eCommerce Report: Retailers use these strategies to win end-of-year sales

Ecommerce businesses are finding themselves in one of the busiest times of the year. With Cyber Monday, and other end-of-year sales events just around the corner, it's important for advertisers to stay ahead of the curve. They can do this by understanding what trends are shaping the online retail landscape. As these busy sales roll around, what eCommerce trends can advertisers expect to see in retail sectors?

First, it’s valuable to take a look back at the transition from 2022 to 2023 to see how it compares to how 2023 played out. According to the Multichannel Marketing Report 2023 by DataFeedWatch, there was a 14% year-over-year increase in the number of discounted products during that time. But since 2023, that number has remained stable at 30.66%. But that doesn’t mean there weren’t any significant changes in 2023.

With holiday shopping season poised to amass even more sales than the record breaking 9.12 billion in 2022, retailers are making strategic choices to take up as big of a portion of that share as possible. This includes what kinds of products they’re adding discounts to and how big or small those discounts are. Taking a closer look at product categories and online retailers’ inventory sizes reveals the reasons behind these decisions that fill retailers’ Q4 playbooks.

Which product categories have the highest number of products on sale? In Q2 of 2023, the Furniture category had 48.51% of products on sale. In second place came Food, Beverages, & Tobacco with 41%, and Apparel & Accessories came in third at 35.75% of its products on sale.

November opens with changes in discount strategies

Now, as of the first week of November 2023, the categories with the most products on sale have shifted. Luggage & Bags have 53.17% of products on sale, Home & Garden has 48.39%, and in third place is Furniture with 47.32%. This shift shows that advertisers in these categories have decided that increasing the number of sales they offer is the best course of action at this point in the game.

Changes have also been made on a subcategory level, showing that retailers are getting as specific as possible with their discounts. Retailers advertising Household Supplies have increased the value of their discounts by 41.94% in Q4, while the discount percentages applied to Jewelry have increased by 28.38%.

But not every subcategory has seen increases at the end of the year. Retailers advertising Linen & Bedding products had the opposite strategy and instead decreased their discount values by 17.28%.

The rankings for discount values stayed the same as recorded in November 2023, but each category has slightly increased their discount values. It now stands at Electronics with 41.31%. Media with 38.68%, and Apparel & Accessories with 38.39%.

Retailers choose between two main discount methods

Speaking of discount strategies, a product category with a higher number of sales doesn’t necessarily mean that the discounts will be higher. As of Q2 2023 the three categories with the highest discounts applied to products are Electronics with 38.02%, Media with 39.7% and Apparel & Accessories with 37.71%.

These numbers give us a glimpse into the reasoning that advertisers are putting behind their strategies. To work within their budgets and resources, retailers are typically choosing between one of two main tactics. Either they are discounting a wider variety of products, or discounting fewer products but making the value of those discounts higher. Both can be effective at enticing customers to visit their online shop and improve the chances of an increase in cart value for the end-of-year sale season.

Either way, retailers should make sure that the discounts they apply are in line with their business goals and capabilities. To offset a more aggressive discount strategy, retailers can do things like reduce their overall marketing costs, invest in cost-saving technologies, and put a bigger emphasis on customer retention.

Inventory size impacts discount strategies

The size of stores also seems to have an effect on discount strategies. As it stands in November of 2023, stores with over 200k products in their inventories had a noteworthy decrease in discount values, dropping by 30.86%. On the other hand, stores with 25-50k products increased their discount values during the same time period by 9.17%.

These changes perhaps point to retail giants waiting to discount their products until Black Friday and Cyber Monday are closer in order to have a larger impact during those sales. They may also be more concerned about the changes of perceived value by consumers that longer-lasting discounts will have on their brand.

At the same time, mid-size stores may be increasing their discount values earlier to remain competitive among similarly-sized stores. If other retailers in their size bracket have sales all November long, then they might conform to not lose out on business.

Succeeding in a competitive market

If retailers in specific product niches or inventory brackets aren’t able to offer the same size or variety of discounts as their competitors, not all hope is lost. Other methods, like enhancing product feeds, can push their listings to the top of the SERP, even if another company is offering a lower price.

One of the most common ways to improve product feeds is through custom labels. They allow advertisers to segment products into any kind of category they wish to, like seasonal items, price margins, and best sellers. The main benefit is having greater control over how advertising budgets are spent. For example, advertisers can boost their ROI through placing all the products they have on sale in one group. In fact, 17.91% of custom labels are set up this way, making it the most popular method.

The takeaway

So, how can online retailers use this information to their advantage? By using this data as a benchmarking tool, advertisers can evaluate where they stand at a global level based on what type of products they sell, and the size of their inventories. Then they can adjust the way they position themselves in the market to have a successful 4th quarter.

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by Irfan Ahmad via Digital Information World