This article is a transcript of the video shown here.
Hi, welcome to another video about Shopify on our channel.
I’m Amos, CEO of BOA Ideas, a web development company that focuses on Shopify websites.
And I’m happy to talk with you about another topic that you’ll find interesting and that we get a lot of questions about.
And it’s the topic of discounts - a confusing word that we’ll try to unpack in a short time so that you leave as an expert.
So what are “sales”? First, let’s start with the word. Because people come to us and ask us about lots of different words. How do you do discounts on Shopify? How do you do sales? Promotions?
And everyone sees it differently. We talk about a discount and the other person is thinking about something different. Also within the sales themselves, there are a lot of different ways to define them - essentially different types of sales. And it even affects the user experience at the end of the day.
For example, if someone wants a buy-one-get-one offer, does the additional item pop up so I can choose whether to add it, or does it get added to the cart automatically - and so on.
So in this video, we want to focus on the more technical aspect - how we use it in Shopify, how we enable it. What we’re trying to consider is how in certain situations in Shopify we enable the customer to pay less than the regular price.
We want to explain that in Shopify, it’s not that simple to do all of the types of discounts that people often ask us about. So first, let’s explain why not and then we’ll explain what is possible to do.
Why Doesn't Shopify Allow Easy Discounts?
Why doesn’t Shopify allow creating discounts in a very simple and easy way from the system?
I want to start by reminding everyone that Shopify makes its money as a percentage of the sales brands generate. In other words, what matters to them is that you sell as much as possible. They are constantly running tests and experiments - and since they've been around for 14 years, they've run a lot - to see what sells the most and what sells the least. When they find something that sells more, they work on it and add it to the platform. And they remove things that sell less from the platform, sometimes even making it harder for us developers to use them. They don't want us using them in our clients' stores, because then those stores will sell less and Shopify will earn less.
So that’s the background story.
They found that numerous, complex discounts hurt sales. Maybe what I just said sounds strange, but the truth is that most of the time we tell clients this, they're surprised. They're surprised because in Israel it's very, very common to offer different types of discounts - buy one, get one; buy two, get three; spend 300, pay 200; join a loyalty program and get 20% off. Lots of different variations like these.
But when you think about it and look at most of the websites in the world, you realize that it’s not actually that common. All of these types of discounts are not that common - more common is a discount coupon, which of course is on Shopify. But not all of these confusing and complex discounts, and definitely not a combination of them.
I want to explain that when it comes to the idea of looking at other websites to see whether they do this or not, ultimately there's an important point to understand.
Shopify sometimes publishes the results of the tests they run, so it's worth paying attention to them. What they've found - and this doesn't surprise us either - is that our customers spend a very, very short time on our websites. A few minutes. And usually they're browsing on their phones while in the middle of two activities. They don't have much time or much attention to spare.
If they come to our website and they see a lot of complicated discounts, they can either say “What’s going on here? It’s chaotic and too much for me,” and they leave, or they can actually be interested but they say to themselves “I need more time to investigate the sale to the end.”
For example, if you do a sale of buy five, get the sixth free, the customer understands that they need to explore the website and find six items to earn the discount. And they might be excited about it, but they might not have time for it in the moment and then they don’t end up buying.
It is true that cultures differ. These promotions may be less common outside Israel and more common here, so customers are used to them and may even expect them. Certain audiences and products are also more responsive to discounts, including complex, multi-part offers. In general, though, it is important to keep promotions simple and straightforward, so they do not increase your costs or hurt your sales.
Now, many times people say to me “Okay, Shopify is always checking what sells the most, and then they do it, so maybe they didn’t have time to check this yet.”
So first of all, that's true - in discounts, as in every other area, Shopify is constantly updating. But on the other hand, remember what I said earlier: Shopify has been around for 14 years, and when it comes to this topic, they're very slow to add features. I think we can infer from that that they really believe it's not something to - let's put it this way - go overboard with.
Even when they do implement some of these things - and we'll talk about what they do offer - these are things customers tell us they don't understand: why did Shopify do it this way and not another? We'll get to that soon.
So we need to put trust in Shopify that they’re not just an organization that knows what they’re doing, it’s also how they earn money. So if they think something hurts sales, they know what they’re talking about.
How Can You Create Discounts on Shopify?
So how can we do discounts? What are the ways?
Product discount
First, let's start with the type of discount that Shopify believes sells the most and will bring you the most customers. It's simply a "product discount." It's not a promotion; it's a discount. And from Shopify's perspective, it's not even a discount - it's just a lower price. You can use Compare-at price to display the old price with a strikethrough.
From a user experience perspective, this converts the most. Even for websites where the whole website is on sale, and then you say to yourself that they’re tricking you and just marking down prices. Even for these websites, they convert higher than if they didn’t use it.
And of course, if you do it right and in the right context, and discount a specific collection or product as part of a sale for a certain period, it really does get people to buy. They're on the bus or somewhere else and see that it's 20% off right now, so they simply add it to their cart and buy it. If you don't know how, just go to the product page and enter a lower amount under "Price" and a higher amount under "Compare-at price." That will display it with a strikethrough. That's it.
There are sometimes legal issues that generally need to be taken into account. I don't think this is relevant to most people, but many stores are subject to regulatory restrictions and aren't allowed to change prices or previous prices. If that's relevant to you, we can talk about it later.
By default, the storefront displays it with a strikethrough and a sale badge, but if you want to show a little more information, that's also possible. You can display the discount percentage or a timer showing when the sale ends, and so on. Anything is possible, but it requires development work.
Managing discounts
When it comes to managing discounts, people often say, "Okay, now I have to enter them product by product, change the price, and figure out what 20% is?" If you need this kind of management for more than one, two, or three products, there are two popular ways to do it. One is simply to use Excel: export your catalog, or just the products on sale. Then you can create a formula in Excel that automatically calculates the prices and shows the old prices. If you want something a little more advanced, there are lots of apps in the app store that can do this for you. Choose the categories and discounts, and the app calculates everything automatically. Of course, it'll cost a few dollars a month, but it may pay for itself.
That is a product discount, sometimes called a strikethrough discount, and it is the simplest option.
Coupons
The next step is coupons. If you look abroad, you’ll see that the public - and we, as Israeli customers who shop abroad and see this for ourselves - really, really love coupons for psychological reasons. They make us feel like we got something other people didn’t. Unlike the discount we mentioned, where the price goes down for everyone, here, if I find a coupon code on Facebook in an ad, on Instagram, in an email, or because it’s my birthday and I received a coupon code, I feel like it’s just for me. Especially if it’s time-limited, I’ll be even more inclined to use it.
For those who aren’t familiar with them, coupon codes are very user-friendly and easy to manage in the Shopify admin, and they’re very powerful. You can set up “buy x, get y” for free or at a discount, choose which categories are included, specify what I need to buy and what I’ll get. There are lots of combinations like that. Of course, you can offer personalized discounts or a discount on the entire purchase, as well as discounts on shipping, if you want. And all of that with a coupon code. It’s important to remember that, as with many websites around the world, on Shopify too, you can’t combine coupon codes. That’s an important point.
Automatic Discounts
That brings us to the next point: a less recent feature released by Shopify: automatic discounts. You can set up a discount that the customer doesn’t need to enter manually. If their cart meets the requirements, that type of discount is applied to the cart automatically. It sounds really, really good, but in practice it’s not so great because there are a lot of limitations. First, you can only have one discount active at a time, no more. That’s already a limitation. The second issue is that once the promotion is applied to the cart - that is, if my cart qualifies for it - I can’t remove the automatic discount if I have a better coupon, for example, one I received for my birthday. And that’s really frustrating for customers.
So, it’s good practice to use this automatic discount in specific cases - for example, something like Black Friday, when you have a huge discount, both in terms of the size of the discount and the fact that it applies to almost the entire store, if not all of it. During that period, I can’t use a personal coupon. So this might work for things in that category. In other cases, it’s less suitable.
Coupons and Conversion Rates
It’s important to say something about coupon codes and automatic discounts: they’re types of discounts that only appear at checkout. So they may hurt the conversion rate from adding to cart to reaching checkout, because I don’t see the discount right away. But they have a big impact on the conversion rate of someone who has started checkout. So check your conversion report to see whether you have a problem with add-to-cart and checkout-start rates, or whether your rates there are high and the drop-off is from people who started checkout but didn’t complete it. Based on that, you can tell whether it’s better for you to discount products, which encourages adding to cart and proceeding to checkout, or whether you should use a coupon code if there’s a large drop-off between people who start checkout and those who complete it. That’s the point about those options.
Shopify Plus Tools
There are two other really nice discount tools for Shopify Plus customers. For those who aren’t familiar, Shopify Plus is a plan for large companies and Shopify business owners. First of all, it costs more, but it offers tools that aren’t available on regular Shopify. I’ll talk about two of them now because they’re related to discounts.
One is Scripts - Shopify scripts, which let us develop complex discounts, the kind people always ask us about. Spend 300, pay 200. Two for 100, three for 200. Buy one, get one; buy one, get two; buy one, get three. Crazy discounts - we developers can go ahead and code them. There are some limitations there too, but it’s much more flexible. Another advantage is that these discounts are shown to shoppers while they’re browsing the site. For example, if they add three or four promotional items and it’s a bundle that lowers the price, the price drops as soon as the items are added to the cart. Not at checkout. So that’s a really big advantage of Shopify Plus.
And then there’s Shopify Launchpad, which is basically a tool for scheduling in advance all the things that will happen automatically in the store. I won’t explain everything; I’ll just talk about the discounts feature. For example, we can set a certain category to be discounted by 20% on a specific date and time, a second category by 15%, and an individual product by 5%. It doesn’t have to be a percentage either - you can set a price or a discount. It’s very, very flexible.
Another advantage is that these discounts are shown to shoppers while they’re browsing the site. For example, if they add three or four promotional items and it’s a bundle that lowers the price, the price drops as soon as the items are added to the cart. Not at checkout. So that’s a really big advantage of Shopify Plus. If you’re interested, feel free to contact us.
Apps in the App Store
The last thing you can do is use different types of apps that are in the Shopify app store. But it’s also important to understand how they work. That means, often, people will request from us to enable different types of discounts, and when we say that it’s something that Shopify makes difficult for us to do, then they say “but there are apps - how did they do it?” So I’ll explain how they did it so you can understand what the disadvantages are.
Basically, discount apps in the Shopify App Store work in one of two ways. Either they automatically create duplicate versions of every product included in the discount, at the reduced price or for free. If you use this kind of app, you should be aware that they make sure these products aren’t available in the store, so that no one can accidentally add them to their cart for free or at a discount. But they’ll ensure that only someone who meets the conditions of the discount you set gets the full-price product replaced with the product they created at the lower price. These apps were more popular until customers - in other words, store owners - saw the mess they created in their stores, catalogs, and inventory management. Quite a few people also managed to access the discounts and lower prices even when they didn’t meet the conditions. That’s why this type of app declined, and I’m glad it did.
The second type of app uses the draft order feature. Those who are familiar with Shopify know that you, as store owners, can create orders on behalf of customers. In other words, they don’t need to go through the site, add products to their cart, and go through checkout. You can create orders in the admin. For those who don’t know how, perhaps we’ll make a separate video about creating orders. Then, because you’re the admin and store owner, you’re free to set whatever price you want. In other words, you can offer any discount you want, including making it free, and you can include shipping charges or not, and so on.
Many discount apps today take advantage of this. They let shoppers browse the site and add products, and each time they check whether the cart qualifies for a discount. If it does, they create a limited draft order. The app controls the prices there and can lower them, then switch between the draft order and the cart. It’s an interesting approach. We’ve also used this app in certain cases, but it’s not perfect. You need to understand that. This isn’t what Shopify intended draft orders for. Draft orders were designed to prepare an order and send it to a customer. So there are some downsides. For example, sometimes it can be hard to go from a draft order back to a regular order if you want to remove or add a product, and so on. The on-screen experience can also be a little jumpy, with other small, strange issues like that. But if you really want to move forward with complex, multiple discounts, the built-in Shopify options don’t work for you, and you’re not willing to move to Shopify Plus, it may be worth trying one out and deciding whether it meets your needs. In general, we don’t recommend it because we generally agree with Shopify that multiple, complex discounts hurt sales. And from a technical standpoint, it’s not perfect.
So I hope that I helped you organize all of the ideas in this world and that now things seem more clear. If you have any questions - and often, answers elicit more questions after these videos, feel free to write to us or call us or ask us questions via any platform. We hope you enjoyed and good luck. Thanks!
