Is Discounting Usage Intensifying in eCommerce?
)
If you are a regular reader of this column, you’ll know that 2024 has been a bit of a shocker in terms of revenue growth thus far. Particularly weak performances across January and April have conspired to leave the year-to-date growth figure, with five months of data in, running at -4.3%. This is against a forecast of 0%, so you can see just how far behind those months have dragged us. There are numerous possible reasons behind this sluggish performance – the failure of summer to get started, economic malaise etc – though it is worth saying that the growth trajectory is pointing in the right direction, it’s just very slow pedalling (uphill) to arrive at that destination.
The Role of Discounting in Retail
If trading conditions are proving tough though, are we seeing retailers reach for certain levers that you might expect to help stimulate some demand – chief among which would be discounting?
The answer is yes, but it’s a complicated yes. To be clear, there is nothing uncommon or necessarily wrong with discounting, and there are many different ways in which it can be deployed. The retail calendar organically lends itself to having periods of clearance as seasons change – any stock that has not sold needs to be run through to make space in the warehouse for the new products. Retailers also run flash sales, which might be an attempt to build a bit of demand and catch up on revenue targets if things have proven slower than they had anticipated (or, indeed, to steal a march on the competition).
Challenges of Entrenched Discounting
The slightly more problematic occurrence of discounting is where it isn’t being used for cyclical clearance purposes, but is instead a switch that is pressed to stimulate demand – not in the way a flash sale operates, which might only last for 24 hours; it is switched on intended to just last for a short timeframe, but actually it can become far longer.
The pattern has been pretty clear historically – when times are hard and customer propensity to buy under pressure, retailers start to fall into the trap of a form of discounting that gets entrenched. The ones that are struggling push it the hardest, their competitors get drawn into it, and before you know it a widespread trend is established that many find it hard to stay out of.
That does appear to be where we are now. When compared to previous periods, the intensity of it is not significantly higher at the moment, but there is a difference worth noting. The below chart shows the percentage of all items sold that had a discount applied against them. The percentage hovers around the 50% mark for most of the two-year period covered by the chart, but the last four months have seen it stay above that point – the first time it has done so consecutively.
While it is quantifiably the case that it’s the first time that has happened, it has almost been the case several times over the past two years anyway.
So discounted products make up a major element of the overall sales mix and have been over the whole cost-of-living era. Is it getting more intense? Arguably, but only marginally so. Retailers would love to see an improvement in shopper confidence that will enable them to just shave a few percentage points off that chart…
More IMRG Insights
Join us on 18-19 September to access event more insights at the IMRG Optimisation Stage!
Latest News
-
)
Gavin Warwick, European Partnership Manager at supply chain software provider SmartFreight explains what’s exciting him about the industries today as well as the trends helping shape the future. -
)
Jack Barmby, CEO of communication tech provider Gnatta, discusses the industry trends he’s most looking forward to seeing at eCommerce Expo and Technology for Marketing this year as well as the bigges ... -
)
Beth Chapman, Managing Director at global delivery solution provider Starlinks Global talks to us about what she’s most looking forward to at the show and her advice for newcomers entering the industr ... -
)
Georgia Leybourne, CMO at eCommerce inventory and order management software business Linnworks discusses the things she’s most looking forward to at the show and the importance of the event in bringin ... -
)
Moshe Winegarten, Chief Revenue Officer at payment service provider Ecommpay talks about the biggest challenges facing eCommerce retailers ahead of peak season. -
)
Chris White, EMEA Chief Revenue Officer at warehouse management system SnapFulfil to discuss the key challenges he’s seeing in his sector and why events like eCommerce Expo and Technology for Marketin ... -
)
Gev Balyan, Founder of eCommerce website builder Ucraft tells us what he’s looking forward to most from eCommerce Expo and Technology for Marketing this year and why the shows are so important in brin ... -
)
Pratik Padhiar, Director of New Business at digital marketing communications agency h2o Creative talks to us about the biggest challenges online retailers are facing right now and what’s exciting them ... -
)
Meet Adam Ull, Global Product Information Lead at H&M, who is transforming commerce by using data and AI to enhance customer experiences across digital channels. He discusses building agile systems an ... -
)
As we approach this year’s eCommerce Expo and Technology for Marketing events, Na’ama Sheba, Chief Marketing Officer at B2B payments provider Mondu discusses the hottest trends in eCommerce payments r ... -
)
In the ever-evolving world of eCommerce, UK merchants must adopt strategic approaches to ensure sustainable growth both at home and abroad. In our recent webinar featuring Emily McMorran, CX Lead at w ... -
)
Some essential tips to help you deliver an impactful presentation with Alyssia Smith, Senior Content Manager at eCommerce Expo and Technology for Marketing -
)
A new source of information for businesses wanting to expand and increase their customer base. -
)
What a miserable year it’s proving to be for eCommerce. Revenue has performed well below expectation, site traffic overall has seen barely any growth in 2024 so far and conversion remains suppressed. ... -
)
Shaun Loughlin, Head of eCommerce at LeMieux, shares his 20-year journey in retail and eCommerce, emphasising international expansion strategies. -
)
Discover how Deliveroo enhances grocery delivery by partnering with retailers, offering logistics, and advanced tech integration, ensuring fast and reliable customer service. -
)
Explore how increasing discount usage in eCommerce is impacting revenue growth in 2024. Discover the trends, challenges, and strategies retailers are employing to navigate tough trading conditions. -
)
Big Bus Tours transformed its digital marketing amid COVID-19, leveraging local insights and tech innovations. The result? Increased revenue, higher click-through rates, and record-breaking digital pe ... -
)
We are thrilled to reveal the initial category finalists for the 2024 eCommerce Awards. -
)
Bite-size updates on what happened in marketing and eCommerce this month, to keep you ahead of the curve and inform your campaigns. -
)
Meet SJ, AllSaint's Global Leader in CX, Fraud & D2C, as she tells you more about implementing AI at a major British fashion retailer, as well as strategies for payment security and fraud prevention -
)
The UK eCommerce market has underperformed in 2024, with actual revenue growth consistently below forecasts, though some sectors like health & beauty show resilience and potential for improvement. -
)
Insights on the transformative impact of generative Artificial Intelligence in eCommerce from daily applications to long-term implications. -
)
Meet Giovanni, Head of eCommerce Media Europe at Lipton as he shares valuable insights into effective eCommerce strategies and balancing creativity with data-driven decisions. -
)
A comprehensive examination of the advantages and limitations of Amazon advertising. -
)
Meet Robert Manning, Head of Direct to Consumer & eCommerce at Biotiful, who's spearheading the launch of ambient products through DTC channel in the rapidly growing gut health market. -
)
In a recent conference session, Andrew Ostcliffe, Oxfam's Head of eCommerce & Retail Innovation, shared key strategies for managing rapid eCommerce growth while integrating with physical store offerin ... -
)
In this conference Helen Slaven, Chief Revenue Officer at Poq, and Jennifer North, Head of Digital Experience at Hobbycraft, shared valuable insights into the pivotal role of mobile apps in driving cu ... -
)
2024 started off badly for eCommerce sales in the UK and it looked like demand might actually be getting even more suppressed; a real blow to a market that has seen 35 consecutive months of negative m ... -
)
If you haven’t started your entries already to the eCommerce Awards there is still plenty of time to start your winning journey…
)
){kind=logo}
)
)
)
)
){kind=logo}
)
)
)
){kind=logo}
)
){kind=logo}
){kind=logo}
.png/fit-in/500x500/filters:no_upscale())
){kind=logo}
)
)
){kind=logo}
)
){kind=logo}
)
){kind=logo}
){kind=logo}
){kind=logo}
){kind=logo}
)
)
)
)
){kind=logo}
){kind=logo}
){kind=logo}
