General / eCommerce Discounting: The Long-Term Impact

eCommerce Discounting: The Long-Term Impact

Andy Thorne
graphic collage of ecommerce website pages and piles of coins

What are the pros and cons of eCommerce discounting? It’s a quick fix that can certainly drive sales up in the short term, but at the risk of devalue your brand long term. Unless you proceed with care, using discounting methods that work.

Online retailers use a variety of product discounting methods, as the quickest way to attract attention and increase lead conversion. This is the era of constant ‘BOGOFs’(buy one, get one free) and year-round ‘Sales’.

It’s a marketing and sales ploy that has its pitfalls.

This guide looks at the ways it can harm your brand and how to structure eCommerce discounting to support your business goals.

Why discounting can be counterproductive

There is considerable hype for such things as Black Friday, Cyber Monday and the January Sales. These are traditionally when both clicks and bricks retailers offer a range of products at much-reduced prices. However, eCommerce discounting is now a year-round activity, as online shops compete for attention and sales.

One of the primary problems is that consumers are increasingly savvy about this. If retailers lower prices at certain points in the year, consumers simply wait and buy then. Or, during the year they place things in their website shopping cart then keep checking back for a price drop before completing the transaction.

Another ‘loophole’ is when customers unsubscribe or let subscriptions lapse, then create a fresh registration to seize special offers for first-time customers.

How your brand is devalued

There is also the question of consumer trust. If you sell something for £30, then it reduces to £15, there is the perception that your starting price was a bit too high; and cheeky attempt to get customers to pay ‘over the odds’. The perceived value of your product falls.

There is much written on brand integrity and protection, convincing your customers that your products are worth paying for and provide genuine benefits. Cutting down prices can seem like a lack of faith from you, in the value of what you sell.

Then there is the wider dynamic – sales fatigue! Promotions of ‘10% off’, ‘nothing to pay with 18 months free credit’, ‘two for the price of one’ and so forth, are now an everyday occurrence. Customers have seen it all before and almost expect such ploys to be offered. You could end up being a slave to constant price cutting, damaging not just your brand but for your profit margin too.

Strategic ecommerce discounting

First, you need to have a robust brand that you back up constantly, drawing attention away from price to the added value of your products. Show they are worth every penny! Then, create an eCommerce discounting strategy that is measured and logical.

For example, offering a discount for customer loyalty can be highly effective. It encourages them to buy more, or more often. It also gives new site visitors a sense that you will reward their custom.

This links with offering discounts when customers order multiple items or bulk buy one item. You are showing that the lower cost is connected to their behaviour, not to the value of your products.

There are other ways to use eCommerce discounting in a clear and relevant way too. For example, reduce the price of end of season items, to make way for new, exciting stock! Or, show that lower prices are available for new customers so they can test your products, and see for themselves that they are worth their normal price.

Another way to boost sales while protecting your brand is to offer free delivery, possibly for a limited time or when a spending threshold is reached.

A lot depends on your product category too. Ecommerce discounting can be used to great effect in developing affinities with third party organisations and influences. This can create a whole new audience for your virtual shop, maintaining your product integrity by making the low price a ‘reward’.

For example, followers of a social media influencer get a percentage discount using a code, NHS staff get a discount or members of a relevant organisation secure discounts as a perk of their membership.

The litmus test for successful ecommerce discounting

So, there are ways to make eCommerce discounting work well for your long term growth strategy, by rewarding customer behaviour and showing sound business reasons behind your lowered price.

Ask yourself, will this discount create a positive customer experience, without damaging my brand? Will it encourage a positive response, without lowering the perceived value of products?

Get in touch for help formulated a successful eCommerce discounting strategy (at the right price).