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How to boost ecommerce sales without discounting (and why you should)

By: Luke Griffiths

In the growing discount culture, a lot of online retailers feel the pressure to slash prices to attract and convert shoppers.

But that’s not the best strategy for shoppers or for retailers.

This article explains how to boost ecommerce sales without discounting, and the long-term benefits of that approach.

The discount climate

The winter and summer sales used to be the two milestones in a retailer’s calendar, but in recent years, regular discounting and almost constant sales have become common. Coupled with fierce competition and the adoption of sales practices from the US, such as Black Friday and Cyber Monday, many retailers are now finding themselves in the middle of a “sales spiral”.

While price reductions can be a useful way to attract new customers, shift stock and lift sales targets, regular discounting can be detrimental to brand perception and profits. In fact, research Klarna conducted confirmed that discounting has become almost unmanageable for a number of retailers - with over half (53%) of the 500 British retailers we surveyed saying the “always on” nature of sales is having a negative impact on profits. 

Discount window display

Time to ditch discounting?

Unsurprisingly, today’s discounting is a significant source of stress for retailers of all sizes. Merchant cash flow, impact on profits, and the operational difficulties that come with managing sales activities are all well-known side effects to managing sales activities. The ecommerce channel is particularly vulnerable, with 56% of retailers saying the majority of their discounted transactions come from online trade.

Perhaps more unexpectedly, we found that shoppers too are gradually turning away from the frenzy generally associated with discounting. Consumer research we conducted alongside showed that over a quarter (28%) say sales are too stressful and avoid them altogether.

Constant discounts can also shift brand perception and damage brand value: a quarter (25%) of consumers say they are less likely to regularly shop with a retailer who always has a sale on, and 38% say that constant discounts make a brand look cheap and unfashionable.

Encouragingly, this shows there’s ample opportunity for retailers to ditch discounting – but what are the areas they should be focusing on to boost business instead?

Consider more personalised sales

Identical doors

Our research highlighted a clear opportunity for retailers to escape the constant sales cycle and boost revenue by paying more attention to personalisation. This change in tactic could be a crucial differentiator, with 45% of consumers saying they would be more likely to shop in a sale if they were sent a personalised offer.

It’s also important to remember that consumers are the savviest they’ve ever been - with more access to comparison sites, discount codes and a wealth of alternatives to their favourite brand. In a complex retail landscape, retailers need to go the extra mile when thinking about personalisation to ensure they stay relevant. 62% of shoppers say they would prefer to only be shown sales items available in their size when shopping online, so try not to bombard customers with irrelevant options during the browsing phase.

Choosing personalisation over discounting has a variety of different perks for retailers. Our research showed that 65% of retailers who had trialled personalised offers found it appealed to customers, while 34% said they offer personalisation because it means that they can discount at any time, without having to wait for a specific window, such as the January sales.

Ultimately, personalisation is all about improving the customer journey and the relationship shoppers have with a retailer. It’s also a way for retailers to differentiate their service and build a more sustainable business. The more personalised the experience, the happier the customer - and they are the ones who will help drive growth and loyalty.

Improve user experience

From our research, it’s clear that merchants and consumers are increasingly disillusioned with discounting - and merchants should look instead to ‘surprise and delight’ shoppers in the everyday customer journey. Retailers can easily win kudos with their consumers by making tangible changes to their user experience over the ‘quick win’ of discounting.

Maintaining a strong purpose and serving customer needs is imperative for a retailer to flourish. Customer service often trumps price - so adding value with services can be real deal clinchers. This could include free delivery, click and collect, or easy returns, to offer customers as seamless an experience as possible. Other great UX-boosting options might include a customer service chat pop-up, to help them with any queries they might have.

Focus on the checkout

The checkout is another area for enhancement. As the final touch point before a purchase, it’s essential this stage is made as pain-free and convenient as possible.

Today’s time-poor shopper no longer has the patience to go through lengthy sign up processes or multi-step checkouts. Those retailers who insist on making the checkout experience more complicated than it needs to be will face the consequences – but reducing the steps to reach the confirmation page or enabling one-click repeat purchases will keep customers coming back and spending more.

Offering deferred payment options can also nudge customers from browsing to buying. One of the main bugbears of online shopping is not being able to see, touch and try on an item before committing to purchasing it. This can lead to a huge number of dropped baskets. But giving customers the option to pay once their goods have arrived and they have decided what to keep will encourage shoppers to buy the items they’re deliberating over, while providing them with a better customer experience.  

While it may be tempting to carry on with the sales “status quo”, the figures show that this may not be sustainable for many merchants. With an increasingly complex customer journey, getting the basics right remains the most effective method for increasing sales. Selling items that genuinely appeal to the target demographic, optimising areas of the customer experience and providing a top-tier service will be key to breaking out of the sales spiral and building a viable strategy for success.

 

By: Luke Griffiths, General Manager, Klarna UK

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