May 21, 2007 - Merchants, Networks    4 Comments

Did you drop your shopping basket?

As many people know, one of my websites focuses on online deals, discounts and offers that are available to the UK online shopper. Many merchants offer discount and voucher codes such as £5 ff your first order or Free P&P. Other companies have a restricted discount policy, offering 10% discount when you spend over £35 for example. In my opinion and experience, all of these incentives work to differing degrees and it is something I have been trying to educate merchants on for a number of years, at A4U Get2Gethers.

I have also in the past, spoke to networks and account managers directly, but have often been told bluntly that the merchant won’t provide such an offer. To me this is a little crazy, firstly the network should again try to educate the merchant on the benefit of offering discount codes, even if their margins are tight, for example;

- A merchant sells a product for £10.00 with £2 profit for themselves. Without a discount code, lets say they sell 20 in a day, making them a profit of £40.
- If the Merchant offers a 5% discount, it means they will only £1.50 profit for each sale, however, they can expect to see an increase of 40% in sales. Therefore they would be selling 28 which means a daily profit of £42.

Not only has the merchant made a sale, they have also gathered a lot of information on a new customer which can be used to retain him/her in the future. These figures are not plucked out the air, they are figures that I have seen personally, and researched quite a bit. In fact, in an NMA article back in April, titled ‘ETailers must target shopping basket drop-outs’ backs up my argument which I have been saying for as long as I can remember…

“….Research by IMRG in December 2006 found that 41% of the UK’s 25m online shoppers got to the checkout, only to then abondon their basket. 30% of UK shoppers would go back online and complete their purchases if they received a small discount….”

This again to me is an simple effective area which I think networks should take it upon themselves to start educating their merchants. Sure, not all merchants will accept the stats, some may want to closely control discount codes, but are they being made aware of the number of lost sales?

I know a number of merchants, mainly large electrical ones, will provide weekend price cuts and special offers, however, when you receive these notifications on a Friday evening at 7pm, its a bit irrelevant at times. Again, the network are aware of the times that these emails are sent, so why not inform merchants to inform the affiliates earlier? The merchant must know prior, as they have to update their systems in order to allow the discount codes so it would be easy enough to drop the affiliates an email days before specifying the start and end time that the discount code will be accepted.

Geeee there is still so much work, in my eyes, on how networks can improve communication and relationships between Affiliate and Merchant, and still a massive amount of education that could benefit everyone in the industry. Anyone fancy partnering to setup AffiliSchool? :)

  • http://www.affiliatewindow.com Kevin Edwards

    You’re right and given that we at Affiliate Window have so many retail clients it’s something that we ask for as a default.

    However, something we sometimes encounter is an inability from a technical perspective for advertisers to integrate these codes.

    Another common theme is the idea that a discount can ‘devalue’ a brand. In this case, the network can ask ’til they’re blue in the face but to no avail. An affiliate network’s request doesn’t cut much mustard against an entire organisation’s branding policies.

    There are other considerations that tend to be on a case by case basis but rest assured, it’s not through lack of asking that more voucher codes aren’t available.

    Finally we do try and update affiliates as soon as we know of an on site promotion – unfortunately we don’t always receive more than a few hours notice.

    We’re getting there – and if you’d like to receive the rolling discount spreadsheet we update then drop me a line – it features all the current discounts/incentives our advertisers offer.

    Cheers,
    Kevin

  • http://www.webaffiliate.co.uk Chris Frost

    Kevin

    Cheers for the comments showing a networks point of view on this issue.

    I fully understand and agree with your comments relating to the inability of merchants websites. I suspect 99.9% of times, merchants are setup and running before approaching a network and as such may not have included that in their original design spec. A bit of an oversight on their part, or lack of understanding of ecommerce maybe. Hopefully merchants will introduce this functionality to their website in future upgrades, releases or redisgns, not only for use by affiliates but general taregtting as detailed in the NMA article.

    As for devaluing a brand… if I read it correctly, this isn’t necessarily your POV, but what merchants are telling networks. However, if you take a quick snapshot of companies (in an out of the affiliate industry) that offer discount and promotional codes, it becomes apparent that this is no longer an excuse.

    PC World, Tesco, Virgin, HMV, La Senza, Marks & Spencers, Littlewoods… these are just a few that have offered discounts to new or existing users in the past, and some continue to do so. Never have these online specials devalued any of the above brands and neither does it devalue smaller companies such as Prezzybox, Love Honey, BeCheeky.

    If Affiliate Window are presented with the argument of discount codes devaluing a brand, do you guys/girls provide examples of large well known establishments to run such deals and explain how successful they are?

    I appreciate that Affiliate Window are extremely helpful in supplying regular email updates regarding discount codes, as well as highlighting these from the Affiliates homepage once logged in.

    Chris

  • http://www.affiliatewindow.com Mark Walters

    Chris,

    I do think merchants using discount codes as part of their online offering is a good thing. They do however have to factor in the additional affiliate commission and network override if they supply/allow affiliates to use them. Online buyers are now savvy to searching for discount codes which means margins from existing purchases are eroded and as you point out needs to be balanced by growth from new sales. Affiliates are a proven means of delivering these new sales but for some there is a fine line.

    An area of concern for merchants regarding discount codes is the way some affiliate discount code sites drop cookies.

    In essence an online viewer can locate a discount voucher site quite easily, on accessing the site they select a category or merchant, when this page loads, a cookie is automatically dropped.

    This all occurs regardless of whether they then choose to click through to the merchant site, whether the discount code is relevant, valid or even available.

    Now as far as a merchant is concerned, someone looking for their discount code, gives a fairly strong indication of a purchase. The process above means that regardless of the action of the visitor, when they purchase from the merchant site (with or without a code), then an affiliate commission will be recorded.

    I appreciate that not all discount code sites operate this way and that those that do may claim they lose out on sales from visitors who merely use them for the code and do not click through to the merchant site from their links. But this is something all affiliates have to live with and adds to the transparency of our industry, free branding and awareness with cookies only being dropped on a valid click through to a merchant site.

    It blurs the line of what’s appropriate and what’s not. It’s not the worst thing an affiliate can do but would merchants approve if they were aware of it?

    From a merchants perspective it’s less ‘Did you drop your shopping basket?’ and more a question of ‘Did your drop a cookie?’

  • http://www.webaffiliate.co.uk Chris Frost

    Mark, don’t shoot the messenger, I am only quoting from an article published in NMA that was carried out by a research company ;)

    I agree that people are getting more savvy when it comes to Discount Codes, however I disagree with the line of thought that if someone is looking for COMPANY-A DISCOUNT, then gives a fairly strong indication of a purchase from COMPANY-A. It only give a strong indication that COMPANY-A stocks or is likely to stock the product they customer after.

    Personally, if I wanted to buy a Karcher Jet Washer, I would not automatically think ARGOS catalogue and if I found no discounts, I would not continue to purchase the product from them. I would continue my search for a CURRYS discount, then LITTLEWOODS discount etc. The end customer is not longer bothered which merchant they use, as loyalty is going out of the window. What an end user wants is the best deal and to save some money and this is what merchants need to realise. Times are changing.

    As for whether affiliates should or shouldn’t be listing websites that have no valid discount codes, this was discussed on the forums (http://www.affiliates4u.com/forums/showthread.php?t=55257). Some may see this as unethical, however if a visitor of mine clicks on an TESCO link that has no discount and continues to purchase anyway, then yes I should get the commission as I attarcted the customer.

    Another way of looking at this, moving away from the Discount Scenario is Cash Back Sites. Is this really any different? Surely without Cash Back Sites the visitor would have gone to TESCO.com and made a purchase anyway. Again, the merchant would have obtained a sale anyway, yet the visitor chose to go via a specific link in order to get Cash Back, not a great deal different to a discount, and therefore the merchant has had to pay commission on a sale that may have come directly.