Best Discount Strategies for Ecommerce Retailers
Discounts in the ecommerce business have become so important that the discussion is no longer about whether or not your online store should offer discounts but about the best discount strategies you can use to benefit the most from these consumer magnets.
Need some context? About 88% of people in the U.S use discount codes when making purchases. 64% will not make a purchase at all if there are no discounts offered.

So yea, that’s the gist. Discounts are pretty important if you want to convert sales in this era. They’re a necessary part of any good sales plan. But you might be thinking, how do I make my profits if I’m offering discounts? (reducing my prices, offering freebies??)
Well, that’s why you need to know and use discount strategies. You have to devise clever and effective plans for applying your discounts so you can actually increase your profits and attract a larger customer base instead of incurring losses.
It’s interesting, discounts to the naked eye look like a way to surely cut back on profits, but intelligent discount strategies conducted by e-commerce retailers and marketers prove otherwise.
For instance, to start with the basics. When setting your discounts, you must consider these three things: the cost of the product, your competitors’ price equivalent, and the level of supply and demand for the product. These three factors are what should determine how you can tweak your discounts with pricing psychology.
Pricing psychology is essentially the art of setting your prices in a manner that customers find very hard to resist. By using pricing psychology and taking advantage of the three factors mentioned above, you can introduce discounts that seem generous and attract customers while actually losing little to no price value of your products.
How to Offer Discounts
Before we jump into the discount strategies you can use, we should set the groundwork on what type of discounts you can use in these strategies.
These are the most used and popular types of discounts. They can then be applied in different ways to set up your discount strategy :
- Percentage Discounts: You remove a particular percentage off your product(s) prices. This type of discount can be applied to any or multiple products at once. Discounts like this are great to acquire new customers because they can be applied to any or a particular range of products in your store. New customers when visiting your store can be invited to get 10 or 20% off their first purchase on any product by completing a particular action.
- Cash Discounts: You can state a deducted price or a price centered bonus deal as the discount. These mostly work when applied specifically to products.
- Free Delivery: Consumers love free deliveries. You can use it to prod new customers to make a purchase on their first visit or motivate buyers to spend more by offering free deliveries for spending above a certain amount.
- Buy One, Get One Free (BOGOF): This is self-explanatory, and it’s great if you have excess products you want to offload. Alternatively, you can switch the numbers, you could do a buy one, get two free, or vice versa, depending on your strategy or motive, but try not to go overboard so you don’t come across as too cheap or inauthentic.
- Multi-buy Discounts: These discounts require that your customers buy multiple products at once. They can apply to entire baskets or a range of related products. Usually, the rewards may differ. You could offer free delivery to people who buy products with a price sum that meets a required price range. Or you could give a price discount for that same qualification.
- Free Gifts: Free gifts are great incentives to keep loyal customers. They can also be applied for new customers in some cases. A great way of using free gifts is by offering them as free supplements to related products a customer bought at your store.
Generally, discounts can be applied to your products in two ways, either as automatic discounts or discount codes.
Automatic discounts will apply to your customers’ carts automatically at checkout. They’re mostly advantageous for the fact that customers don’t have to worry about the extra process of inputting discount codes, which could offer slight, but very significant hesitation, especially on mobile phones.
Ideally, you want an ecommerce platform that offers very functional and machine intelligent features for automatic discounting. The most popular ecommerce platforms around are Shopify and Wix. There are however Shopify alternatives you can consider to add depth to your options.
With automatic price discounts, customers will usually be able to see the discounts applied to the product from the product page to checkout. The original price is struck out with a line and placed next to the discounted price.
Another benefit of automatic discounts is that they are the best option for limited-time discounts or flash sales. Discounts that only last for a matter of time naturally create a sense of urgency in consumers, and this is a good sales strategy. But automatic discounts further that urgency by displaying the appealing discount price.
A disadvantage of automatic discounts may be that consumers won’t feel as special as they would have for getting exclusive promotions with discount codes that were targeted specifically to them.
Discount codes are entered at checkout before customers can receive whatever discounts they were given. The main advantage of discount codes is that they are great for personalized promotions or targeted email marketing.
Another advantage is that they’re a way to introduce new traffic or consumers from channels like social media and then track the sales conversion of this traffic. In this sense, you can strike partnerships with influencers to advertise your codes to their following or use the codes as incentives in your own marketing strategy.
Discount codes are also useful for an omnichannel customer experience. Customers who get the codes should be able to apply them in a physical store.
A major spoiler for discount codes however is the extra process they afford customers at checkout. Having to input a manual code as part of the check out process can be discouraging to customers, as mentioned earlier. There is an existing chance of mistakes being made when typing the code. This can lead to a frustrating scenario that could end up in the customer abandoning the cart.
Another disadvantage is the fact that customers might not be sure of what they’re getting till they get to checkout, since the price discount wouldn’t be displayed onscreen throughout the purchase journey, like in automatic discounts.
Ideally, after all this information, you might be curious as to the best option for applying your discounts. Usually, this would depend on your discretion or your marketing strategy but ecommerce experts generally agree that automatic discounts are a better option for consumers because they avoid the stress of an extra checkout process.
Best Discount Strategies for Ecommerce Retailers to Follow
The insider consensus in e-commerce is that offering discounts can be a double-edged sword. With its numerous advantages, it can also be disadvantageous to you as an online retailer if you’re not tactical about how you set your discounts.
You could offer discounts that would offer no real value to you in return. You could make your customers run away with deals that were much more profitable to them than you.
Or worse, you could devalue your brand. You might believe offering higher discounts will win consumers over. That’s true, but only to an extent. Offering too huge discounts will make customers doubt the quality of your brand and products.
They will pause, trying to make sense of why you’re being so generous. Most often, they will just end up concluding that you have fake, defected or second-hand products. Ideally, discount percentages shouldn’t go more than 30%.
To make the most of your efforts and avoid biting your tongue when it comes to discounts, here are the e-commerce discount strategies you must practice:
Use Discounts as Incentives
This is a reward based strategy and it’s a way to get the most value out of your customers, even beyond them just making purchases. It involves demanding specific actions from your customers before they can access a discount.
The specific action will usually be something that benefits your business. The benefits can be diverse and don’t necessarily have to be of monetary value. For instance, you could use a pop-up to ask new customers to subscribe to your email list and get a percentage off their first purchase.

With this strategy, you can motivate first-timers to buy something and also build a list of new customers or prospects who you can then try to convert to loyal customers with targeted emails.
Another profitable action you can get out of an incentive is to ask customers to share your business on their social media. That way, you have better opportunities of attracting new customers through user content.
Multi-buy promos are also great incentive discounts. By offering a reward for customers who buy a particular amount of goods, you can make more sales. You could cross-sell and suggest related products or products that work with something a customer has picked and offer a round discount if they add that product to their cart.
Incentives can encourage consumers to spend more. For instance, you could instruct customers to buy up to $150 worth of goods from your online store to qualify for a particular discount.

BOGOFS are also good examples of incentive discounts, if that isn’t obvious already.
Use Discounts to Prevent Abandonment
People that abandon their carts without checking out can be re-enticed with discount offers. These people will fall into the majority. The percentage of people that abandoned their carts surged to 88.05% last year.

Discounts can help you convert sales from this huge percentage of traffic and ensure you don’t totally lose out.
You can send retargeting emails that ask the customer why they left your site and if they want discounts on the product they abandoned.
Or you can employ ecommerce tools that can detect if a customer is about to leave your online store without checking out and send a pop-up that offers them a discount on the product they were about to abandon. You could also suggest related products with better offers.
Even if a customer hadn’t picked any items already, exit-intent pop-ups can still be used to save the lead by requesting their emails in exchange for a general discount which could then motivate them to buy something.

This strategy usually works and leads to conversions, as in fact some customers will deliberately abandon their carts so as to get discounts on a product.
Use Discounts as Targeted Promos and Offers
This strategy is used to engage regular customers and lure them to make more sales and become loyal customers.
By tracking and analyzing their purchase history, you can send promotions that give discounts on products that they are very likely to want or need. These promotions could be emails or targeted social media ads.
Your offers could take the form of combination discounts. When a customer has added a product to a cart, send an offer with a related or supplementary product that will add an inviting discount to the cart if the customer goes with it.
You could go one step further and try to totally win the customer over. Offer a free, little, supplementary gift (that you can afford to) that is related to or works with whatever product the customer has chosen.

This strategy is great for building new customers into returning customers and returning customers into loyal ones.
You have to be careful not to give too valuable products, or do this too often, so customers don’t get used to it.
Use Flash Sales
Flash sales are an awesome conversion strategy when utilized well. Limiting the duration or user count of discounts and displaying the time limits or slots available along with the discount offered can compel consumers to buy on impulse or complete their purchase journey.

It’s simply utilizing the consumer psychology and triggering their fear of missing out (FOMO). It’s hard to resist a good offer that would expire very soon.
You can increase this FOMO effect by displaying a countdown clock or timer near the discounted product. Then make the discount decrease per a time period that passes, it could be hours or days, depending on your strategy.
Same goes for user-limited discounts. Display the amount of slots left and engineer a feature that automatically reduces the numbers as the slots are taken.
Doing this fuels a sense of urgency in your customers which in turn boosts sales.
Use Seasonal Discounts
Specific discounts can be applied to specific products on specific occasions or periods of the year.
If you’re an e-commerce business that retails, say basketball merch, you can get creative with your discounts during special NBA matchups. These discounts can be a way to advertise your business and capitalize on the spirit of the period.
Examples of not so specific seasonal discounts all online stores should engage in are Black Fridays and New Year discounts.
Apart from being a seasonal strategy, discounts can be used as responsive ways to take advantage of special occasions.
For instance, the online shop Etsy received a huge bump in publicity recently due to a tweet by the world’s second-richest man. Retailers that sell on Etsy immediately took advantage of this situation, offering attractive discounts to pull the thousands of visitors that swarmed the ecommerce site in this period.
Research and Test to Know What Consumers Want
At the end of the day, after all the aforementioned information, the best way to know which discount strategies will bring in more sales for your ecommerce business is by testing these strategies and measuring their results to decide your best choice.
In a way, that already counts as consumer research, as your results are determined and reinforced by consumer behavior. But you can go further and seek data on customer satisfaction. Online surveys can be a good way to do this if used tactfully.
And of course, your customer service. A functional, reliable customer service is a no-brainer for discovering the thoughts and preferences of your customers.
Whatever your research method, it’s vital that you know what consumers want as it’s your knowledge of their behavior that will determine how effective your strategies will be.
There are a few applicable tips you can take note of however regarding consumer behavior. It’s better to offer percentage discounts rather than cash discounts to new customers. The reason being, new customers are not used to your brand’s product pricing, so they will appreciate a percentage off better.
On the other hand, regular customers who understand your pricing will respond better to cash discounts.
Best Ecommerce Discounting and Pricing Strategies
After all is said and done, the best discount strategy for you is determined by the data you gain from researching and learning about your consumer behavior.
In this sense, setting your strategy can be interesting, and also time consuming, but remember, patience, knowledge and due diligence are vital qualities of any successful ecommerce retailer.