The rise of discount driven online retailers appears to be outpacing the growth of non discounted merchandise. What trends as strategies do you see as key to successful execution of online trading for companies who pursue a non discount based format.
Its quite simple really (in theory); have a fantastic brand/product that people feel an affinity for and can engage with. Do this and they will pay the full ticket price to get it. Business as usual.
It’s an interesting dilemma when online users are often searching for the best price on line, brands strive to provide the most compelling and yet competitive online offer and all the while discount retailers and often pure players are serving this growing appetite for discounted prices. More often than not customers are starting to expect discounts. However an unmanaged discounting pricing strategy can be costly journey to embark on when margins start to take a hit and sale figure only spike when a 50% off tag is applied. Maintaining a full priced, inflexible pricing strategy is courageous and to be applauded if you have loyal customers who can’t get the product elsewhere or you have a strong USP which secures a premium price.
However, not all brands are in this position and as such we advise all our clients to use discounting only tactically and not to make it a continual feature of your site. When caution is applied and discounting is used to acquire new customers or to provide a sales hook ie through free delivery or BOGOF deals, tactical discounting can work. This is often achieved through targeting sections of your database, carefully chosen affiliates and key market segments. The main objective though is to get these customers to trial, through first order incentives and such, and then offer a full priced position which adds value. By this we mean, ensure that your range is differentiated enough ie; is it range authority, web exclusivity, first to market, style knowledge that is your shout? If so, communicate this and let customers know that they are buying into your brand rather than just letting them make a judgement based on price alone.
Coming from one of those discount retailers you may find this answer interesting. I think the winners are those who (a) realise that high quality imagery and information for each product is a non-negotiable (especially if you want to achieve a full price) and (b) that you have to back this up with great service (including a call centre) as it is this that will drive repeat purchase.
In this climate customers want (or at least feel they deserve) Value with a capital V. But it’s a subjective that means different things to different people. Right now one of the growing areas for value is Discounts. The often forgotten area is Customer Service. If you don’t want to trade on the former, excel to high standards on the latter.
Do everything you possibly can - even if it means compromising margin - to establish your market position by making the customer’s life easier. You’ll reap the benefits once people feel confident in spending more.