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Discounting Increased Order Volume During Thanksgiving, But Experts Warn Against Long-Term Use

The Thanksgiving sales period saw significant conversion numbers for many brands and retailers, but new data from True Fit shows that average order value decreased during this time. True Fit attributes part of this shift in shopper behavior, from larger but less frequent purchasing to more regular, smaller orders, to the rise of discounting – and warns against embracing this strategy too much.

The apparel and footwear personalization platform assessed sales data from November 2020 and found that the total number of US e-commerce fashion orders increased 702% since the beginning of that month. Cyber Monday Week saw week-over-week growth of 239% in order volume, while U.S. web traffic grew 221% WoW. Yet that same week saw basket size decrease by 13% YoY.

“The reason for this downturn in AOV during Cyber Week,” said the True Fit release, “is shoppers buying earlier in the month as retailers brought forward discounts and extended Black Friday promotions over a longer period, combined with a dip in consumer confidence.”

However, True Fit noted that this discounting behavior is not unique to the Black Friday sales period. Instead, many retailers have embraced a broader discounting strategy, throughout the holiday season and possibly beyond, in order to keep sales volumes high. These lower prices can stimulate demand, while also appealing to the significant number of consumers who are still cautious about spending on nonessentials.

During a year of retail challenges and store closures, generating any sales momentum is appealing. And with many shoppers citing value for money as a priority, a good sale can help retailers win business in a competitive market. But these companies should be wary of using discounting too casually.

20% sale off red and white sign. Discount sale banner at cloth bar store.
Discounts can be a useful merchandising strategy but shouldn’t be deployed too freely, in order to protect margins.
CREDIT: Chaay_tee - stock.adobe.com

Jessica Murphy, co-founder and CCO at True Fit, emphasized that the high volume of orders, even if at a lower basket value, shows there is still an interest in fashion e-commerce and a willingness to buy. If retailers discount too much, they risk permanently reducing their revenue as shoppers come to expect lower prices from that brand or product type.

“While discounting might seem an obvious route to stimulating demand, especially at a time when shoppers are increasingly cautious due to economic uncertainty, long-term retailers need to focus less on markdowns and more on margin protection,” said Murphy. “And key to being able to sell more stock at full price is data insights, delivered on an individual, one-to-one customer level.”

Investing in a data insights solution is more costly upfront than simply lowering prices on select items, but the investment will lead to price protection and higher margins in the long-term. Discounting can still be useful, especially during major sales events, but should support a broader pricing strategy. These data insights can also help identify which products would benefit most from a markdown – and which should keep their original price.

“Knowing how that customer shops across product attributes and categories, as well as how they shop outside of your brand, is key to creating engagement around products they will love and keep,” said Murphy.  “This enables retailers close what we call the loyalty loop, meaning a virtuous circle of trust that’s built up between brand and customer, that drives not just the confidence to buy, but loyalty and customer life-time value.”

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