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Klarna: 53% of retailers say “always on” sales are damaging profits

By Dan Wilson April 5, 2018 - 7:49 pm

Research by payments provider Klarna shows that discounting is no longer confined to the traditional winter and summer sales. The new rules of retail mean discounting has become a fluid and unpredictable phenomenon with over half (57%) of consumers expecting regular sales.

The research of 500 British retailers highlighted the negative impact this can have on the bottom line of merchants. Over half of retailers surveyed (53%) say the “always on” nature of sales is having a negative impact on profits – 11% said discounting cost them over £25,000 throughout 2017. This isn’t felt just by smaller retailers, but merchants of all sizes – in fact, it’s those with 100-239 employees that feel the burden most with 66% saying constant discounts are impacting profits.

The ecommerce channel is particularly vulnerable, with 56% of retailers saying the majority of their discounted transactions come from online trade.

Discounting can be a significant source of stress for retailers of all sizes – from the impact on profits to the operational difficulties that come with managing sales activity. Many merchants will discount to shift unwanted stock, so part of the solution is to make better, more educated purchasing decisions.

But our research also shows how retailers can win over customers without slashing prices. Instead of discounting, merchants would do well to focus on perfecting the customer journey – from an inspirational browsing experience through to a seamless checkout phase, with multiple payment options and one-click repeat purchase options.
– Luke Griffiths, Managing Director at Klarna UK

The most interesting aspect of these survey results for ecommerce merchants regards how online is apparently more vulnerable to the trend of ongoing discounts. And, of course, the marketplaces are increasingly pushing merchants in that direction to draw in the buyers.

  • SAM
    2 years ago

    Last year was pretty horrific in the games business. It was just constant, a new game would come out and normally Amazon would totally destroy the product within a week.
    Game themselves turnover was up but profit was way down (they have had to start sending 24 and matching Amazon)….and Grainger went totally bust last week. We have switched a lot to digital ourselves which is even lower margin but at least takes logistics and marketplace fees out of the hassle.
    Let’s be honest do most people believe a SALE is genuine. Dixon’s have already bought their BLACK FRIDAY Laptops and TVs in, will have them priced up £200 before pretending to drop them £200 on Black Friday.

    • james
      2 years ago

      No disrespect, but as a gamer, i really don’t see why there is still much of an online (physical) games re-seller industry.

      for those who want games online, you have instant(ish) downloads.
      for those who want physical disks, you get them instantly in store.
      there’s very little benefit to ordering a physical disk online.
      (he says, having done exactly that this week, because every local store was sold out of ‘a way out’ on ps4)

      if the market is big enough to work around the gaps that amazon leaves, by all means exploit that, but i wouldn’t be expecting much of a gap left in any media sectors for long, amazon wants them all.

      As usual games are an afterthought in the minds of the mainstream when it comes to media, but Amazon have already cornered physical books online, done the kindle for digital, brought you amazon prime film & tv, amazon prime music, how long left until they come for the consoles?
      (Wild speculation: expect the A-ZboxStation around Christmas 2020)

      Again, no offence intended, more than happy to hear the error of my logic, just sharing my thought on the topic.

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