Discounts

7 Types of eCommerce Discounts for D2C stores

Skai Lama
June 17, 2024
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"Product development is only half the battle; selling it demands a separate strategy altogether."
- Every eCommerce Store Owner 

In a world where consumers are bombarded with countless product choices, several factors play an important role in the overall success of a store. Based on marketing principles, achieving success in retail and eCommerce requires the careful orchestration of the four Ps: Product, Price, Place, and Promotion. In the article below, we’ll take a deep dive into the type of Discounts, which fall under the 4th P - Promotions.

It's evident that consumers love discounts. Offering discounts attracts customers to finish their purchases and encourages them to become repeat buyers. Saving money is a common aspiration among humans, and for any merchant, incentivizing sales and offering discounts becomes a mandatory growth strategy.

In this detailed guide, we'll explore types of discount in eCommerce that retailers and online store owners can implement. From percentage discounts to buy-one-get-one promotions, we'll explore what they are, the benefits they offer to merchants, and provide real-world examples to understand their effectiveness.

1. Percentage Discount - Slash, Sell, Grow

A percentage discount is a promotional offer where a certain percentage is deducted from the total purchase amount at checkout. For instance, "Get 25% off all winter jackets during our end-of-season sale!” 

Benefits to Merchant: One of the most widely used discount strategies among store owners, percentage discounts can be the easiest way to attract more customers. This strategy appeals to price-sensitive consumers who are more inclined to make a purchase when offered a discount.

Remember, discounts are a perfect strategy to help your consumers spread the word. They have the highest potential for word-of-mouth marketing.

Example : Supplement Express offers a flat 15% discount to all first-time users who purchase from the store. This helps first-time visitors convert and become shoppers with the brand.

2. Fixed Amount Discount : Transparent way to Drive Conversions

A fixed amount discount is a promotional offer where a specific dollar amount is subtracted from the total purchase price at checkout. For example, "Save $10 on your next purchase of $50 or more with code SAVE10!"

Benefits to Merchants: Fixed amount discounts can help merchants move inventory quickly and increase Average Order Value (AOV). These discounts provide a predictable cost to the merchant while still offering savings to the customer. To avoid overextending your budget, you can set a maximum discount amount and limit it to one-time usage.

Example : Myntra offers a flat Rs. 200 off on a minimum purchase of Rs. 899. This helps the store increase its average order value (AOV) and incentivizes users to add more items to their carts.

3. Buy-One-Get-One (BOGO) : Double the Delight, Twice the Profit

A buy-one-get-one (BOGO) offer is a promotional deal where customers receive an additional item for free or at a discounted price when they purchase one at full price. For example, "Buy one pair of shoes, get the second pair 50% off!" 

Benefits to Merchant: BOGO offers can help merchants increase sales volume and clear out excess inventory, particularly for products with higher profit margins. BOGO promotions often generate buzz and excitement among shoppers, driving traffic both online and in-store.

Tip : A helpful strategy for achieving successful clearance with BOGO deals is to bundle two frequently purchased products together, sum up their sales prices, and offer them as an entire BOGO deal.

Example : Shoppers Stop, in collaboration with MAC, offers Buy One, Get One on its complete range of products. It's one of the most popular offers at the Shoppers Stop store.

4. Volume Discount or Quantity Discount : Sell in Bulk 

A volume discount is a promotional offer where customers receive a discount based on the quantity of items purchased. The higher the product quantity, the greater the discount. Inspired by wholesale discounting, it is now evidently utilised by DTC brands. For instance, "Save 10% when you buy 3 or more items from our summer collection!"

Benefits to Merchant: Volume discounts can help merchants increase sales volume, encourage customers to buy in bulk, and move excess inventory quickly. They incentivize customers to spend more by offering discounts for purchasing multiple items.

Example : Pet Food Express offers customers the fourth item for free with the purchase of three items. This helps the store increase its average order value (AOV) and allows customers to buy more items for their beloved pets.

5. Free Shipping : Boost AOV & Conversions 

Free shipping is a promotional offer where customers receive complimentary shipping on their order, usually when they meet specific criteria such as reaching a minimum purchase amount. For example, "Enjoy free shipping on all orders over $50!"

Benefits to Merchant: Free shipping can help merchants reduce cart abandonment, increase Average Order Value (AOV), and attract new customers. It removes a barrier to purchase and can encourage customers to spend more to qualify for free shipping. 

Tip: If your Average Selling Price is $100, it's recommended to set a shipping threshold that is 10% higher to encourage users to purchase additional items.

Example : Cupshe offers free shipping to all users on purchases of more than $50. This encourages users to add more items to their carts and allows the merchant to combine all products into a single shipment, thereby reducing shipping costs.

6. Bundle Discount - Offer more for less

A bundle discount is a type of discount where customers receive a discount when they purchase multiple items together as a bundle. For instance, "Save 20% when you buy the shampoo and conditioner bundle!"

Tip : To create Fixed & Volume Bundles, Fly Bundles on Shopify is the easiest way to offer Bundle Discounts 

Benefits to Merchant: Bundle discounts can help merchants increase sales volume, encourage customers to buy complementary products, and increase average order value. Bundles incentivize customers to purchase multiple items and reduce shipping charges for merchants. This type of discount MUST be used by eCommerce stores selling complimentary items. Categories like Fashion & Apparel, Home & Kitchen, Food & Beverage, Health, Beauty & Cosmetics have seen tremendous results with Bundle Discounts. Download Free Bundling Guide for Shopify Stores.

Example : Meatbox offers a wide range of discounted bundles for users to try their lip-smacking steaks.

7.Coupon Codes : Personalised approach to Reward Shoppers

Coupon codes are alphanumeric sequences that customers can enter during checkout to receive discounts on their purchases. This type of discount is broadly used by all kind of eCommerce merchants. For instance, "Enter code SPRING15 at checkout to enjoy 15% off your entire order."
They are among the most widely used methods to promote products, offering strong recall and easy-to-remember words. Creating coupon codes can enhance brand recognition and incentivize repeat purchases.

Benefits to Merchant: Coupon codes offer a way for merchants to track the effectiveness of their marketing campaigns across various channels and influencers. By incentivizing customer behaviour and rewarding loyalty, they provide measurable insights into promotion success and encourage purchases.
Did you know? Coupon codes are also utilised in community building, with influencers offering exclusive codes to their followers.

Real Example: Dollar Shave Club offers a 15% discount on their member-favorite collection with the coupon code MEMBERFAVORITES. It's easy to remember and refer to others, resulting in a high word-of-mouth quotient.

Today's consumers are perpetually seeking the best value for their money and are particularly drawn to promotions. While there are no one-size-fits-all discounts, merchants should keep experimenting with the above types of discounts for higher conversions and loyalty.

If you're aiming to craft the perfect discount for ecommerce stores, and you happen to be using Shopify, you're in luck.
Kite by Skai Lama offers a comprehensive range of discount options to elevate your business!

Share article

Table of Content

toc- heading
"Product development is only half the battle; selling it demands a separate strategy altogether."
- Every eCommerce Store Owner 

In a world where consumers are bombarded with countless product choices, several factors play an important role in the overall success of a store. Based on marketing principles, achieving success in retail and eCommerce requires the careful orchestration of the four Ps: Product, Price, Place, and Promotion. In the article below, we’ll take a deep dive into the type of Discounts, which fall under the 4th P - Promotions.

It's evident that consumers love discounts. Offering discounts attracts customers to finish their purchases and encourages them to become repeat buyers. Saving money is a common aspiration among humans, and for any merchant, incentivizing sales and offering discounts becomes a mandatory growth strategy.

In this detailed guide, we'll explore types of discount in eCommerce that retailers and online store owners can implement. From percentage discounts to buy-one-get-one promotions, we'll explore what they are, the benefits they offer to merchants, and provide real-world examples to understand their effectiveness.

1. Percentage Discount - Slash, Sell, Grow

A percentage discount is a promotional offer where a certain percentage is deducted from the total purchase amount at checkout. For instance, "Get 25% off all winter jackets during our end-of-season sale!” 

Benefits to Merchant: One of the most widely used discount strategies among store owners, percentage discounts can be the easiest way to attract more customers. This strategy appeals to price-sensitive consumers who are more inclined to make a purchase when offered a discount.

Remember, discounts are a perfect strategy to help your consumers spread the word. They have the highest potential for word-of-mouth marketing.

Example : Supplement Express offers a flat 15% discount to all first-time users who purchase from the store. This helps first-time visitors convert and become shoppers with the brand.

2. Fixed Amount Discount : Transparent way to Drive Conversions

A fixed amount discount is a promotional offer where a specific dollar amount is subtracted from the total purchase price at checkout. For example, "Save $10 on your next purchase of $50 or more with code SAVE10!"

Benefits to Merchants: Fixed amount discounts can help merchants move inventory quickly and increase Average Order Value (AOV). These discounts provide a predictable cost to the merchant while still offering savings to the customer. To avoid overextending your budget, you can set a maximum discount amount and limit it to one-time usage.

Example : Myntra offers a flat Rs. 200 off on a minimum purchase of Rs. 899. This helps the store increase its average order value (AOV) and incentivizes users to add more items to their carts.

3. Buy-One-Get-One (BOGO) : Double the Delight, Twice the Profit

A buy-one-get-one (BOGO) offer is a promotional deal where customers receive an additional item for free or at a discounted price when they purchase one at full price. For example, "Buy one pair of shoes, get the second pair 50% off!" 

Benefits to Merchant: BOGO offers can help merchants increase sales volume and clear out excess inventory, particularly for products with higher profit margins. BOGO promotions often generate buzz and excitement among shoppers, driving traffic both online and in-store.

Tip : A helpful strategy for achieving successful clearance with BOGO deals is to bundle two frequently purchased products together, sum up their sales prices, and offer them as an entire BOGO deal.

Example : Shoppers Stop, in collaboration with MAC, offers Buy One, Get One on its complete range of products. It's one of the most popular offers at the Shoppers Stop store.

4. Volume Discount or Quantity Discount : Sell in Bulk 

A volume discount is a promotional offer where customers receive a discount based on the quantity of items purchased. The higher the product quantity, the greater the discount. Inspired by wholesale discounting, it is now evidently utilised by DTC brands. For instance, "Save 10% when you buy 3 or more items from our summer collection!"

Benefits to Merchant: Volume discounts can help merchants increase sales volume, encourage customers to buy in bulk, and move excess inventory quickly. They incentivize customers to spend more by offering discounts for purchasing multiple items.

Example : Pet Food Express offers customers the fourth item for free with the purchase of three items. This helps the store increase its average order value (AOV) and allows customers to buy more items for their beloved pets.

5. Free Shipping : Boost AOV & Conversions 

Free shipping is a promotional offer where customers receive complimentary shipping on their order, usually when they meet specific criteria such as reaching a minimum purchase amount. For example, "Enjoy free shipping on all orders over $50!"

Benefits to Merchant: Free shipping can help merchants reduce cart abandonment, increase Average Order Value (AOV), and attract new customers. It removes a barrier to purchase and can encourage customers to spend more to qualify for free shipping. 

Tip: If your Average Selling Price is $100, it's recommended to set a shipping threshold that is 10% higher to encourage users to purchase additional items.

Example : Cupshe offers free shipping to all users on purchases of more than $50. This encourages users to add more items to their carts and allows the merchant to combine all products into a single shipment, thereby reducing shipping costs.

6. Bundle Discount - Offer more for less

A bundle discount is a type of discount where customers receive a discount when they purchase multiple items together as a bundle. For instance, "Save 20% when you buy the shampoo and conditioner bundle!"

Tip : To create Fixed & Volume Bundles, Fly Bundles on Shopify is the easiest way to offer Bundle Discounts 

Benefits to Merchant: Bundle discounts can help merchants increase sales volume, encourage customers to buy complementary products, and increase average order value. Bundles incentivize customers to purchase multiple items and reduce shipping charges for merchants. This type of discount MUST be used by eCommerce stores selling complimentary items. Categories like Fashion & Apparel, Home & Kitchen, Food & Beverage, Health, Beauty & Cosmetics have seen tremendous results with Bundle Discounts. Download Free Bundling Guide for Shopify Stores.

Example : Meatbox offers a wide range of discounted bundles for users to try their lip-smacking steaks.

7.Coupon Codes : Personalised approach to Reward Shoppers

Coupon codes are alphanumeric sequences that customers can enter during checkout to receive discounts on their purchases. This type of discount is broadly used by all kind of eCommerce merchants. For instance, "Enter code SPRING15 at checkout to enjoy 15% off your entire order."
They are among the most widely used methods to promote products, offering strong recall and easy-to-remember words. Creating coupon codes can enhance brand recognition and incentivize repeat purchases.

Benefits to Merchant: Coupon codes offer a way for merchants to track the effectiveness of their marketing campaigns across various channels and influencers. By incentivizing customer behaviour and rewarding loyalty, they provide measurable insights into promotion success and encourage purchases.
Did you know? Coupon codes are also utilised in community building, with influencers offering exclusive codes to their followers.

Real Example: Dollar Shave Club offers a 15% discount on their member-favorite collection with the coupon code MEMBERFAVORITES. It's easy to remember and refer to others, resulting in a high word-of-mouth quotient.

Today's consumers are perpetually seeking the best value for their money and are particularly drawn to promotions. While there are no one-size-fits-all discounts, merchants should keep experimenting with the above types of discounts for higher conversions and loyalty.

If you're aiming to craft the perfect discount for ecommerce stores, and you happen to be using Shopify, you're in luck.
Kite by Skai Lama offers a comprehensive range of discount options to elevate your business!

Share article