How can a single day boycott financially affect a business?


I get that it shows that people are upset. If you can cause a zero-sale day, that’s huge. But the business likely only cares about profit. Doesn’t that lost profit show up a day or two before or after the boycott? It’s not like people suddenly no longer need that stuff.

In: Economics

Maybe, maybe they go to a competitor because they don’t want to wait. Maybe they don’t buy at all because they don’t want to give the company money or no longer have the impulse to buy the object.

It’s all about affecting the news cycle. If the news is seen as troubling, the company might respond. But mostly, boycotts by a few upset customers do nothing.

In general it doesn’t matter from a financial point of view. People have run gas strikes and single day things many times and the impact isn’t really there. It only matters if the people that would have used that business skip a “round” of service.

Monthly, quarterly, and annual profits are going to be the reported numbers and unless those change it doesn’t really have an impact. A national/multinational company can secure short term (under 270 days) loans called commercial paper at virtually no cost. They’re extremely safe and so they have really low interest rates. Even if they had to sell a little more commercial paper, if they’re balanced a week later they don’t care.

Small companies (most are private), as well as large private companies won’t have those same obligations and typically would have more wiggle room because of that. Investors see that you’re being boycotted, they might care about the image but financially Mark Cuban doesn’t care if his Shark Tank chicken shop sells 125% Monday, 50% Tuesday, and 125% Wednesday. He cares that year over year they’re growing.

So again, unless the 1 day boycott actually drives lower overall revenue meaning lower profits, no one cares.

Now, the bigger impact would be the perception and media attention. A single day boycott gets picked up by national media and 0.001% of the customer base start to question that company and bring their business elsewhere? For a business that does 50 billion in annual revenue, that’s a loss of 50 million a year. So, the goal of one of these is to get attention so some people will reject that company moving forward.

The famous McDonald’s $2.8M coffee verdict (yes, I know the actual outcome was much different) was arrived at because it represented one day of McDonald’s coffee sales. That’s 1994 millions and sales, too. I use that example as one clearly tired to a day, which is otherwise hard to find.

In the right business, one day can mean a lot of cash doesn’t flow. But it probably wouldn’t make successful business struggle.

Walmart’s 2019 revenues were more than $500B, which is conversationally more than a billion dollars a day (the even distribution math isn’t reality, as not all days in the year are equal, but for discussion…).

Several things, though.

Walmart wouldn’t like to have all of that payroll and no revenue for that day, and possibly lose some perishables, but a lot of other work would be done, and overall it could afford the cash flow hit.

A one-day boycott would probably mean recovery in the following days. Those shoppers world wait for the tomorrow to get their groceries, or whatever, or maybe return next week if they went somewhere else today.

Walmart would notice, and probably say WTF, but for a day-long blip, probably wouldn’t really change anything.

Corner grocer or non-chain restaurant or other close-cutting establishment might not fare as well. Maybe for one day, but maybe not if people didn’t make up for it right away. Huge expenses in preparation and payroll might never get recuperated with the small margins they might be running under.

Correct. For example, a few years ago, people tried to do one day boycotts of gas stations. It doesn’t work that way because you’re still using the same amount of product over time. But now with this Coronavirus quarantine thing, gas prices are lower than they have been in decades, because *nobody is buying gas*.