Discount Shopping: A New Norm?

Since Halloween ended, many of you have probably started listening to your Christmas playlist or heard them being played somewhere. With Thanksgiving and Black Friday approaching as well, it is officially peak holiday shopping season. We drive to the mall with our list of gift ideas, spend a few hours deciding what to get and then leave the mall. Here’s the catch – we don’t leave the mall with the gifts in our hand. Rather, we leave the mall with a plethora of order confirmation emails and exclusive discounts. In the day and age where we effectively want instant gratification and on-demand services, we somehow associate shopping malls as a showroom where our consumer habits no longer apply. This is due to the increased levels of mobile phone activity within the general population, coupled by advancements in applications that are increasingly easier to use yet still valuable. As a result, online spending is expected to exceed in-store for the first time during the holiday season.

Deloitte Graphic

A year ago, a study done by Euclid showed that only 8% of consumers were using a retailer’s app for their shopping journey. Fast forward one year and now 40% of smartphone users anticipate using a retailer’s app for their shopping journey. This is probably due to the apps being streamlined by third-party developers and retailers utilizing a mobile wallet strategy that is compatible with the apps.

Additionally, browser based apps also contribute to our shift from traditional shopping. One that you’ve probably heard of but hesitated to use is Ebates. Ebates is a company that gives you cash back for shopping through their affiliated stores.  You go onto Ebates.com, search for the store you want to shop at, click on the “shop now” button. Ebates then redirects you to the retailer with their tracking tag and you can shop as you normally would. After you make your purchase, a percentage of the purchase shows up in your Ebates account. In addition to cash back, Ebates also offers a large variety of coupon codes that stack with their cash back rewards for double down discounts.

Ebates

Furthermore, Ebates also provides a Chrome extension. Don’t want to spend too much time poaching deals on Ebates? No problem – you can search for stuff organically on Google Chrome and the Ebates extension will provide a notice for links eligible for cash back.

Chromecashback

Another browser extension worth noting is Honey. Honey works behind the scenes while you are browsing to find coupons relevant to what you’re looking at. Their algorithm takes approximately 30 seconds to a minute to find the best coupon for your purchase instead of scouring RetailMeNot and other coupon code outlet. Honey also works alongside Ebates to supplement for listed deals that could be discounted further.

While this concept is great, the execution is a bit of a mixed bag. In my personal use of Honey, it only worked for me 20% of the time. Honey also provides cash back on purchases but unlike Ebates, you don’t know ahead of time how much you would be getting. Lastly, the concept would be a game changer if it was available on our smartphones. However, with the execution issues already present in their browser extension, Honey has ways to go before making a smartphone app.

These two browser extensions are only a part of a shift in consumer sales towards online purchases and deep discounts. Companies are increasingly spending more money on social media ads. But this trend has been going upwards since the advent of social media and brick and mortar stores have yet to disappear.  However, I believe that brick and mortar retailers need to put greater emphasis in developing their omnichannel strategy to retain their physical presence. We’ve already been accustomed to pop-up shops and it’s expected to be more prevalent and tech-oriented. Brick and mortar locations can also rent out some of their warehouse storage space for small to mid-sized e-commerce websites that need extra storage for the holiday surge. This would be a good strategy to fill in the void left by what would’ve been in-store sales revenue in the past. Lastly, brick and mortar locations need to at least match (if not provide better deals) than their online channels to incentivize making in store purchases again. Best Buy recently spearheaded their Price Match Guarantee system where they will match all local competitors, including their online prices. Other retailers will have to think along these lines moving forward.

As you prepare for the holiday shopping season, be cognizant of the offers from brick and mortar and definitely give Ebates and Honey a shot if you aren’t already using it. You’ll at the very least become a smarter consumer for your efforts.

7 comments

  1. I definitely believe that discount shopping has become the new norm. This reminded me of what we talked about last class regarding some retailers increasing prices online to cover shipping costs and encourage people to shop in-stores. The subsequent outrage of consumers shows how people have become so accustom to discounted prices on sites like Amazon, that if there isn’t any form of discount offered, they simply won’t buy the product.

  2. Really interesting article! I had seen the name rakuten (ebates) name on the FC Barcelona shirt, but did not know it was a website where you can get rebates. It is true that at this age, a lot of people wait till black friday or cyber monday to make the biggest purchases of the year, while the other days, stores are not making that much of a profit. It is interesting where we will draw the line with the rebates, because it seems that as each year passes, rebates become higher and customers are using more coupons.

  3. I really liked your point about brick-and-mortar shops needing to be more present across multiple channels (and more flexible to alternative modes of income, like you mentioned with renting out warehouse space). I think you point about pop-up shops is spot on. I too think they will become increasingly prevalent in the store-front retail space, especially as trends toward shopping online continually increase. They are a good mid-way point between brick-and-mortar and online without the added expense of keeping a shop front open.

  4. Super relevant read given the time of year! I’m looking forward to seeing the discounts that retailers will offer on Cyber Monday. I’ve personally never used Ebates or a similar browser app though. How do these companies make money? I think an increasing number of consumers will begin to use rebates if it was easily accessible via phone apps, or if these companies advertised themselves more on social media!

    I think your point about omnichannel strategy is an important one. To stay ahead, retailers need to constantly adapt to changing consumer trends. Brick and mortar shops need to incentivize consumers to shop in-stores, as opposed to online. While convenience is a reason why many consumers are turning to online shopping, I personally shop online because it’s easier for me to compare products and prices across multiple retailers. I wonder how brick and mortar stores can utilize technology to implement a way so that consumers can compare prices to other retailers? In addition, I think your point about brick and mortar locations renting out warehouse storage is a great one! It could definitely help stores earn additional revenue to make up for the revenue lost to online retailers.

  5. Really nice post and commentary on the transition from brick and mortar stores to ecommerce shops online. I find it interesting the way that technology changes the way we shop – I too have tried Honey and Ebates and have enjoyed the benefits of rebates/coupons. I’m surprised that this year is only the first for online sales to outnumber retail sales, as I cannot remember the last time that I personally spent more in actual stores than online myself.

  6. I’ve used Honey for awhile, and I’ve always had your “mixed bag” experience. Most of the data is outdated, so it’s really hard to find codes and coupons that actually work. Great idea, poor execution.

  7. I used to use Retailmenot religiously and made great use of it. I definitely plan on checking out Honey when I get back home to do some holiday shopping. Especially since with Retailmenot, I haven’t been able to use it the same way as Ebates, where you can actually get money back for shopping rather than just using it for discounts. I also find it interesting how these companies can use algorithms to track shopping habits, although getting bombarded on my inbox is kind of annoying haha Great blog!

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