E-Commerce Link : Valued Promotions
Three recession defense tactics for online retailers in 2009
February 2009 By Ken Burke
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This year brings significant challenges for online retailers including higher expectations from online shoppers, limited resources with which to drive sales and the need to build customer loyalty in the face of increased competition. Consumers also look to spend less, yet they still expect stellar experiences online.
This means that two priorities have superseded all others: (1) meeting customer demand for real value and lower prices, and (2) maintaining sales and revenue momentum. While these goals may seem diametrically opposed, it’s possible to satisfy customers’ needs while still setting yourself up for success in the uncertain mood of 2009.
Tactic No. 1: Free Shipping
Forrester Research’s October study, Outlook for U.S. Online Holiday Sales, 2008, reports that 75 percent of shoppers say they’re more likely to shop at a site that offers free shipping. You need to choose a free shipping model that your particular customers respond to. Be careful to weigh the cost of free or discounted shipping against increased order size. Some estimates indicate you need to increase sales by 30 percent to cover the free shipping cost.
- Product- or category-specific: Tie free shipping to a limited selection of products or product categories.
- Free shipping category: Create an entirely new category for free shipping, and place it in the site navigation.
- Dollar amount threshold: Apply free shipping automatically once the amount in the cart exceeds a certain point. Promote this actively throughout the site and in the cart.
- Site-to-store: Put a spin on the “purchase online, pick up at a store” technique by promoting it as a free shipping opportunity. The buyer has the convenience of shopping online, and the cost of shipping from warehouse to store is cheaper for the merchant.
- Tied to branded credit card: When someone makes a purchase with your store-branded card, provide free shipping.
Tactic No. 2: Value Without Price Cuts
Customers want to find good things in the sale/clearance section, reduced prices and affordable package deals. In many cases, it is not necessary to actually reduce your prices at all. It may be sufficient to emphasize value by highlighting products already in your inventory that carry lower prices.
“Good, better, best” pricing traditionally has been used to encourage shoppers to buy more expensive products. These days, it also can rescue the sale if a shopper balks at a price that is higher than expected. Recently, Helzberg Diamonds created an effective homepage strategy. A flash animation swaps primary images on its homepage every few seconds, starting with a midrange product, then a low-priced option and finishing with a high-end option. This lets all buyers find products that are right for them.
Another pricing option is to offer entire categories based upon specific price points: “Under $50” or “Under $100.” This can be very effective in price-based online gift guides, and these products do not actually have to be on sale.
Tactic No. 3: Discount Judiciously, Promote Extravagantly
Retailers can maintain the integrity of the brand while still offering discounts—even deep ones. Smart retailers focus on discounts that mean the most to core customers rather than slashing indiscriminately. A few well-advertised discounts can draw new customers without making you look like a liquidation center.
Once you decide which discounts to apply, get creative and promote them. Consumers see a lot of “Prices Slashed” messaging, and you want to stand out from the crowd.
- Online value center: Reduced price items in this section can be organized according to price point. You may choose to highlight one or two different items every few days in a “Time is running out!” promotion to create a sense of urgency.
- Value bundles: People love to get more for less, and applying a lower price to an ensemble of products is bound to be a winner.
- “Buy more, save more” categories: During the 2008 holiday period, Victoria’s Secret grouped bras and underwear into categories like “2 for $40” and “3 for $25.” These categories were in the left navigation of its Sales & Specials section, which also included discounted categories labeled as “25%-40% off styles.”
- Online coupons and coupon codes: Target recently grouped all of its coupons in one section of its site, providing a great merchandising opportunity and making it convenient for shoppers. Rather than automatically applying a coupon discount, you can require shoppers to enter the coupon code to get them more engaged.
Marketing Tips
Once you have your discounts arranged, it’s key to communicate effectively; bargain hunters may not take the time to hunt for the discounted product you promised them.
For e-mail marketing, make sure the message in your e-mail is consistent with what the shopper sees on your site and landing pages. Use the same messaging and imagery in both places to promote discounts, products and value, and link directly from your e-mail to the product wherever possible. Similarly, when crafting paid search ads, include the price and coupon code in your listing. This engages shoppers from the start, and they enter your site armed with the tools to get a good deal.
Ken Burke is the chairman, founder and chief evangelist of MarketLive Inc., an e-commerce technology services provider based in Petaluma, Calif. He can be reached at ken@mmlive.com, or visit www.marketlive.com/sitereview.
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