Markdowns are a bit like a necessary evil for the retail industry. Attempts by retailers to move away from this model have nearly always ended in failure. The problem is even worse online as all it takes for a shopper to go to a new store is to open another tab. Each year as the holiday season heats up it isn’t uncommon to see banners displaying 50% off and more. But unless you run a large store and do large enough volumes to justify the markdowns, you are going to be losing a lot of money trying to keep up with all the dicounting. Here are a four ideas that will help you avoid just that
Never get into a pricing war:
Having a price match guarantee is a slippery slope. While you might get more traffic to your store you might end up losing money because of the huge discounts. Instead, focus on adding extra value to your shoppers for the money they pay. Try adding non monetary benefits to each purchase like the possibility of winning a huge prize, more coupons etc…
Start early and start small:
Start your promotions as early as you can, before the holiday season fully sets in. That way you can hopefully generate enough revenue to justify deeper discounts later on in the season or maybe, just maybe avoid the discounting craze all together. The discount rates on these early sales don’t have to be too high, just work on putting it in front of as many people as possible. While promoting your sale use messaging language that is similar to what might be seen later on “regular” holiday sales.
Unless you sell extremely niche products, you are most likely going to be competing with larger stores with a much bigger marketing budgets than yours. Instead of going head to head with them for CPC ad space, look at local media outlets for your ads. You could possibly get the same level of shopper attention where it matters without having to compete with the biggies. Another approach you could take is to get in touch with influencers in your area and get them to endorse or promote you.
Unless you do large volumes, those extra orders you get because of a huge discount are not going to help much. You can either focus on getting more traffic to your store or on increasing the average order value(AOV) of each customer. To get in more traffic give out discounts based on successful referrals. One idea to increase the AOV is to have discounts that apply only on purchases above a price range.
Discount based on target demographic
It is quite likely that the whales on your store will continue shopping with you even if you don’t have huge discounts all the time. Find out what products these people are interested in and avoid discounting them too heavily, instead put all the heavy discounts on products that the masses might be interested in.