Stock sweeping, end-of-season sales - what do you need to take into consideration to have successful discounts?

-In general, you can expect a discount to increase your sales, gain new customers, and be kind to your old, loyal customers. Typical forms of discounts include end-of-season sales and inventory sweeps -, says Fruzsina Donáth, Business Development Manager at PriceKit.

The purpose of inventory sweeping is usually for the company to minimize losses as well as get rid of excess inventory. In the case of end-of-season sales, the run-down models are typically priced by the dealer. So not every inventory sweep is a seasonal sale, but almost every end-of-season sale is a kind of inventory sweep.

Which components are a must-have of a discount?

Show the discounted products!

Discounted products must be differentiated from the other products! You can use tags, but it is also efficient and useful to have a separate page for the discounts in your webshop. 

Set the limits

In most cases, there is a time and stock limit to all discounts, so the trader shows until when the discount is available and that the discount is on until they are out of stock.

Define the reason

– It is good to give a reason for the discount: for example stock sweeping or winter sales. This way, you can make your discount transparent. - points out Fruzsina - This is important because otherwise, the customer could think that the discount is due to a quality decrease. But, if it is defined that the discount belongs to a winter sale, it will make the discount and the communication more authentic and help to prevent misunderstandings. 

Show the original price

It is a basic requirement: always show from when and to where the price has been lowered. You should show the original and the discount price. 

Pros and cons

Discounts definitely have a lot of advantages, although, they also have negative effects too, that you need to be prepared to.

Donáth Fruzsina highlights that offering discounts can give you an advantage on the market, but it is a very short-term condition. The reason behind this is that it can be copied very easily and quickly. Real competitive advantage is always based on a unique distinctive valuation in the market!

It is also an advantage that you can increase your income and get new customers. Keep in mind that new buyers are mostly price-sensitive customers who are coming to you because of your price action.

Of course, the big advantage of stock sweeping and the end-of-season sale is that the stock is freed up, so you can refill it with new products and fresh stock at no extra cost!

A disadvantage can be that a discount can be easily copied - especially nowadays when pricing is automated. In the case of a unique development or special service, this is not an issue. Another negative aspect could be that all discounts will take your potential profit margin, so you give up on this to make stock sweeping possible.

You need to take discount hunters into consideration too. Many customers are timing their purchases based on discounts. Sometimes a big discount can also hurt the brand (too cheap=no quality). This is normally not an issue for the popular, big brands, but can affect small webshops.

The bases of a good discount

To have a successful discount, there are some rules to follow.

Plan it 

It might seem evident, but many people forget about making plans and think through the discount from one step to the next. 

- You should define a goal. Decide who is the target audience, what is the time limit, which products and categories are included, and how much the prices should be increased. - suggests Fruzsina - A structured plan will also help to check at the end if the discount were successful, which elements worked fine and which did not. 

Targeted communication

If you are targeting only one segment, you should target the messages to them about the discounts. 

Gather the data

You could use these discounts to gather data. Customers are more willing to subscribe for example, as they have the feeling of getting a lot for a good price. Ask for feedback, reviews, ratings!

Be proportionate

Before having a strong campaign behind a discount, you should definitely check the stock, so define the campaign based on the stock - highlights Fruzsina - This way, you can avoid turning your discount negative, unsatisfied customers (even consumer protection).

Avoid fake pricing

It is not smart to make the prices higher just before the discount, so it would seem to have a bigger discount. Not to mention that the customers can check this in a few clicks.

Portfolio management

– Think in portfolios! There is no need to give all your products at a discount. Think about the categories in which you can bring back the lost profit margin - suggests Fruzsina.

Stay transparent

It is also important to show guarantees next to the discounted products. Stay transparent about what is included in this.

Price wisely

Set a minimum price that you would not cross when adding a discount. Setting the discounts week by week with smaller changes is also a good idea. It is not always the best idea to discount to product to the lowest price from the beginning.

Monitor the competition

Monitor the prices of your competitors and check if they react to your discount or not - this can be easily done with the help of PriceKit. You should also analyze the competition (when and how do they discount, what is their profile when pricing) because if you have this data, you will know more or less how the market will react when you have discounts.

Be prepared

– Maybe the most important task: to get your system ready for the discounts and be as organized as possible - suggests Fruzsina. - The reason is that when a stock sweeping gets very busy, all the team, from logistics to support, needs to be ready. It is not enough to have great discounts if you cannot deliver quickly. This can cost you a lot, you can even lose the credibility of your brand.