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Advantages and Disadvantages of Discounts

Advantages and Disadvantages of Discounts

Discounts have been used to promote products since the 1950s; it was a huge success and has become a primary strategy for brands to increase the sales of the products.

Offering discounts attract customers and also increases your sales, unlike any other strategy.

But just like the old saying, too much of something is good for nothing; there is a place and time to offer discounts, if you don’t limit yourself, it’ll negatively impact your store.

When it comes to eCommerce stores, it is hard to keep discounts and stores apart. But before you start offering discounts, you must know the pros and cons of it.

We’ve listed some of the significant pros and cons of discounts that can give you a heads up on what to expect.

Advantages of Discounts

High Traffic

Offering Discounts is one of the easiest ways to increase traffic to your store. Many eCommerce stores set up a discount plugin and offer multiple discounts to bring in customers.

More traffic directly reflects on your sales; the higher the traffic, the higher the sales.

Offering Discounts is one of the easiest ways to increase traffic to your store.

Customers purchase on impulse; offering discounts triggers them, and they’ll rush to the stores to purchase the product before the sales get offers.

And also let’s talk about new customers, they are ones that always look for a store with discounts.

So, you can pull them easily to your store with deals, offer exceptional service and engage with them personally and they’ll become your repeat customers.

Repeat Sales

One of the major factors to achieve if you want your eCommerce store to reach new heights is Repeated sales.

Repeat sales reflect loyalty and trust; a customer won’t come back to a store if he/she is not comfortable purchasing in that store. And what influences repeat sales are Discounts.

Discounts help you retain your customers, and by offering exclusive/personalized discounts, you can convert them into loyal customers and increase your revenue.

Remember, acquiring new customers on your own is costly, so discounts help you get them without spending much.

Offering discounts and Next order coupons will keep your customers purchasing at your store repeatedly, but make sure you don’t lose your profit while offering discounts.

Clear Your Inventory

What do your nearby locality stores do when they have unsold products?

They lower the price of the products and announce special sales.

Well, you can use the same tactics in your eCommerce stores, too, if your store has many unsold items that take up the valuable space of your store.

Then you can levy discounts on those unsold goods and sell them; this will free up the space of your store for new customers.

Clearing out your inventory is one of the most practical reasons for an eCommerce store to offer deals. No one likes unsold products taking up valuable space.

Avoid Cart Abandonment

Cart abandonment has been a menace to eCommerce stores ever since its inception. The average cart abandonment rate stands at 70% as of 2020.

And it is also proven that lack of discounts is one of the major reasons for cart abandonment.

Avoid cart abandonment.

Customers will add products to their cart with an impulse to purchase, and not every time will they be expecting a discount. But sometimes the shipping costs or additional costs might be high.

In those cases, the first thing they’ll look for is a discount; if the discount is not available, they’ll abandon their cart.

So, to avoid cart abandonment, you can offer free shipping, or you can offer a discount based on the subtotal value of their cart instead of plain discounts.

Offering discounts based on the cart value will motivate them to add more items to their cart, increasing your profit.

You can also use a Cart recovery plugin and recover abandoned carts. Send them an email along with a discount to encourage your customer to return to your store and recover his cart.

Brand Awareness

Do you want your store to be known across the eCommerce market?

Then offering discounts can help you promote your store to new horizons.

Discounts are not only used to attract your customers, it can also be used to expose your store to a new audience across the market. Discounts are automated Word of mouth.

You can offer discounts to elder citizens and military personnel; this is a good Word of mouth, and people will start talking about it.

It increases your brand awareness and reputation; you can see many stores are offering deals due to the Covid pandemic, all of these contribute to your store’s reputation.

Disadvantages of Discounts

Pessimistic Expectations

Offering discounts will make the customers think that there will always be a special sale in your store.

They’ll think of your actual product prices as manipulative even if the prices are true. As a result, the customers will feel defensive and not purchase from your store.

It’ll also show that you are worthy only when there are discounts in your store and thus your sales will get affected.

The customers will only visit your store when there are deals, which is not a good sign for an eCommerce store. So, avoid offering deals all the time, save them for special occasions.

Risk of Losing Loyal Customers

It usually happens in premium stores or for premium products; customers of premium products love their exclusiveness.

Premium products are costly, and there is a certain volume of customers that are fond of them. They love purchasing expensive goods because they believe the higher the cost, the higher the quality.

When you offer these exclusive products at a discount, chances are you’ll lose their loyal customers. They want those products to be exclusive.

When they see those premium products available for almost every customer due to lower pricing, they’ll probably move out of the store.

It is why it is hard to see Nike, Tommy Hilfiger, Versace, etc., at discounts in prominent eCommerce stores like Amazon, AliExpress, etc.

Reputation Risk

Stores like Amazon, AliExpress, etc., are still on the top of the eCommerce market. They stand as an example for all the other eCommerce stores.

These stores do offer discounts, but they know their limits; you can see special offers on these only on rare occasions and that too for a short period of time.

And as we previously said, look at all those premium brands; they are known for their expressive products, no one is judging their reputation.

It is a problem with discounts when you lower the price; people look at your products as inferior quality compared to other expensive stuff.

And when you offer deals, again and again, it’ll show that you have no faith in your product or simply your product is not selling. It creates a major impact on your reputation.

They look at your brand as an inferior one; this is hard to come back from. So, always remember your limit when you offer deals.

Wrapping Up

Discounts have become a part of society ever since Coca-cola did it first in the 1950s. The problem with discounts is they are alluring; it is the same thing that can attract customers to your store when done right, and it is the same thing that can push people away from your store when you do it wrong.

Everything depends on where and how you use it; many eCommerce stores offer deals just because they have to. That’s why we crafted this article to let customers know about the major pros and cons that they can face while offering discounts in their eCommerce store.

Editorial Staff at WP Daily Coupons is a team of WordPress experts led by Peter Nilsson.

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