Shopping events

Today is Black Friday, and next Monday is Cyber Monday; both are shopping events which customers can enjoy some attractive discount rates when shopping. In China, the biggest shopping is on November 11th, almost every year broke its previous revenue record. Why do companies collaborate with each other and create these large scaled shopping events? (Not only companies within the same sector collaborate with each other, but companies across countries and sectors also collaborate with each other)

A massive shopping event can affect customers’ decision making. During a massive shopping event, customers are suddenly offered a lot more options; customers have constrained abilities to make perfect judgment when receiving too much information. In addition, companies can sell off their outdated products and start to sell new products after shopping events, this can boost companies’ sales and reduce the costs of holding old products. Furthermore, because people are paying too much attention to shopping events, they do not pay attention to the pre-event prices carefully, so they may not actually enjoy the discounts they deserve (since some retailers may increase prices before events and then put discounts on the increased prices). Furthermore, when others are buying, an individual is likely to follow others and also buy things that he or she may not actually need. This could be explained by the herding effect.

Overall, because of the incapacity of individuals, when a shopping event is becoming larger and creates more information and draw more attention, then it is actually easier for retailers to make more profits.