5 Types of Price Discounts to Consider for Your Ecommerce Store

by Andrew Reed, on May 3, 2022 2:59:17 PM

With thousands of online retailers to compete with across dozens of platforms and verticals, attracting new customers to your online store can be difficult.

Luckily, discounting products and running promotional campaigns can be a great way to get the attention of new customers, luring them in with discounted prices in order to have them try your product. Once you have served your customers, it will be easier to retarget them and lead towards another conversion.

Discount campaigns can be made up of a variety of strategies. Knowing how these strategies drive sales and when each can be used will help you settle on what strategy will work best for your brand and business.

Common Discount Strategies for Ecommerce Merchants

Below we have listed a variety of discounts that can be used to help promote your brand and move your product. Remember that it is possible to try a combination of strategies to reach new customers and that while these strategies can be fruitful, they don’t come without their risks. 

1) Volume Discounts

With a volume discount, you offer customers a discount on an item that is being sold in bulk. Volume discounting can benefit your business by increasing your average order value (AOV) while also quickly moving inventory to make space for new products.

This is a common tactic for essential household goods, like soap, shampoo, and paper towels, that customers need to constantly refill, or for when trying to move out-of-season products that didn't manage to sell.

2) Bundle Discounts

With bundled discounts, you offer shoppers a lower price on a group of items rather than lowering each price individually.

The benefits of this approach include:

  • Increasing the total number of products sold: Customers love a good deal and are likely to convert on items that offer more bang for their buck. This means you can increase your average order value and move more products by enticing customers to increase their cart size with a discounted rate on bundled products. It may seem like bundled discounts run the risk of causing revenue loss, but the boost in sales will quickly make up for sales lost to discounted prices.

  • Move unpopular products by bundling them with popular ones: This strategy is ideal if you’re having trouble moving out-of-season products. By attaching unpopular products to your bestselling ones at a discounted price, you can move out old inventory, increase your AOV, as well as...

  • Get customers to try your other products: Getting customers out of their comfort zone can be difficult and frustrating, especially when you know they will enjoy a product that isn’t naturally on their radar. 

Putting items you want customers to try together with ones they already want is a great way to grab their interest, especially when offering the item at a discounted price. 

A helpful hint when setting up a bundled discount is to look at the items your customers often buy together. It can make sense to sell unrelated items together in order to move inventory or have customers try something new, but the most effective bundling will be with items that complement each other.

This way, you can add value to the bundle by discounting products customers want to buy together anyway.

3) Automatic Discounts

Automatic discounts refer to discounts that are automatically applied after the user takes a certain action on your site. For example, offering users free shipping when their checkout cart is over a certain value, or giving a discount when they add a certain item to their cart.

These types of discounts are often used to increase overall cart value or move a particular high-value product. 

4) Promotional Coupon Codes

Another successful strategy is partnering with marketing affiliates and other online influencers to promote your product and distribute coupon codes for customers to use.

There are a number of great tools you can use to help create these codes for distribution, but generating unique, single-use codes can make it more challenging to distribute codes. For example, if you are promoting over a podcast, you will only be able to share a single code for listeners to use.

This means you may be at risk of coupon abuse, or improper redemption, where coupon codes leak beyond their intended audience. 

This can end up hurting your revenue and marketing ROI, especially if they end up being scraped by coupon extensions like Honey or Capital One Shopping. These apps will automatically inject codes into checkout carts at the moment of conversion, to customers typically unaware there was even a promo code to use. They may even charge you an affiliate fee, regardless if they were able to find a coupon code or not.

5) Buy one, Get One Free/X% Off

Buy One/Get One Free—or BOGO— promotions are one of the most common and familiar ways to discount items and move inventory.

With Buy One/Get One Free, you can grab the attention of casual customers who may be interested in trying your product. Remember that you don't have to offer two of the same product, but can also pair items together in a way that can be appealing to your customers.

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Risks of Coupon Campaigns

Coupon and discount strategies are some of the most common and useful ways businesses attract new customers and drive revenue. But that doesn’t mean they are without their risks. 

Here's a quick list of how discounting can help your business, and how it may also leave you vulnerable:

Pros:

  • Reward customer loyalty
  • Move out of season products
  • Target new customers
  • Increase cart values
  • Retarget abandoned purchases
  • Track the performance of different marketing channels or tactics

Cons:

  • Can lower perceived brand value
  • Lower margins can lead to lost profit
  • Attracts bargain hunters and more price-sensitive shoppers
  • Can train customers to expect discounts with every purchase, lowering lifetime value
  • Puts you at risk for coupon fraud

Offering too many discounts can not only damage your margins, but it can also hurt your brand reputation as well. Customers may start to associate your discount with the quality of your brand, and this may lead them to avoid your products. 

Also, many of your discounted conversions may end up being bargain hunters with no intention of becoming repeat customers. These shoppers might help you move out of season inventory, but are unlikely to become a part of any loyalty program or contribute to your long-term marketing goals.

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Blocking Coupon Extensions and the Impact on Merchant Revenue

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Protecting Yourself With cleanCART

Partnering with a preventative solution like cleanCART will put an end to automatic injection on your site, prevent false affiliate fees from coupon extensions, and help you take back control over your discount strategy. 

cleanCART will also provide you with helpful attribution metrics, a unique dashboard to track your campaign performance, and a motivated team eager to save you money and win back control over your marketing campaigns.

If you are interested to see how cleanCART can help improve your margins and cart completion rates, you can sign up for a free trial here or check out our Shopify and BigCommerce App Listings.

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