E-Commerce Promotions: Using Offers & Discounts to Stand-Out
For some brands, the choice of whether to use discounts and offers to drive online sales may be an obvious hard yes or no, for many justified and unjustified reasons. There are a broad number of strategic reasons for branching into incentives, beyond simply to drive total sales and meet revenue targets. When used effectively, offers can help to shift slow-moving stock, increase average order value, onboard new customers to your brand and products, or simply show your existing customers they’re valued. What has worked across your website may not be as engaging across your other e-commerce sites, or perhaps may not adhere to specific marketplaces’ offer guidelines, but with some research and understanding of platforms offers can be a great way to stand out amongst the online competition.
Getting started with online promotions and discounts
Promotions and offers to customers can take many different forms, from discounts to free samples, but most importantly should align with how you want your customers to perceive you.
Discounts are commonly either percentage-based (Buy two products, get 30% off) or a fixed amount (Spend £100, get £10 off) and the value of your products will heavily determine which discount option is best suited: after all, customers will consider the perceived value of your offering. Percentage-based discounts can vary from small incentives to get customers’ attention, to large discounts aiming to liquidate slow-moving or close to obsolete stock. Brands can also apply percentages to collections of products to encourage customers to try items that are new or less popular. Opting for a fixed amount discount can give rise to the feeling of missing out or wasting money if not used and can also be combined with a minimum purchase requirement.
The method in which the information is presented to the consumer can greatly affect whether the offer resonates with a shopper. Jonah Berger’s The Rule of 100 theory is often used to determine which discount type is most applicable to your products. His research has shown that a percentage discount will always appear larger than an absolute discount for items under £100. This is reverse for items with an absolute discount value greater than £100.
Scrolling through any search results page within Amazon, it is easy to be drawn to free shipping icons: in fact, research has shown that 73% of consumer are more likely to purchase items with free shipping, and 24% of consumers would spend more money to qualify for free delivery. With the rapid growth of e-commerce during 2020 and customers relying greater than ever on home deliveries, free shipping has established itself as a significant differentiator when comparing similar options. Unclear or considerable fees upon checkout are hugely influential in shopping cart abandonment too. Free shipping can be offered to specific customers or on a seasonal basis if desired, for example, those who have signed up to the website newsletter, or can be combined with a minimum purchase requirement to increase average order spend per customer.
Sometimes, discounting your product simply doesn’t make sense right now. For brands with a price point that can’t be moved much, or for brands opting for a premium feel, adjusting the price of your product may not be the right choice. Offering a free sample or gift can provide value to your customers in a way that aligns greater to your ideal customer’s values. Setting a minimum purchase requirement to claim the gift can still encourage an increase in average order spend, however, this strategy is often appreciated by loyal customers who have been waiting to try more of your products and can have huge long-term benefits for growing customer lifetime value (LTV) and loyalty. Alternatively, offering a gift can also assist with clearing a product that is slow-moving or has excess stock.
What are the benefits and drawbacks of utilising offers across marketplaces?
Benefits
Encourage additional purchases from existing customers
Increase average order value through incentives
Introduce products to new-to-brand customers
Capitalise on seasonal events, i.e. Black Friday
Clear slow-moving stock
Trial bundles to source valuable cross-selling insight
Grow customer loyalty
Drawbacks
If used haphazardly, can become unprofitable
Profit margins can fluctuate depending on the product volume
Can cause damage to premium brands
It may be difficult to plan around marketplace restrictions limiting what you can and can’t do
Offers may need to differ between marketplaces
How can sellers implement offers and discounts across marketplaces?
Implementing your promotional strategy can highly vary depending on the chosen platform. Launching your discounts and offers across your website can provide a great amount of flexibility and options but has limited reach, whereas marketplaces like Amazon and eBay can help merchants access buyers worldwide but offer limited control over campaigns and data. It is always recommended to research the available features on each channel before setting your promotional strategy.
Websites offer a wide array of options for setting promotions, therefore, it is imperative to choose the desired target audience, set the correct campaign scheduling, and the create suitable terms and conditions. All of these factors will determine how successfully the content, pricing and positioning of the campaign can engage with potential buyers. Customer-facing and business goals should also be considered when setting the call-to-action used in campaigns.
Amazon marketplace also offers a variety of options, including social media promo codes, percentage-based discounts, and free shipping. Lightning Deals, lasting between 4-6 hours, are also available to professional sellers if their products can meet the minimum requirements. This includes the listing featuring at least a 3+ star rating, Prime eligibility, and not being included in exempt categories. For special seasonal events such as Black Friday, Cyber Monday, or Prime Day, Amazon also provides sellers with the opportunity to submit special deals such as Deal of the Day.
Business sellers on eBay can use Seller Hub Promotions to create promotions that are suitable for their business. Different promotional strategies are recommended by eBay depending on your volume and price to help with maintaining the right profit margins. The options for sellers include multi-buy offers, sale events triggered on specific dates, order discounts for customers that purchase select items, or offers to buyers for one-of-a-kind product items.
Shopify’s platform, on the other hand, has exciting possibilities for using automatic discounting versus discount codes for select customers. This enables you to offer customers fixed-value, shipping or percentage discounts for products, variants, or entire collections within the store. Further customisation options help with setting specific dates for codes, the number of times they can be applied, and the minimum order amount. It should be noted that there is a limit of 20,000,000 unique discount codes that are applied to each store.
Don’t be afraid to use multiple strategies and channels, but always ensure that you tailor each strategy to its corresponding channel. With marketplaces having their own requirements and processes for registering your deals, it may make sense to segregate your content and customers. However, it all comes down to how you want your consumer to view you. Lastly, revisit your strategies frequently to tweak and optimise. With offers and discounts being goal-based, events or periods may arise that naturally create the opportunity for new offers. However, some tell-tale signs showing it may be time to look into your offerings include new product launches, large volumes of slow-moving stock for specific products, or joining a marketplace that has specific events such as Amazon’s famous Prime Day. Just because you haven’t participated before, doesn’t mean there aren’t ample opportunities to explore in the future.
Conclusion
Promotional campaign structures will vary for each brand, and although discounts and offers can be an effective tool, it’s important to be realistic with your goals. Scaling the campaigns will also vary depending on your goal: do you want to clear a certain amount of stock? Do you want to maintain a specific profit margin? By setting specific targets and objectives, brands can ensure that campaigns are managed and scaled properly to ensure goals can be sustainably achieved.
Campaigns that do not meet expectations are also an opportunity to extract the data and analyse what went well and what can be altered next time. For instance, a campaign may reveal an alternative approach to offers that works better with your existing branding, content, and online presence. You may even discover that offers that worked on one platform, didn’t perform so well on another.