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BizReport : Ecommerce archives : April 23, 2012

70% of brands rely on discounting to drive direct purchases

Despite the risk of cannibalizing existing sales channels, brands are pushing ahead with investments to sell direct to the public, according to recent research by ecommerce trading solutions firm eCommera. But are they relying too heavily on discounting?

by Helen Leggatt

eCommera_Logo_150dpi.jpgThe research, which forms part of eCommera's upcoming Trading Intelligence Quarterly, found that 70% of brands are relying heavily on discounting to drive customers to purchase from them direct.

Online, in particular, is where brands hope to capture sales, more so in countries where they have little or no physical presence.

However, these brands risk displeasing their retail partners and they could end up with far few physical stores that carry their products. Despite this, brands appear to be adopting a 'wait and see' attitude and will face the consequences if and when they arise, found eCommera's research.

Over half (56%) of brands are engaging directly with customers via flagship stores, both online and physical, but a similar percentage are focusing on social media (52%), primarily Facebook.

The majority are relying heavily on discounts (70%) to drive direct purchases. Michael Ross, Director of eCommera, believes this is a "dangerous game". "Brand owners need to add value, but subtly. Brands should invest in technology that inspires customers," he says.

Just a small minority of brands are avoiding heavy discounting, worried it will devalue their brand. Other tactics are being used - a third of the brands involved in the research said they use VIP customer services to incentivize customers to buy direct and 15% use exclusive products to lure them in.

Tags: brand marketing, direct marketing, direct sales, discounting, ecommerce, online store, research, retail partners

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