How eCommerce Companies and Retailers Can Avoid Heavy Discounting | eCommerce Matters Ep. 008

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This episode shares answers to pricing questions such as why are ecommerce companies and retailers heavily discounting, what are the latest strategies to help you counter heavy discounting and much more. 

Hosts: Philip Huthwaite (CEO & Founder of BlackCurve) and Rob Horton (Product Director at BlackCurve).

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Podcast Summary

Introduction

The podcast episode titled "How eCommerce Companies and Retailers Can Avoid Heavy Discounting" discusses various pricing-related questions and strategies for avoiding excessive discounting. The hosts, Philip Huthwaite and Rob Horton, address questions from a previous webinar and provide insights into effective pricing practices.

Identifying candidates for discounting

To determine which products to discount, it's essential to analyse sales history and assess demand in the marketplace. Examining data sets can help identify items that may benefit from price adjustments to increase sales.

Customer reaction to fluid pricing

Customers can be sensitive to frequent price changes. To avoid cognitive dissonance and customer annoyance, it's recommended to avoid intraday or daily price changes. Setting a consistent pricing cycle (e.g., weekly changes) can help maintain a stable user experience.

Avoiding price wars

Price wars can be damaging to the marketplace. Holding your nerve and resisting the urge to engage in aggressive discounting can help maintain stability and profitability. It's crucial to consider the broader market conditions and focus on utilising data sets beyond competitor pricing to inform pricing decisions.

Depth of discounting

When determining the level of discount, it is suggested to approach it strategically. While marketing efforts may require deeper discounts to attract attention, it's important to avoid excessive discounting that negatively impacts profitability. Smaller incremental price adjustments allow for better optimisation and margin control.

Pricing relative to Amazon

When pricing products relative to Amazon, it's essential to analyse individual inventory and identify items that are price-sensitive versus those driven by other factors like advertising or unique value propositions. While some products may require price parity with Amazon, understanding your brand positioning and consumer behavior is crucial.

Monitoring margin returns during discounting

Balancing headline discounting with margin returns can be challenging. It requires analysing data and running pricing experiments to find the right balance between driving sales and maintaining margins. Each business's context and goals play a significant role in determining the optimal discounting strategy.

Discounting when doing well during lockdown

If a business is performing well, it may not always be necessary to discount. However, market changes, such as transitioning in and out of lockdown, can impact demand and require adjustments to pricing strategies. Monitoring the market and adapting pricing accordingly is crucial.

Conclusion

The hosts emphasise the importance of data analysis, understanding market dynamics, and considering individual business contexts when making pricing decisions. They encourage businesses to experiment, optimise, and monitor results to find the most effective pricing strategies for their specific circumstances.