E-tailers Use Strategic Offers, Not Discounts, to Lure Buyers
Internet e-commerce giants are changing the way the game is played as more consumers become more comfortable with shopping online.
Typically during a holiday season, retailers respond with deep discounts of 40% or higher in order to encourage sales.
However, in the 2010 holiday season, the name of the game changed from bargain basement offers to more strategic promotions. Reducing the amount of discounts and focusing on sending targeted offers to specific groups of people, or creating promotions to encourage more sales, both paid off for many top retailers during the last part of last year.
For example, rather than send a 30% coupon off of all purchases, e-tailers encourage shopping by offering a free gift with a certain amount of purchases. This encourages buyers to explore the merchant’s website and look for more things to buy – all the while becoming more familiarized with what the company has to offer. Alternatively, many e-tailers send a specific offer to a small amount of buyers who had made a specific type of purchase previously (e.g., offering a discount on suit essentials to someone who has purchased a suit).
Going beyond the discount to more strategic offers has been positive so far. Online sales grew 12 percent in the first 47 days of the holiday season, protecting retailers’ profit margins along the way.
Posted at 04:52 am by Peter Koeppel