Brands over-reliant on discounting to encourage direct purchase online

Over 70% of brand owners said that they use price discounting to drive customers to buy direct from them, primarily through online channels, according to recent research.

The study - commissioned by eCommera, a pioneering provider of intelligent eCommerce trading solutions, with research specialists, Coleman Parkes, among 50 major international brands – found that only 35% of brand owners used added-value techniques such as offering specialised customer services while just 15% offer exclusive products.

One respondent said, “We offer relatively heavy discounts on products which are available online, this makes [customers] want to buy from online channels. Some of our collections feature online before they reach stores and sometimes vice versa.” However, this was not a universally accepted approach as some brand owners felt that discounting products would devalue their brand.

Michael Ross, Director of eCommera, said, “Simply discounting is a dangerous game to play. Brand owners need to add value, but subtly. Brands should invest in technology that inspires customers. An excellent example is the Beauty Consultation on Clarins’ online store, which advises users on a personalised cleansing routine.”

Coleman Parkes interviewed 50 senior eCommerce managers from major European brands between late 2011 and early 2012. Nearly half of respondents have been trading online for three or more years, one quarter for one to two years, while five, or one in ten, have gone online only recently. Only a small proportion of annual sales revenue comes from online sales, with only a handful reporting higher than 30%.

The research is part of eCommera’s forthcoming edition of the Trading Intelligence Quarterly, a preview of which – 'Catalysts for Change' and 'Adversaries and allies' – is available to download here: ow.ly/anTkO