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Retailers Should Jump Off the Discounting Rollercoaster in 2021
The last 12 months have proven to be a rollercoaster, to say the least. When it comes to e-commerce, with the increasing need to compete with pricing, shipping and returns, it can cost retailers more than they may realise. How can retailers tackle the onboarding of new shoppers while staying sustainable and profitable? Is it time that retailers got off the discounting rollercoaster in 2021?
From the pandemic bolstering online growth to the seismic changes in consumer behaviour, the acceleration in e-commerce adoption has been greater than expected. A recent webinar with Partnerize and Silverbean offered valuable insights and advice for retailers to stay agile and scalable in a time of retail uncertainty.
According to IBM’s Retail Index, e-commerce has experienced approximately five years’ worth of growth in the last 12 months, with 70 percent of shoppers turning to online channels to help them find a bargain. Moreover, there were one million new online shoppers joining the e-commerce phenomenon in 2020, resulting in 73 percent of all Aussie households using e-commerce as a shopping channel.
“What’s interesting is where that spending is being directed,” explained Sarah Kelly, the Marketing Director at Partnerize. “Online growth is happening across all retail areas, and while some show larger growth – such as fashion and footwear – all areas are continuing to increase by 20 to 35 percent.”
With a flurry of new shoppers and seasoned customers using online as a preferred channel, how does this change consumer habits? According to data from Westpac Red Book, we are currently experiencing a retail rebound, and while consumer sentiment has been relatively choppy after the last six months, it is now higher than it was in a pre-COVID landscape.
So, what does this mean? In a recovering economy, it’s understandable that consumers are looking for ways to save and become more mindful of how they spend their money online and in-store. This, of course, means they’re on the lookout for discounts before adding to cart.
When used correctly, discounts can be one of a retailer’s strongest promotional arms, but it’s important to be mindful when introducing them – it’s all about balance.
In an effort to reduce the strain of these changes in consumer behaviour, an option that retailers may wish to consider is developing a new approach to partnerships. A recent study from Partnerize found that there has been a 37 percent increase in content partner sign-ups YoY.
“Consumers are demanding and want to understand and research even the simplest of purchases before committing to buy,” explained Annabel Gray, the Associate Director of Silverbean Australia.
As such, there has also been a 111 percent increase in revenue from loyalty partners YoY, and a 65 percent average increase in partnership revenue in APAC.
In the last three months, 76 percent of shoppers have taken advantage of a loyalty program to secure a discount or coupon.
“To put this into perspective, this is one of the largest increases in sign-ups from any partner type and signals the willingness for both consumers and brands to engage with this partner category,” Gray told Power Retail.
Partnerize and Silverbean gave Power Retail six key tactics to help create a long-term, sustainable model for retailers.
Before jumping in, it’s important to reiterate that discounts are an intrinsic part of the retail model and strategy. When considering discounts, retailers need to create a long-term, sustainable model. And while it’s not about removing discounting in its entirety, retailers have to realise that the practice is about so much more than just discounting, it’s about centring around a retailer’s goals and profitability.
To find out the six key strategies for jumping off the discounting rollercoaster, check out the full webinar with Partnerize and Silverbean below.