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Coupons, Coupons, Coupons

After Black Friday and the Black Week nearly everybody has recognized that coupons have been the center of all the marketing and sales activities in online shops. They focus their sales activities normally in their cart and the customers see their discounts there after applying a coupon code.

Does it really make sense to offer new coupons weekly in e.g. newsletters? Read more in this article regarding coupons, coupons, coupons.

Coupons are a De Facto Standard

Nowadays customers are used to coupons. The online shop owners taught their customers to use coupons in nearly every order. Most e-commerce customers are totally used to enter coupon codes on cart pages. When they see discounts, they think of coupons. Some of them even only order in online shops when a coupon is available. Therefore they are checking several deal and coupon websites before placing an order. If none is available, then some of them won’t even order.

That’s why it indeed can make sense to regularly offer coupons combined with sales activities. But this “habituation effect” is a great chance for online shop owners to find new ways of offering discounts.

Coupon Types

Fixed Coupons

The first and easiest coupon type are coupons with a fixed value. Very easy, because you can just use it in the cart – no matter what your cart contents look like. Fixed coupons are calculated like:

Order Item 1             $55.00
Order Item 2             $60.00
-------------------------------
Subtotal                $115.00
Coupon Fixed             $10.00
-------------------------------
Grand Total             $105.00

Percentage Coupons for the Whole Cart

Percentage discounts for the whole cart are also a very common type used for coupons. When entered in the cart, the percentage discount gets applied depending on the contents in your cart. An example calculation:

Order Item 1             $55.00
Order Item 2             $60.00
-------------------------------
Subtotal                $115.00
Coupon 10 % Article 1    $11.50
-------------------------------
Grand Total             $103.50

Percentage Coupons for Specific Order Items or Special Conditions

Another very common way of shop owners is to offer coupon codes combined with special conditions. These conditions can be e.g.:

  • A minimum order amount
  • A percentage discount which is only applied to specific order items
  • The time of the day

Let’s take the example calculation above and let’s assume, that the coupon code is only valid for the order item 1:

Order Item 1             $55.00
Order Item 2             $60.00
-------------------------------
Subtotal                $115.00
Coupon 10 %               $5.50
-------------------------------
Grand Total             $109.50

As you can see in this example calculation, this coupon type is much more complicated for the customers, but great to promote for shop owners. Special conditions are usually only communicated in foot notes in the coupon terms referenced by a “*”.

Problems for Consumers

The famous Black Friday is a great example: only 76 % of the “discounted” offers did really contain a discount. So every 4th product was just sold by its normal or an even higher price. Many offers were fake and the special prices were just based on a higher original price.

As a customer who buys mass products, you really have to take care for the current prices. You’re forced to compare the prices on platforms like Google Shopping to really make sure, that the price reduced by a coupon discount is really the best price offered on the market. Additionally, coupons don’t necessarily appear in platforms like Google Shopping as you can only see prices and special prices there, because the coupon is entered in the cart. Therefore you have to spend lots of time browsing through the different online shops and deal sites to find the best price and coupon.

Problems for Shop Owners

Bad Margins

The overall margin of online shops constantly offering coupons is much smaller than of online shops with random sales activities. Many small shops have already been ruined by too extensive coupon usage. They’ve destroyed their margins and sold too many products with too high discounts. The result: because of the high order amount and the low margin, backorders could not be fulfilled because there was no money left to fill up the stock.

No More Orders Without Coupons

Customers really get used to coupons quite fast. Many of the customers who have once used a coupon code, will already search for the next one with their following orders. Some of them will even wait until the next coupon is available instead of placing their order. This can result in unsatisfied customers just waiting for coupons which will maybe never come again. And the customer is lost.

Offer Real Discounts?

Also very common is to offer a general higher price and then reduce this price by offering coupons. This is a way to circumvent their customers and when the customers are recognizing this, they will be lost forever.

How Could It Possibly Come This Far?

There are countless small online shops out their. In Europe and America, all these online shops compete with large marketplaces like Amazon or also even sell their products additionally on these marketplaces. As these marketplace giants are defining the market price and go into the price leadership for mass products, also small and mid sized online shops, which don’t sell their own unique products, have to follow their prices and discounts. Coupons are one central way of doing this and to compete with the market leaders.

For both, shop owners and customers, the discount battles with coupons are a huge problem and really exhausting. It’s really time to find something pioneering new. We’re really excited about what the next innovative idea for a coupon alternative will be.

MichaelCoupons, Coupons, Coupons