The promotions try to get customers to behave in a certain way. A coupon may seem straightforward, like Drugstore.com offering $5 off a $30 purchase. In fact, it is encouraging one-time customers to browse through several pages of a site and get to know what a retailer offers as they decide what to buy.
“The reason there’s these different promotions and not just the straight dollar-off or percent-off promotions all the time is there are different incentives,” said David Lonczak, chief marketing officer of Drugstore.com. “You may just need a sale, you may have a product you’re long on and you need to get rid of it, or you may be looking to acquire customers with a higher basket,” he said, referring to the transaction price. “You have to be thoughtful.”
Discounting has declined; in November, retailers’ e-commerce revenue from sales of full-price items rose 52 percent versus November 2009, according to MyBuys, which works on personalization offers for retailers.
But less discounting has not tamped down online sales. On Thanksgiving weekend, more than one-third of purchases were made online, versus about 28.5 percent last year, according to the National Retail Federation.
That is because even staunch in-store shoppers are now comfortable buying online, said Fiona Dias, executive vice president for strategy and marketing for GSI Commerce, which provides e-commerce technology to retailers like Toys “R” Us. And the high demand means that online retailers do not have to slash prices to get customers.
“If anything, we’re running tight on inventory because everyone has sold a lot more than they expected to,” Ms. Dias said of the sites she works with. “That’s why we’re not seeing 50-percent-off promotions.”
Given their strong position, retailers are trying to get customers out of the price-wars mind-set that they adopted during the recession.
“At some point, we have to stop and try to go back to where we were because if everyone continues to offer 20 percent, 50 percent off, it’s going to change the market on a long-term scale that it would be too hard to get back from,” said Melissa Joy Manning, who runs an online jewelry store bearing her name. She has stopped discounting, but is giving a pair of silver hoop earrings to customers who spend $100 or more. “We don’t have unlimited resources, so we do try to be as creative with them as we can,” she said.
Like Ms. Manning, other retailers are getting creative with unusually specific offers.
“It’s about margins,” said Andy Dunn, the chief executive and co-founder of Bonobos, a men’s clothing site. While last December, about a third of his revenue came from promotions, this year it’s down to about a quarter, even as he expects his revenue to nearly triple for the month. “There’s less of a need to be highly promotional,” he said. “At the same time, we feel we need to get better at the laser-beam promoting.”
So he is whittling down offers, sending, for instance, a 20 percent offer on suit elements to people who have bought wool pants but not a jacket.
“We don’t have to treat everyone the same,” he said.
Drugstore.com also changes its approach depending on the customer.
That offer for $5 off any purchase over $30 may prompt people to explore the site. “So if a new Drugstore.com customer doesn’t know I sell toys and games, would you think I’d sell a Razor scooter?” he said. “I have to incent you to shop around.”