Coupons, Promo Codes Tied to Big Jump in Online Sales
It’s not news that consumers are using coupons or promotional codes while shopping online. The number of people looking to save money online has been on a steady uptick, even before the Great Recession. What might be news, at least to some, is that the jump in sales connected to coupon and promo code usage is so high.
According to research from Ipsos conducted for RetailMeNot.com, an aggregator of online coupons and promo codes, online coupon usage from that site increased 23 percent year-over-year for the three months prior to November. Merchant sales connected to coupons and codes found on the site were up by 82 percent for the same period.
“It is clear that consumers are stretching their dollar by utilizing coupons and promotional codes to get more for their money while shopping online this holiday season,” said Josh Harding, director of business intelligence for WhaleShark Media, Inc., the operator of RetailMeNot.com, in a press release. “In an environment where the economy continues to create uncertainty, both merchants and consumers are looking for coupon promotions, like free shipping, to drive demand and increase the value of each purchase.”
Providing incentives to shop has become important as consumers seek to make ends meet during very difficult times for so many. According to the survey’s findings, free shipping (26 percent) topped the list of offers sought by consumers followed by BOGOs (20 percent) and percentage discounts (18 percent).
Women, it turns out, were more interested in free shipping than men, with 31 percent searching for that type of offer versus 21 percent. All searches for free shipping were up 29 percent in October.
Coupon usage, on the whole, has been up in recent years. According to NCH Marketing Services, consumers in the U.S. redeemed 1.75 billion coupons during the first six months of 2011. That number represented an 18 percent increase from the first half of 2009.
Coupon aggregation sites such as RetailMeNot, shopathome.com and others have benefited from emphasis on discounts sparked by daily deal sites and television shows featuring extreme couponers.
Back in September, Marc Braunstein, founder of shopathome, told Bloomberg News that visits to his company site more than doubled after “Extreme Couponing” went on the air.
“The show created an awareness about coupons and made people see that, with a little effort, they could save a lot,” Mr. Braunstein told the news service.
Discussion Questions
Discussion Questions: Are you surprised by the lift in sales tied to online coupon and promo code usage found by Ipsos? What role should coupons and promo codes have in the marketing of retail websites?
Should anyone be surprised? The state of the economy, the proliferation of smart phones and a general desire to save money have all driven this phenomenon. Consumers want to save. Retailers need to make it easy for consumers to use those coupons, otherwise they will move on to a retailer who does.
Is there some huge gap in logic here…or am I just not smart enough to get it?
Retailers give out discount coupons and customers use them. The more the discount, the higher the sales. This is worth an article? There’s not one word about profitability here. Heck, want to see ‘sales’ really soar? Give out a 100% off coupon! Call me crazy, but I think that will set a ‘sales’ record! While there may a little more wiggle room in online margins there’s a limit there too.
What I want to see along with the coupon-use graph is a profitability graph. My feeling is this will produce one huge ‘X’; the one going up is coupon use and the one going down is profitability. This is what Bob Phibbs keeps telling us when it comes to all things coupon.
Yes consumers are trying to ‘make ends meet’ but aren’t retailers trying to do that too? Breaking News: Keep doing this and your ‘ends’ will be exactly that.
The sales lift has to be expected — shoppers understand how to search for the best value by scanning online sites. Use of promo codes and coupons gives an instant connection to a shopper who wants to purchase the items on offer.
In the best situation, the promo deal leads to return visits and creates a unique value proposition for target consumers. It’s a competitive world out there, with many ways for shoppers to compare products and sites, deals change daily — relevance is key.
Why should we be surprised with these statistics? We have known for a good while that more people are using coupons to determine where and what they purchase. I am more than willing to wait to make a purchase based on coupon availability now than ever before.
I am not surprised by the lift. Now I have three more questions: What happens after the coupons are no longer available for those retailers? Do sales drop as consumers go to the next retailer for who they have coupons? Will some retailers offer the same discounts as the coupons and get the same lift?
Nothing surprising here, as the TV show has been raising awareness. As with everything else, smartphones, apps, and websites aggregating discount codes make the whole couponing experience easier to manage vs. dealing with mail-in rebates. I want to think that ‘extreme couponers’ are a very small minority. Hopefully, most coupons end up driving traffic to the aisle and help with building the basket. But it would be great to see some stats. Has anyone reviewed some hard data?
Not one bit. With the rise in mobile phone usage, money-saving applications and purchases online, finding deals and shopping for the best prices is easier than ever before. Naturally, shoppers will turn their attention to retailers and brands that provide them the best incentives to purchase. Especially this holiday season, I believe we’ll see the race for ‘Share of Wallet’ increase exponentially.
It shouldn’t surprise any of us that coupon and other cost containment activity is driving the growth for online shopping. Despite sprinkles of hope that economy is improving, value conscious consumerism continues to grow.
The first reaction of some retailers might be less than positive as it is one more indication that gaining market share and new shoppers online will require a margin investment that many are not prepared to make.
Recent surveys indicate, the quintessential value shopper is shopping all channels looking for deals. It makes sense that if the shopper is looking for deals, she is looking online where they can be easily viewed in aggregate, before she makes the decision of where and how to shop.
If the retailer is committed to building a relationship with value shoppers, special incentives, (not available to in-store shoppers), will provide the savvy multichannel shopper the reason to buy. In addition these incentives could even motivate some of the late adapters to online shopping the impetus to give it a shot.
Embracing the online value shopper can manifest itself in providing new deals or bonus incentives on deals that exist in store. But most importantly, it requires having a focused online promotional strategy that is separate but complimentary to its more traditional in-store promotions. It is imperative not to lose this shopper as they index positively towards larger baskets and big households. The brutal reality with this emerging all-channel value-shopper, if you lose them online, you will likely lose them entirely.
There should be no surprise that e-tailers are following the path of the 4-wall channel to drive more volume.
The larger discussion is what this portends for e-tailers in the future. Competing promotionally is a narcotic. Forty years ago, there were over 130 independent department stores operating in America, all making money. After 40 years of increasing promotional activity, there is basically one, with over 85% of its sales done at promotional price.
Things happen much faster in e-tail, so it’s unlikely it will take 40 years to see the impact of this trend. As someone has said, competing on price is a footrace to the bottom. It will be no different in this space.
Coupon codes especially from retailmenot.com, are something an online shopper researches before they hit the buy button. Either it be dollars or percentage off, free shipping, what have you, the online customer is savvy in the groupon world of savings, and will vacate his/her shopping cart if the coupon code doesn’t work.
I think that one of borders.com problems, one of many, that for the most part, coupon codes never worked when entered. Carts were abandoned by the thousands.
Am I surprised that consumers want to use more coupons? No. That the internet makes coupons easier to get? No. That coupons boost traffic? No.
That the internet couponing boom has generated this much sound and fury (and GRPN market cap) without anyone truly understanding the attributable impact on retail profits? Well, I’m not sure I’m surprised but I am disappointed.
What are we missing? We raise prices because of “commodity cost increases,” but don’t lower them when the costs drop. Then we deal back to what the market appears to bear. Meanwhile, back at the ranch, folks have a fixed revenue stream, and there is competition between putting gas in the car to go to work, buying food and paying rent. This doesn’t affect everyone, but a substantial segment of the economy. We are losing or gaining occasional users of product based on affordability. Coupons create that affordability, but lower prices would more likely sustain repeat purchase. In many cases we have reached the upper reaches of price elasticity and the balloon needs to pop.
When one out of one coupons is issued and used, that’s 100% usage. If, later, two out of two coupons are issued and used, that’s a 100% increase! My point, if not artfully expressed, is that large percentage increases from a (relatively) small base mean very little. They’re encouraging to be sure, and will be great if the percentage increases year over year can be maintained. I would be interested to see the raw numbers for this report.
GMROI addressed the difficulty of sustaining year over year percentage increases in coupon usage best. Coupons are band-aids, plain and simple.
Why would the growing number of shoppers taking advantage of the offer of discounts, or “free” money surprise anyone? Consumers have never been more value-conscious than they are today. It’s just a bit risky for the retailers when their only value proposition is deep discounts. They need to find values to offer throughout the entire shopping experience.
Not getting access to promo codes can be disappointing. But online merchants such as brightsettings.com are flexible. Personally, I placed an order with them on Friday for a custom fitted table cloth. I had just signed up for their newsletter, but it went directly to spam. Later I found that it contained a $10 off code for a minimum $50 order, which I made. I contacted them on the weekend, and they promptly replied, stating that the credit would be applied. I now feel much better about the merchant. No one ever wants to order online without taking advantage of these vital, money saving promo codes. You feel cheated if you can’t take advantage of them.