices on profitable products just because they "feel" like they need to compete. The result is tens of thousands of dollars of lost revenue.
On the other hand, here's what the data-driven merchandising approach looks like.
1. Sorting by Margin, Not Just Popularity
That hoodie everyone's buying might be your worst profit generator. What you want to do is pull reports showing profit per item, not just units sold. Here’s how to prioritize profit over popularity:
- Promote your high-margin accessories over low-margin bestsellers
- Make margin percentage your first filter when choosing what to discount
Remember that moving 100 units at a 10% margin earns you less than moving 30 units at a 50% margin!
2. Geo-Merchandising Strategically
Good Shopify location-based merchandising means being able to push:
- Raincoat promotions for Australians in fall
- And swimwear discounts for the United States in spring
All at the same time.
In other words, using location data to tailor your promotions to seasonal relevance, like this:
- Matching your featured products to local seasons and weather patterns
- Creating different homepage collections for different regions
…and not wasting ad spend promoting winter coats to customers heading into summer.
3. Checking Inventory Depth Before Each Promotion
A product with only XS and XXL left shouldn't be your featured discount item, no matter how popular it was.
What to do instead?
Run availability reports and only promote or feature products with healthy stock across your core sizes. This will ensure that you:
- Save limited inventory items for strategic bundles, not main promotions
- Send traffic to products you can actually fulfill
4. Promoting Intelligent Bundling That’s Backed By Data
Look at your "frequently bought together" data to pair slow movers with proven winners. That otherwise-stagnant belt sells when bundled with your bestselling jeans because customers actually want the complete look.
- Pair slow-moving items with products customers already buy together
- Use one popular item to pull in one problem product
- Price bundles so that customers feel they're getting a deal, while you move dead stock
If you have 100+ SKUs, doing this manually over BFCM isn’t a good option. The fluctuations in traffic, demand, inventory, last-minute promotions, etc., are just too high.
And yes, there is definitely an app for all that!
This is exactly what the Kimonix product-driven marketing platform is designed to tackle. And because it’s plug-and-play and works on the frontend, you can have it set up in minutes. Here’s just a taste of what our platform handles for you.
- A product sorting strategy that goes beyond Shopify’s generic defaults to integrate inventory, marketing, and behavior parameters in real-time.
Shopify Markets Geo-Location Merchandising
- One of the only options to automatically generate market-specific Collection versions (with unique URLs) on Shopify Markets without the need for a developer.
- The ability to multi-segment collections based on merchandising strategy rules, data, and analytics.
- One of the few sorting apps that enables advanced product sorting rules for site-wide product recommendations based on marketing, retail, and shopper KPIs.
- Includes built-in, automated A/B testing features to assess merchandising strategy in real-time.
- Merchants can monitor every recommendation element, using advanced analytics to fine-tune their strategies.
- Combining individual shopper behavior data with cohort insights to create highly customized email marketing campaigns.
Variants in Stock Sorting
- Dynamic sorting that prioritizes product variants (like sizes) based on current inventory levels.
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Final Thoughts: What If Retailers Rethought Pricing Before Inventory Started Piling Up?
Black Friday doesn’t have to mean a margin blackout. With smarter merchandising, retailers can drive sales and protect profitability at the same time.
But instead of waiting for the November panic, smart merchants are testing smaller, steady discounts throughout the year.
And there is still time now to do it!
Here's how it works:
- Identify products that typically end up in clearance
- Then test 10%–15% discounts in slower months like February or August
- And monitor sell-through rates and customer response
The result?
You’ll move inventory gradually, maintain healthier margins, and avoid the frantic "fire sale" cycle we've all come to expect each November.
Plus, you’ll enter Black Friday with less dead stock and more flexibility to compete with your bestsellers, without destroying profits.
If you’re ready to maximize profit all year round, not just on one chaotic weekend, it’s worth taking a data-driven approach.
Start your free trial and get expert merchandising guidance.
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