Studies show that 93% of shoppers hunt for a discount before buying online. While discounts still do play a big role in online retail, the way that businesses use them is changing rapidly.
Free Shipping is Preferred to a Discount
According to eCommerce statistics, free shipping is a bigger motivator for someone making a purchase than a traditional percentage discount. Product bundles have also become more popular.
Beauty brands like Sephora are pairing routine skincare products together, and technology retailers are pairing earphones with new mobile devices to create bundles. This type of promotion works because they offer perceived value. Many industries have been using creative incentives for years, showing how discounts have never been just about getting money off.
An example would be Cineworld, who are currently offering free regular popcorn to those who buy a movie ticket, and any drink to celebrate their anniversary. The online casino sector offers even more choice with promotions. Whether it’s the opportunity to win daily prizes, getting free spins every week, or getting 5% cashback on losses, the industry has always operated in ways that offer more than a simple cash discount.
This shift is happening because retailers are facing growing pressure to protect margins while meeting high consumer expectations. Today, shoppers do love deals and bargains, but they also value convenience and tailored experiences.
Businesses are Finding Ways to Maintain their ROI
Studies show that 83% of people who find a discount would have completed the purchase anyway, which is why so many retailers are working around widely used public discounts and trying to be more selective over who receives a discount and when.
To cater to the current market, more businesses are trying to find ways to protect their profit margins by narrowing product focus and niching down. Specialised offers let companies charge a higher price for tailored solutions, while clear audience definitions lower the cost of acquiring new customers, raising ROI substantially.
Adopting a smaller focus also allows companies to adopt more personalised campaigns, which results in less money being wasted on targeting broader audiences that might only buy as a result of an offer being on.
As personalised promotions generate three times the return on investment when compared to mass campaigns, it makes perfect sense to adopt this approach.
AI is helping to make things much easier here. Rather than emailing every customer a discount code, retailers can now look into browsing habits, abandoned cart baskets, and loyalty activity to create more relevant offers.
Two customers who are visiting the same website may end up receiving completely different incentives, based on their behaviour. One shopper may receive next-day delivery if they abandon their basket, and another may get extra bonus points if they make several purchases in a single month. The offer becomes part of the experience.
Discounting may generate short-term sales, but it can train customers to delay purchase until the next promotion. Brands that offer loyalty schemes with personalised rewards, or that focus on more exclusive experiences, will find that shoppers can be rewarded more while protecting profit margins.
David Prior
David Prior is the editor of Today News, responsible for the overall editorial strategy. He is an NCTJ-qualified journalist with over 20 years’ experience, and is also editor of the award-winning hyperlocal news title Altrincham Today. His LinkedIn profile is here.
