eCommerce and online sales are on the rise in India this festive season. Flipkart, Amazon, Myntra, and Snapdeal — all the marketplaces are geared up for festive sale by offering deeply discounted products to online shoppers.
A RedSeer report suggests that eCommerce platforms are expected to clock over $9 billion in gross merchandise value (GMV) during the festive season this year, a 23% rise.
Image credits: RedseerClearly, they nailed their discount pricing strategy. But what exactly is this strategy and how can you build one for your own eCommerce business? Keep reading this blog to find out!
What is discount pricing strategy?
Discount pricing is a strategy for eCommerce businesses to generate more leads that eventually convert to sales. When applied correctly, eCommerce discount pricing strategies can help your business gain and retain loyal customers.
Pricing has the utmost importance for customers. Therefore, using the right pricing strategy for eCommerce is crucial to
- Scale your business
- Increase sales
- Grow profits
As a business owner, you too need to plan your discount marketing strategy and grow your business with the right approach. So, what will be the most effective strategy for successful eCommerce discount marketing?
Let’s find out.
How the eCommerce marketplaces are doing it?
In a bid to reach discount shoppers first, both Amazon India and Flipkart advanced their sale dates from October 4 and October 7 respectively to October 3, as competition between the two industry leaders intensifies.
Flipkart reportedly saw a 40% growth in sales during this year’s early access event as compared to a year ago. Amazon India reported that 60% more sellers clocked higher sales during this year’s early access event, compared to last year.
“eCommerce is clearly gaining increasing acceptance among the masses, and it is evident that user-friendly technical and financial constructs are helping to drive its adoption,” said Nandita Sinha, vice president – customer and growth, Flipkart.
If you want your eCommerce business to stay ahead of the game, you may need to look into your discount pricing strategy. The big question is – If you keep your prices high, then you risk missing out on gaining more customers.
But by lowering your prices to be competitive can reduce your revenue. How do you find the right balance?
Here we have listed the most effective discount pricing strategies to help you decide on the type of discount to offer your customers at the right time.
7 Discount Pricing Strategies to Drive Sales
Let’s dive in a bit more to understand how it could be done. So, let’s understand how to successfully run a discount campaign and drive more sales to your online store.
1. Decide on the type of discount to be offered
To produce maximised profit for your eCommerce business, you should consider what type of discount will be more efficient to increase sales. There are several discount strategies to be offered on a product or service:
- Percentage discount
- Cash amount discount
- Discount code
- Combo offers
You can reduce prices with a predetermined percentage discount or a specific cash amount discount. Or you can offer your customers a specialised discount if they buy from you again.
This strategy can help you optimise customer retention. If you want to sell more products at a time, then combo offers are the way to go!
Learn how you can use and set up discount codes to improve sales in this video:
2. Put expiration dates on discounts
As one of the best eCommerce discount pricing strategies, timing and scheduling plays an important role in maximizing customer engagement.
For example, the festival season is perfect for offering promotions and discounts since people are most likely to purchase on or before those days. Therefore, it is very crucial to schedule your discounts strategically to optimize your sales and profit.
Besides timing, you should also consider how long discounts run. Do you run your discount for a week or an hourly flash sale with special prices? Putting expiration dates on discounts creates a sense of urgency consumers can rarely resist.
Take Instamojo’s emailer for example. By saying today is the last day to shop at flat 50% off, we created the FOMO (fear of missing out) experience among shoppers looking for great deals and tapped into customers’ sentiment by offering discounts for the festive season.
3. Offer special discounts to new customers
It’s best to give customers a great first impression. Promote your first-comer visitors to purchase your products by offering an initial discount which is valid only for the first purchase.
This discount pricing strategy gives new customers a nudge to buy your product for the first time.
How do you offer a discount code to a customer who is new to your store? One way is to have a popup on your store home page which talks about your special offer like how this store does it:
You can get this feature if you create an online store with Instamojo. You can setup popups and create discount codes which your customers can apply on checkout. Get started for free today!
4. Don’t forget to reward your existing customers
Although the ultimate goal with eCommerce discount pricing strategies is creating more customers and increasing sales, you should also consider offering discounts to your existing customers to boost brand loyalty.
Incentive awards for your customers can encourage them to market your business by sharing your products on social media platforms or inviting friends to your eCommerce platform.
For example, you can offer a 50% discount on their next purchase if they invite 3 friends or you can only ask them to subscribe to your e-mail list in return for special promotions and discounts.
You can thus build your email list and lay groundworks for email marketing.
5. Promote promote promote!
To spearhead the shopping experience, take advantage of online platforms by running discount promotions and telling customers exactly what to do.
Use social media to talk about your discount sale and let customers know which products fall under the sale. Build as much hype as you can around the discount campaign.
6. Collaborate with other brands
Is there a brand that can compliment your product with a collaboration? Go for a collaboration with a discount sale campaign hosted from both ends. This will be especially fruitful if both brands have a very similar target audience. You can hype up your partnership among your community members by offering a limited sale discount.
7. Convert abandoned carts
Another way discounts can be used is to convert abandoned carts and purchases.
If you have an online store platform like Instamojo, you can track customers that put items in cart but haven’t made purchases.
Use this data to send them personalised emails with a discount coupon to get them to make the purchase.
The success of your discounting efforts depends on how smartly you build your discount pricing strategy. If done right, it can prove to be a very profitable strategy to boost sales and membership growth.
With Instamojo, you can easily deploy discount codes for pre-orders, clearance sales, and more. You can also create a discount link and share it in emails to select customers. You can use Instamojo discount codes just the way you want to.