Avoiding the Discount Trap

Tell the truth. As a new ecommerce vendor, or even a somewhat seasoned hat, were you in awe of the way you have picked up the essentials of running a business that’s essentially global in some respects? Paying attention to strategies such as marketing, budgeting, and developing ways to maximize revenues with a minimum of investment?

It’s a constant challenge, and as you shape your philosophy and brand, you’ll settle on a policy, if only internally, for striking a balance between luring customers with discounts and giving away the store.

The concept of discounting involves variables, for sure. The brick-and-mortar “sale” is far easier to generate on the fly, while an online shop that necessitates a physical and time-centered distance between you and your clientele involves far better planning.

It also begs the question you may not want to answer. Are you willing to take daunting risks just to gain customers?
​
Mid- to large-size businesses operate in a universe you can barely see through a telescope. They focus on margins, set-asides, long-term marketing plans, and ROIs at a degree you may realize one day. In the interim, a wholly different strategy applies to the average ecommerce biz.

Let’s say you’d like to experiment with a sales campaign using a coupon for one product. You know it’s an initial hook method and you’re curious to see if the product will move.

Now let’s say someone discovers it and thinks it’s the best thing since sliced bread, and shares it on Pinterest. Soon you have an onslaught of orders you can’t possibly fill. You could offer rainchecks, like the physical stores do, but if you have no reliable supply chain, that will end badly with a less than stellar rep and sour would-be customers.

That pitfall aside, you might switch to a standard percentage discount. That non-targeted shtick is easier to fulfill, right? Not so fast. The rules of economics remind us that margins are for the big kids, and that the effort you must expend in filling a spike in orders may not be worthwhile for the net revenues you bring in. And, customers may eye you as a permanent discount seller, which is never a good thing.

We all want to maximize a customer base. Advertise with integrity and an alluring price-slashing to stay atop the competition. But it can be a zero-sum game if not executed properly. And worse.
 
Up your game

Even the ecommerce giants shy away from gimmicky campaigns. Luxury brands typically won’t offer discounts. It’s not just an image thing, either—they are sensitive to the prospect of depleting their inventories of top-selling goods.

Thankfully there are some super smart ways to attract business with enticements. Consider these:

• Go easy on shipping. Hey, it’s a discount. And if not free, then comp half. Temporarily.
  
  
• Set up a loyalty program. Back-loading discounts will gain you earnest fans, and not those likely to site-hop to score the best deal every time.
  
  
• Make buying a breeze. A smooth shop-and-buy experience offers surprising results in the approval department. Studies show that most ecommerce consumers place a priority on ease of use over price.
  
  
• Mad on add-ons. Get the bells and whistles that absorb customers in their consumer pursuit. No really, do it. Offer live chats for support and advice, devote time to a blog, and create the world’s friendliest email campaign.

 
By now you’ve got the picture. It’s not all about low prices. It’s about a holistic shopping experience that elevates your store to the Top Ten list of at least a few thousand customers.

Or less. You’ll grow.