Don’t Let Discounts and Deals Ruin Your Ecommerce Startup

July 28, 2016

8:00 pm

Sales, promos and special deals are every customers three favorite words. It’s hard to resist the temptation of checking out the most discounted offers when they’re sitting right there in front of your face.

But as a retailer or ecommerce business owner, you probably don’t get as excited. Sure, launching promos and special deals can bring you more traffic, but is the dip in your profit margins really worth it? Plus, an over-reliance on sales and deals could negatively impact your brand by exclusively attracting shoppers who are never willing to pay full price.

If you want to avoid these ecommerce pitfalls, give the next four approaches some thought before launching your next big sale.

Offer Promos To Frequent Shoppers First

As the saying goes – 80% of your ecommerce profits are likely coming from the 20% of your highest spenders. Instead of pursuing deal-hunters and budget-savvy folks, retain your loyal customers and frequent spenders with targeted offers.

Your loyal top-10% spends 3 times more per order than the lower 90%, and your top-1% spends 5 times more than the lower 90%. In fact, repeat customers will likely to spend 25% more during the holiday season, compared to 17% increase from one-time buyers. Identify the top spenders in your CRM and send out special discounts or coupon codes to them first.

Avoid Discounting Your Signature Products

Don’t put a discount tag on your flagship products. You’ll be able protect the margins for your best goods, while also avoiding the “deal-centric brand” taboo. Your customers will understand that you are offering a premium product for a respective fair price, not a superficially inflated deal.

“Keeping what you consider as premium items at full prices allows you to continue driving significant revenue during the sales season without compromising your entire brand,”says Roman Bonkalo, Manager at Comfort Side. “Your most popular and desirable items should never go on sale or be sold with a discount only once per year. Think how luxury fashion brands are playing this card. There’s always a craze in the store when Chanel or Hermes merchandise suddenly goes on a slight sale. Any retailer can adopt the same approach.”

Offer Conditional Free Shipping

According to ComScore study, 58% of shoppers purchase more items to meet the free shipping margin, yet 83% don’t mind waiting for a few extra days if the shipping would cost nothing.

Obviously, free shipping drives more sales, but can lower your margins as well. So, be smart with structuring your offers. Rather than making it the default, setup specific conditions for deal redemption, like a minimum order value to qualify for international shipping. Or free shipping for only for top-priced items or special free shipping deals for a limited amount of time.

Consider Added-Value Promotions

Special deals are not only about selling items for a lower price. For instance, you can offer a free product sample or small item with a large purchase. That’s an excellent way to get rid of the unpopular inventory.

Add value through personalization and bundle up with another service provider to offer relevant incentives to loyal spenders. For instance, when selling fridges, team up with the local grocery delivery for a 2-week trial subscription. That’s a win-win situation for all the parties involved, which is the goal of good ecommerce business.

Did you like this article?

Get more delivered to your inbox just like it!

Sorry about that. Try these articles instead!

Dianna is a former ESL teacher and World Teach volunteer, currently living in France. She's slightly addicted to apps and viral media trends and helps different companies with product localization and content strategies. You can tweet her at @dilabrien

  • Shares

Leave a Reply

  • (will not be published)
Startup_Mixology_300x250