The festive season is when ecommerce discounts turn big and bold. All this is done in the hopes to receive massive orders that bring that glorious cha-ching! But, simple math shows that the more discounts you offer the less money you make. So, how can this festive season possibly boost your finances if discounts burn holes into your pockets?
MBOSS owner and online seller Chirag Gada claims that, “The additional discount during festive sales should be very low.. usually 2-5% as anyways there is good traffic during those days and sales will increase. Higher discounts can lead to losses or very low profits as post festive sales the returns are also very high. Only inventory which is to be liquidated should be discounted higher.”
Therefore, before you promote your products for the festive season it is wise to plan. Avoid promoting everything you sell. Select only products that:
This means if it costs you too much to acquire a product, then it is best you don’t promote it through deep discounting. Also, products that sell like hot cakes are guaranteed to sell faster even at a small discount. You can also leverage discounts and benefits you receive from platforms. For example, Amazon currently has a series of offers for sellers. You can use these to lower your input cost and pass them on to the consumer.
Transfer Price = Costs + Margin
To figure out this price it takes a while. You need to understand how the market is responding to your products then accordingly change your selling price.
The seller behind the Cotton Chef, Farooque Memon says, “If your pricing is not right, the entire game is played wrong. You are just supplying the goods and not gaining profits. Hence if you have sustained a good pricing, it will be easy to give a lot of discounts.”
The multi-channel and inventory management firm, Browntape Technologies can record your products' performance through sales reports produced by its software. These help you identify the best and average performing SKUs and the best discount prices to sell them at during festive sales. Browntape’s price updating feature helps you change selling prices on online marketplaces at anytime.
“It is not necessary to give a lot of discounts every now and then. Else people have a very casual picture about your brand. If your product is always discounted, it loses its brand value.
Sellers can keep a slight giveaway of 8 to 10 percent. Discounting your product too much also doesn't catch a lot of attention. There are so many sellers who keep MRP as 999 and sell the products for 200 or 300 which is not an effective move (it’s a loss making one),” mentions Memon.
You can even control the hour-by-hour timing of discounts with tools like lightning deals, so that your product does not need to be on discount the entire day. This has the added bonus of your product being visible to shoppers looking specifically for festive discounts.
According to the category managers at Browntape, the best ways to offer discounts and stay financially secure are by: