Using discounts in the online store: PROFIT or LOSS?
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Some curious users who prefer to shop online could ask themselves: Why do online stores arrange online sale? Can a sale increase revenue in an online store? Could a frequent sale campaign bankrupt an online business? The same questions novice sellers ask themselves are essential to understanding the policy of running a business. In this article, we'll try to answer these questions.
Let's talk about the objectives of the sale, how to avoid losses, make discounts on specific types of products, how to attract and not scare away potential buyers with excessive sale campaigns and many other topics.
But before delving into these issues, we remind you that the Magento 2 store is able to track your discounts automatically by using the Sale Category PRO module. You can leave the monotonous work to the extension and focus on more useful work. For example, study our articles and make an effective strategy for discounts and sales to get a larger percentage of profit.
WHY DO ONLINE STORES NEED DISCOUNTS?
It's vital to get acquainted with three main situations when you need to organize a sale:
- To increase and expand the customer base.
- There's a need to get rid of stock on the shelves.
- Even a small discount = increase in profit.
In today's world, the competition in ecommerce is relatively high. A lot of customers have a habit of occasionally monitor stores to spot best deals and sales for their benefit. Therefore, even with a slight decrease in the actual value of goods, the online store can gain new customers to its customer base, resulting in a increase revenue.
The seasonal sale applies to clothes or shoes from last year's collection when a new group is on the way; old models of devices or other cases. The best interest of every business is to make a profit from outdated goods before its updated versions or replacements arrive.
Imagine a dealer that has purchased a large batch of shoes or machinery, but in the middle of the season, he understands that he won't have the time to distribute the whole batch. An excellent way out of this situation is to provide a minimum discount on the product (for example, -10% or -15%). This way, it'll be possible to achieve the following advantages: attract new customers, sell all the goods and get the desired profit.
And this is only a minimal list of the most popular and clear reasons why online stores actively use such a standard tool as sales discounts.
WHO BENEFITS FROM DISCOUNTS FOR ONLINE PRODUCTS?
As practice shows, seasonal sales are incredibly beneficial and relevant for online stores that quickly sell outdated goods/ perishable products/ goods with high margins, etc. In this case, occasional sales are an indispensable element of a successful business for constant active rotation of goods. Otherwise, the warehouse will be filled with many products that no one have time to sell.
Sellers don’t need to make frequent discounts if their online stores is specialising in the distribution sale a long-life products.
But do you have a plenty of such products? We don’t.
In today's world, everything is becoming old-fashioned too fast. Even a good quality thing cannot remain without changes in the TOP sales for more than a year. Proof of this is the annual update of phones or cars' leading brands.
Another important category of online stores that use sales discounts as a popular marketing tool is the new trading platforms and brands essential to popularize their name. In this case, periodic sales act as a «lure» for buyers who first pay attention to the price tag and after - to the goods themselves. Even if the user were not in desperate need of such things, an attractive offer from the online store wouldn’t allow him to pass by that simply.
As a result, well-planned sales are helpful for almost all online stores. However, their conditions and frequency depend on many individual factors.
HOW TO ATTRACT AND NOT SCARE BUYERS AWAY WITH EXCESSIVE DISCOUNTS
Despite all the advantages of discounts, this approach can turn against the online store in some situations, as excessive discounts often cause suspicion among customers. To avoid such mistakes, you must familiarize yourself with some essential nuances and peculiarities of ''discount policy''.
As the statistics show, users are very loyal to seasonal discounts and promotions dedicated to certain festive events. In this period, people make the most significant number of purchases online and offline, and therefore even too high discounts are not considered suspicious. Unfortunately, fraudsters can use it. Despite this, people continue to trust online stores before the New Year holidays or planned seasonal promotions for specific groups of goods. But, significant discounts in stores that offer original branded items cause buyers’ suspicion and fear to be deceived.
It's especially valid for new customers who have never bought anything in a specific online store and are unfamiliar with its work. Suppose the store sells brand shoes, bags or clothes, and at the same time have a discount 50-70% for all those products. In that case, it must provide all the necessary documents, quality certificates, and packaging in original, stylish packages and boxes. Thus, promotional goods shouldn’t differ from the usual brand products. It's the only way to remove users' doubts, confirming that in front of them are quality products that are sold at a discount for reasonable reasons.
The task of online sellers is to convey to the user the validity and benefits to buy a product with a discount. It plays a significant role in making a specific decision. The client needs to understand that, in addition to the goods, he can still get them. When talking to a customer on the phone or chatting with online support, it is crucial to indicate the product's actual (initial) value and the discount price. Thus, it's possible to ''play on the contrast''.
In order not to scare the customer away with huge or, on the contrary, with too small discount, the online store should start to begin to analyze the market, to consider the offers from their potential competitors beforehand:
- If your discount is too high compared to other online stores, the customer will ask: ''Why is it so cheap? Do you have a product of poor quality? What is the catch?''.
- If your discount is not large enough compared to competitors, the customer will ask: ''Why are these products so expensive? Don't you appreciate your customers?''.
Therefore, it's essential to carefully study all offers from their main stores-competitors to find the «golden middle». This way, you'll receive minimum questions from users and maximum action-active orders online. After all, to preserve and maintain your reputation you should prove your reliability and honesty to both regular and new consumers. And our Sale Category PRO module for Magento 2 will help you keep your finger on the pulse and allow you to effectively manage all the discounts in the store.
Have a good sale!
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