Popular Question: Why Do Online Shopping Companies Give So Much Discount Coupons?

First because they have less costs than a physical store - they don't need to pay the store rent, bills, salespeople, samples, exposed items, demonstration items or stuff of the sort. So their costs are lower and they can pass the discounts to the customer more easily.
Second, they have harder competition - it's easier to search for the best prices online than is is at stores. So they have to work harder to get the customer this way.

 

The online shopping entities are not burdened many of the cost that in-store shopping companies has to face. This allows online shopping corporations a great amount of cost savings. However, this is may not the only reason why they give these discounts. Part of it is to probably induce people to shop online. Some people are sceptical of online shopping because of problems relating to credit card fraud and identity theft amongst others things, therefore, online shopping companies seek to make these discounts attractive enough to entice the sceptics and regular shoppers to shop.

 

I think it has a lot to do with how much more likely someone is to window shop and purchase more items when they are online shopping. Discount codes normally give the illusion that you're saving tons of money, when in reality it's just convenient and after shipping and everything else you end up spending about the same amount as you would spend in a store.

 

The same reason physical stores give out coupons. Typically, virtual store's coupons or promos don't last anywhere near as physical stores because they reach a much larger consumer base. But, they tend to have many more than physical stores do because It's almost always new traffic.

 

Personally, I am just glad that they do. It is awesome not to pay full for purchases. The problem with the online store coupons and promo codes is they don't always work, and they generally have a shorter time they are good compared to coupons to physical stores. Most of the time, the online coupon code promo code sites give the percentage of time the coupons have been used successfully.

 

Generally, discount coupons are given to get the customer interested. A lot of people who were not even thinking about buying a t-shirt will buy one if its on discount. That's just how human psychology works. I had a roommate who was crazy about shopping for things online at a discount. "But this is at a discount" was his usual reason for buying something - no other reason just that the thing was bought using a coupon.

 

Online companies can afford to sell you things for less because they don't have the overhead costs. Be aware, that sometimes they give you coupons to bring you to their site and then you find out that everything is not cheap. If you don't want to pay extra in shipping, then you end up buying from the one place anyway.

 

I agree with juno said about the overhead costs, but I also think that these companies can afford to buy more into the "get them int the store" mentality where just be getting to the site and buying one thing they anticipate that you will buy other items there as well. So offering you that deal on one thing gets you to buy all your other stuff there as well.

 

I think coupons from any company at all are goodwill. They're a reminder that you've shopped there before and liked their product. With everything being marked up significantly anyway, there is no problem to them to give you something apparently cheaper, when really it's all the same to them. Not to mention that if there's inventory about to happen it's always nicer to have a sale -with coupons - and get stock OUT before it has to be accounted for.

 

Another reason they may be willing to give steep discounts, particularly for first time online customers, is that they are also looking at the "lifetime" value of the customer. In other words, once they get your foot in the door, they know they will make that discount back in future revenue from you continuing to shop from them again in the future.

Another thing to consider is that they may see the steep discount as a better way of getting you on their mailing lists, and onboarding you as a customer, vs. spending advertising dollars in other channels. For example, maybe the discounts they offer are cheaper than them paying online advertising fees to get you in the door as a customer.

 

Aside from the reasons mentioned above, it just takes a few discount coupons to win the loyalty of a potential customer, so why not take that initiative right? They have a huge mark-up already anyway for their items, so even if it's "discounted' they will still be able to get profit.

 

Another reason they can offer discounts, sometimes up to 50% is because most products usually are overpriced. So even if they offer the discounts they still will be making profits off what they sell. It won't be long before consumers start enjoying the low prices because brick and mortar stores which also sell their products online could offer in-store pick up when you buy something from their online stores.

Macy's for example offers a 15% discount when you buy something online and pick it up in any of their stores.

 

Stores actually make a lot off of individual items so they always have massive allowances before they start hitting the break even point where they gain no profit for the effort, and as long as they can keep it away from that amount with every sale then they can benefit from the transaction even with massive discounts because at the end of the day it's still much better that they are able to sell their items for a small profit rather than have them stagnate in inventory just because they won't budge on the price. This way they get to replenish their stocks and get new items that will hopefully be a lot more of a draw and with that they won't need the promos as much anymore.

 

It's true that online stores may not have as many costs as brick and mortar stores, but they still do have costs. If you're selling on a site like eBay or Etsy, there are basic listing costs. In addition, there are sometimes other costs associated with those listings, such as eBay charging for bolding and highlighting listings. There are also costs of materials, time spent making or obtaining products, shipping costs associated with getting those products, advertising, printing, overhead such as phone, electricity, internet, etc. I think a lot of people assume that online sellers have much lower costs, but that's not always the case.

I've discussed online coupons with other small business people I interact with, and most say they see little return on coupons, and that most coupons aren't even redeemed.

I will usually look for coupons if I'm shopping online, particularly one for free shipping. In my opinion, the main reasons sellers offer coupons are to get their name out in the public, attract shoppers, and once the shoppers are in the store, hopefully the products and customer service experience will bring them back.