Research reveals “always on” sales are damaging eCommerce profits

New research, published by Klarna, has revealed the extent of damage caused by ‘always on’ sales to merchants’ bottom lines.

The research shows that discounting is no longer confined to the traditional winter and summer sales. The new rules of retail mean discounting has become a fluid and unpredictable phenomenon – with over half (57%) of consumers expecting regular sales.

The research of 500 British retailers highlighted the negative impact this can have on the bottom line of merchants. Over half of retailers surveyed (53%) say the “always on” nature of sales is having a negative impact on profits – and shockingly, over one in 10 (11%) saying discounting cost them over £25,000 throughout 2017.

This isn’t felt just by smaller retailers, but merchants of all sizes – in fact, it’s those with 100-239 employees that feel the burden most with 66% saying constant discounts are impacting profits.

The eCommerce channel is particularly vulnerable, with 56% of retailers saying the majority of their discounted transactions come from online trade.

While the research revealed that 18% of respondents only shop when there is a sale on – with millennials (23% of 25-34 year olds) and gen Z (22% of 16-24 year olds) most likely to wait for sales to shop, compared to 11% of over 55s – all is not lost for retailers.

Klarna’s research shows that, with many consumers viewing sales shopping as a stressful, negative experience, there’s scope for retailers instead to turn to more shopper-centric initiatives to win business and loyalty. Over a third of customers surveyed (36%) would be more likely to buy full price items if they were able to pay later once they had received the goods and decided what to keep. Offering multiple payment options at the point of sale – both online and in store – gives shoppers choice, convenience and financial flexibility.

“There’s ample scope for retailers to ditch excessive discounting and instead focus on providing a better customer journey to win over shoppers – from the browsing phase through to the payments process,” Luke Griffiths, Managing Director at Klarna UK, told PaymentEye.

“Key to this will be improving the checkout experience. Online retailers should look to reduce steps in the purchase flow, enable one-click purchases, optimise for mobile and offer a wider variety of payment options.”

“In fact, over a third of customers surveyed (36%) would be more likely to buy full price items if they were able to pay later once they had received the goods and decided what to keep – showing the benefits of offering flexible and consumer-friendly options at the point of sale.”

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