Smart Discounting

Dave Dennings: Discounting is obviously the curse of margin erosion and you better have a bloody

[Voiceover]: good reason if you're not going to be offering one.

Dave Dennings: That sort of strategy for me is risky.

[Voiceover]: Make hay while the sun shines.

Dave Dennings: A false start of any description for one day can be hundreds of thousands of dollars.

[Voiceover]: So welcome to Add to Cart, the podcast that Express delivers all you need

Dave Dennings: to know in the fast moving world of E commerce.

[Voiceover]: Every month, Nathan Bush from 12 High and an E commerce industry expert will share the news, research and insights that you need know to keep you at the top of your game and of course, keep your customers adding to Cart. Hello everyone and welcome to episode two of Add to Cart. My name is Nathan Bush from e commerce consultancy 12 high and really happy to be back with you on episode two. We've made it two episodes so far in the bag. Thank you so much to everyone who listened to episode one and more importantly to those who shared it on LinkedIn and every other way. We really appreciate getting the word out there so early in the piece. A very special thanks to our partners, Shopify plus, who listened to episode one and decided to stay on board for episode two and hopefully more episodes to come. But thank you very much, Shopify plus, it's so great to have you on board. Okay, onto today's episode we have joining us Dave Dennings, who was most recently the GM of technology at Surf Stitch. Dave is joining us to talk everything around smart discounting, which is very, very relevant, which as we come up to Click Frenzy, Black Friday and Cyber Monday. So welcome to the show, Dave.

Dave Dennings: Hey Nath, how are you mate? Thanks for having me.

[Voiceover]: My pleasure, sir. Thank you for joining. Let's get straight into our topic today, which is smart discounting, how to discount without sending yourself broke, which is obviously the perfect time. Coming up to what we've got known as the silly discounting season, which we've got Click Frenzy hitting us on 12th November, Black Friday on 29th November and Cyber Monday on 2nd December, which is a little bit later than what it would usually be for this time of year. Fell, I think last year around early November, but silly discounting season. So Dave, I know that you've had a lot of experience with sales and big sales events.

Dave Dennings: Yeah, definitely. Look, I mean it is going to be an interesting year this year because it falls in December. So anyone comping, you know, on last year, their November is going to be a battle. So I'm sure everyone's got everything weighted into December this year and they're going to have to be huge Decembers for most of the retailers out there. But I guess for us coming from a multi brand sort of aggregator, we've got a small portion of vertical production when, when I was at Surf Stitch. But most of the retailers that I've ever worked with have, have tended to be aggregators.

[Voiceover]: Dave, I read some research the other day and it was that 49% of Australian retailers see discounting as their biggest challenge. Now I know you've had a lot of experience around discounting and especially Black Friday and Cyber Monday at places like Surf Stitch. What's your experience been like?

Dave Dennings: Yeah, discounting is a huge challenge for most retailers, but you know, it was especially for us at Surf Stitch because, you know, ultimately you're trying to make money, you're trying to make margin. Discounting is obviously the curse of margin erosion. So it is a real challenge, you know, walking that fine line around that discounting period. And I think that's why everyone is finding it so challenging, especially when you're forced into periods that, you know, you need to heavily discount to compete.

[Voiceover]: It's an interesting language you've got there around being forced into because we know that it's growing in popularity and I think last year was up about 28% year on year that Black Friday, Cyber Monday period. Why do you feel that retailers are being forced into this, this sales period?

Dave Dennings: I think because unless you're fortunate enough to have a unique product where you literally can be a full price operator, you know, you have to make hay while the sun shines, as they say. And these key periods where most of your brands, they're expecting you to be discounting so you don't have a lot of flack from your brands. And you know, most of the retailers and the consumers out there are now trained to, you know, waiting and stalling their purchasing behavior for these discounting periods. You know, they're savvy, they know that this is when they're going to be getting their 25s and 30s up off, you know, full price, end sale. So, you know, as a retailer you really have to play ball in many ways.

[Voiceover]: Yeah, we've kind of created a rod for our own back there, haven't we?

Dave Dennings: Absolutely. Yeah, definitely.

[Voiceover]: I've always found it really odd timing Black Friday and Cyber Monday and obviously it's there for Christmas. But also retailers kind of invented Christmas if we take the religious context out of it is retailers created the consumerism around Christmas in order to drive sales. And now we've put these big sales events where we give away most of our margins at Christmas. It all seems very odd to me, but it's kind of snowballed into exactly like you said, the situation where consumers are there, they expect to be able to shop, they expect to be able to get a discount and you better have a bloody good reason if you're not going to be offering one. So with that in mind, Dave, I don't think it's all negative. Tell us about what good you've seen come out of this discounting season.

Dave Dennings: Yeah, look, I mean, the good things that I see come out of here is obviously really strong trading periods. So, you know, what we do know is that while everyone has waited for these sales and consumers are ready for these sales, their purchase intent is really high as well. So if you have the right offering and the right product, you know, your conversions and your sales should be very, very strong. You know, like that Cyber Week really now is stronger than Christmas certainly was for us.

[Voiceover]: Yeah, I saw that the other day and it was around that Cyber Week's the biggest shopping week of the year, but Boxing Day still being the biggest day.

Dave Dennings: Yeah, it's. It was a massive period for us last year when I was at Surf Stitch, you know, it was, it was record breaking. We've been around for what, nine years and last year Cyber Week for us beat all records, both revenue and also traffic. So, you know, this year the guys will be having to go really strong to comp last year's numbers. But, you know, I'm sure everyone's got their fingers crossed. It's going to be a big retail week.

[Voiceover]: Absolutely. And mate, what can go wrong in these big sales periods?

Dave Dennings: What can go wrong? Ad planning, Typical retailers, all sort of. Or not, I won't say all, but a lot of retailers all reactively operating. These are the periods when you need to be well planned. You need to make sure all your product is, you know, you're putting your best foot forwards and going strong. You need to make sure that whatever the discount is that you're offering is competitive and walking that fine line between being the biggest discount across the group, across all the retailers, as opposed to just being in line with the retailers and having a great offering. So it's a, it's a pretty dangerous little bit of territory to play in there because no one quite knows what anyone's going to come out with on the day and everyone's watching everyone who's going early and, you know, going late and everything like that. I think that's thing. I think another thing too Is one of the things to prepare for is get your customer experience right before, you know, do all of your tech tweaks and all of your changes and get that ideally get a code freeze in place so that you are absolutely ready to go with your customer experience. Because you know, that needs to be as optimized as it possibly as good as it can be.

[Voiceover]: Yeah, and I think you're absolutely right. Here is like it's not just one team who is preparing for these sales. Right. It's not just marketing, it's. There's huge pressure on your merchandising and your merchandising teams to be able to make sure that they've got the stock on hand, to make sure the stock's available, your tech teams to make sure that everything's running smoothly and it's ready for. For a spike in traffic and transactions. Customer service team, because those queries are going to go up. So it's a really whole of business impact, isn't it?

Dave Dennings: Absolutely.

[Voiceover]: Like we said, we know that you did a lot of discounting at Surf Stitch. What was the general approach there? Was it a discount off everything? How smart was the discounting that you saw applied?

Dave Dennings: Yeah, look, I mean, we're talking sort of two different periods. We're talking outside of big, you know, we were trying, we were generally trying to be a lot better around our segmentation and I guess discounting where we needed to, but light, you know, based on aged inventory and stock that we were clearing and things like that. So when it comes to the peak periods like Cyber Week, really they're what we classed as our true site wides. And for that it meant, you know, creative throughout the entire site, all focused on Black Friday, Cyber Monday, singles day, whatever it might be. But you know, ultimately they were what we would internally class site wides and generally, I mean, when you say sophistication, I mean really what that was about was looking at what we had available product wise across the site and ultimately trying to make this a really big bang. So push as much product into an environment and then drive our sort of key styles that were rarely on sale during the year. We had these periods where we were able to put them on sale so they would be our big pull cards, you know, that we'd have. We'd merchandise them strong and make sure that we were driving traffic. So, you know, it was, it was more about their really big events that we pushed everything over and to discount.

[Voiceover]: Yeah. So it was seen as kind of like, let's not get too smart or not, let's not get too fancy about this. Let's just take the cash grab wallets there. To put it really, really bluntly, which I don't think is different from too many retailers.

Dave Dennings: No, look, I think the problem with Cyber Week is let's call it, you know, two, two key days Cyber, you know, Black Friday, Cyber Monday and what, whatever's in between and maybe a couple of extensions or pre sales. But in those periods, you know, when you're a retailer the size of Surf Stitch and you know, other other big competitive retailers, a false start of any description for one day can be hundreds of thousands of dollars. So you know, you need to, whatever it is you're planning on going live with, you need to get it right and back it ultimately, you know, plan as well as you can to make sure it's your best foot forwards.

[Voiceover]: Yep, that's what budgets are made of, isn't it?

Dave Dennings: That's exactly right, yeah.

[Voiceover]: All right, mate. Well, if we keep in mind that 49% of Australian retailers are really stressing about discounting second only to rent and labor costs, let's look at tactics around how retailers can approach this period in a bit of smarter way so that they, they're not losing their pants and they're not giving away all their margin before the busiest time of the year. So let's talk about ranging. So what have you seen around how discounts are applied for different ranges and how people get really smart around what they choose to put on discount versus what they keep at full price?

Dave Dennings: Yeah, I think that comes back to something that again, when I was at Surf Stitch, something that they wanted to work on or are working on all the time, is a clearance strategy. I think the basis for this, for the whole period, the whole 12 months really is having a really properly laid out clearance strategy from the beginning. And really that's about ideally consumers not being able to get those new styles and those key styles and the latest on trend product discounted. And ultimately the discounts are only being received on items that are aged inventory, they are items that have been around longer. That's a challenge for a lot of retailers because obviously you're up against competition and if someone, if Joe Blow has their particular product at a discount, then you tend to have to follow when you're, like I said, when you're sort of a multi brand aggregator of product, you've got different challenges to the guys that have got strong vertical products. So that is the big challenge because then when you get to the peak periods, those products that you've not necessarily been discounting or haven't discounted a lot. You know, maybe only the after pay days and the, and the click frenzies and that you generate a lot more hype. So that's probably the key area, is that solid clearance strategy all year round.

[Voiceover]: Yeah. And I think a lot of retailers do it and they, they put their clearance out. I remember at one of the retailers I worked with once, they put in their very first foray into click frenzy. I think it was they put a car window vacuum cleaner on sale as the only product. And this is in the really, really early days because. Just because I had bucket loads of them out the back. Yeah. Needless to say that the one item of the one clearance that they wanted to get rid of didn't go too well. But again, that was a long time ago. We've come a long way since then. The other thing that I have heard, and this is one of Australia's biggest homeware stores actually, is what they did is they actually, when they are planning their ranges, that they plan a range leading up until like a summer range, right up until Cyber Monday week, and they aim then to get rid of it all there. And it looks like it's the normal price stock, but then they actually have a second shipment of goods which they bring in post Cyber Monday to lead them through to Christmas that they then don't discount. So that the range they buy for Cyber Monday Black Friday actually has a higher margin that they can discount and still make a profit. And then it's totally different range for after that, which they don't intend to discount as much leading into Christmas, which is a more premium range, which I thought was an interesting strategy.

Dave Dennings: Yeah, look, it does. That does sound like an interesting strategy. I mean, I mean, again, like I said, I mean, I guess it's very much dependent on the retailer and their market and, you know, their customer. I think apparel and primarily, I can really only talk to that most. I think generally the negative, you know, it's the old story that the negative of it, you know, moving into December this year means that everything's weighted into December, so it's going to be a big December. But the positive is that, you know, when it's in November, you know, it does bring a lot of those sales forwards and that can hurt Christmas. So I guess, you know, that strategy sounds good. I mean, we, we tended to find that you get to a certain period and normally it is Cyber Week, or it may be it, maybe it'll be singles day this year. Which has been gaining momentum. But once you hit that period, it's pretty much Christmas is here that we found. And you really don't get much of an opportunity to throttle off. You pretty much throttle on until really up until the delivery window cut off for Christmas.

[Voiceover]: Yeah, and it's a good point too, right. Because if you're purely an online business, then your timelines are very different to someone who might be more omnichannel or just physical. Because from an online perspective, you've only got up until. Depends how good you're for. But you've probably only got up until say 23rd December at the latest to make the most sales at best. Yeah. And then if you're a physical retailer or your footfall is actually coming in that last week leading up to Christmas, so your traffic is very different, right, whether it's physical or online.

Dave Dennings: Yeah, absolutely. I mean, we, you know, you just, you literally are. You trade, you're trading as hard as you can and squeezing as much water out of the sponge for that, for that period, you know, and you know that realistically, January, outside of your Boxing Day sales, you know, January is, is January and February, they're tough, they're tough months. The heat's off, people are away, everyone's bought everything they wanted to buy. So really you're storing for winter, so to speak, in that period. So it's got to be. They've got to be big and they got to be successful.

[Voiceover]: This episode of Add to Cart is brought to you by Shopify Plus. Our friends over at Shopify Plus Power supply of the world's fastest growing brands, including brands like JB hi Fi, Koala and a brand you may have heard a bit about, Kylie Cosmetics. The average growth rate for Shopify plus customers is 126%, which is absolutely massive. In the lead up to Black Friday and Christmas and peak trading, Shopify plus have just released a really awesome holiday preseason playbook which is well worth checking out. Visit Shopify plus Holiday au. That's Shopify plus Holiday au. To download the guide for free. You can also find the link in our show notes. A massive thanks to Shopify plus for being the inaugural partner of Add to Cart. Now back to the show. Surf Stitch did an incredible job of having a strong customer base and a member base doing a lot of loyalty stuff. Did you leverage any of that for your sale period?

Dave Dennings: Look, yeah, we. Look, we don't have a loyalty program, so to speak, so we're lucky because we've been around for a long time. So the business had been around for quite a while and has a really strong following, you know, and a really loyal, like we do have a naturally loyal customer, which is good. So again, you know, while I'd like to say we leveraged off, you know, those sorts of things, I mean really, we just appeal to the fact that people came to us for what they know we've got. And at that, during that period, you know, you, you had strong communication, strong messaging out there around better offers, you know, maybe some reduced, reduced shipping rates and also some segmentation, some, you know, targeting sale product to your more sort of discount, your real discount shoppers and targeting your more trend following shoppers with you know, a discount on full price, which is unusual. And we tend to operate most of our sales are on sale product during the year.

[Voiceover]: Yeah, yeah, that makes sense. I think Surf Stitch do such a great job that it actually does feel like you're a member even though you're just signed up because you do really great personalized content and messaging. One thing that I have seen around memberships in the sales period is that I've seen some retailers actually go loud and proud that they're on sale. But to access the discounts you actually have to be a member, which means that yes, you are giving away margin for that product, but at the same time you're building your membership base which you can use post that sales period to leverage more sales, hopefully at a higher cut.

Dave Dennings: Yeah, look, I think that's a really good point and we all do talk about the sales and the revenue, but like I said at the beginning of this, you've got shoppers that are on the hunt. You know, yes, they're after a bargain, but they're also committed to buying gifts and buying presents. And you know, there's other thoughts in their head, not just about necessarily the discount. So I think that you've got the advantage during that period of getting acquisition and new customers. And when you're a business like Surf Stitch, that's been around for a long time and you know, has got a pretty strong following, it's a good opportunity. You know, you're focused on those sales and you are focused on top line revenue and moving, making money and moving product, but it's a great time to acquire new customers as well. So brand awareness, traffic and everything like that, you're leveraging off that for signups and ongoing communication as you suggested.

[Voiceover]: Yeah, and then I suppose it comes down to a bit of a calculation or a bit of an assumption around if I acquire a customer or get the details for a new customer. And I'm running at a negative margin or very, very low margin. Is that still worth it for us over the long term? And quite possibly is. But it becomes more than just about the. The percentage of profit on that individual sale. It becomes more of a customer lifetime conversation.

Dave Dennings: Yeah, well, it gives you opportunity later in the year, you know, if you get that customer, you know, everyone does it, not just us, you know, you have customers that only shop with you at Christmas, you know. But that does mean you've got an opportunity then from a, from a repeat purchase perspective, you know, be it January, February, but even Boxing Day, you know, going again, trying to get someone to repeat and start that momentum, you know, you've got that opportunity, you know, and at the end of the day, like I said, you know, it's tough getting new customers, but during this period, that is the time to try and build that database up. And that really does mean your customer experience needs to be bulletproof during that period. Like absolutely bulletproof.

[Voiceover]: Yep, absolutely. A controversial tactic that I have heard, and it's from one of the leading streetwear brands, is to actually hide discounts. So what they do is they say, yeah, we'll discount, but we'll only show it through our Instagram stories or our Snapchat stories. And it'll be a code. So if you actually go to their website, it actually doesn't look like they're discounting unless you know the code. And the same goes for. We might advertise, we might be loud and proud about our discounts, but it'll be a discount code that you have to use to get. Or it might be a different landing page with the discount so that people who are naturally going to your page anyway with the intention to shop are still buying at full price. What do you think about that strategy? Is it more hassle than what it's worth?

Dave Dennings: No, I actually think it's a really, really good strategy and I think it's a strat. Like, it's a strategy we adopt as well. And I think it's a strategy that more and more commerce platforms out there are offering their customers. You know, being able to, to adjust content experiences, you know, based on cookies, based on where people are coming from and that sort of thing. I think it's a great strategy. What I will say is, though, what we've done in the past, this is years ago, we haven't made this mistake really of late, but you try and play, or try and make it a bit more complicated, a bit more you know, sophisticated, a bit more technical. Bring these peak periods, which is what ultimately you let out within these conversations. And customers are just out there, out to shop. Yeah, they don't really, they don't really want things hidden. They don't want to. They don't want you trying to be clever or be secretive unless you're giving some incredible offer that's just, you know, you're almost embarrassed about which good luck. But you know, from during those periods, really, it's about just good execution, good communication and making it very clear that now's the time to come and shop and buy something because it's, it's an unusual sale because it's off full price or it's off latest product or that sort of thing. So I'd say during these periods that sort of strategy for me is risky.

[Voiceover]: It's almost like the. If it's good enough to be on sale, go and beat your chest about it.

Dave Dennings: Absolutely, you know, Absolutely. And again, like I said, it's not like you've got the flexibility in these. Not like the flexibility of going, oh, hey, that was a typical Sunday. We thought we'd work and it didn't, you know, fair enough, we'll walk away. You know, if you bugger one of these days up, you don't have another opportunity until this time next year. So you really, It's a real roll of the dice doing that sort of thing in, like I said, in my opinion.

[Voiceover]: Yeah, now that makes total sense. There's risk reward in that strategy. Have you had any experience around getting vendors or suppliers on board to help take some of the pain away from the discounting that you're expected to do at this time, whether that be coming to market with you around a discount so getting it at a cheaper price or potentially even offering them prime position in emails, homepages and the rest of the. To put their product front and center to be able to get some sort of rebate. Have you had any experience around that?

Dave Dennings: Look, not personally. I mean, obviously I was primarily running sort of digital and the digital side of things, customer experience. But I do know from obviously being in business and working in the thick of it that it is a time it's always tough because vendors are not overly keen on having their products discounted no matter what the period. This does tend to be the periods that vendors will turn a bit of a blind eye or accept the. That fact fact that everyone's discounting and often including themselves. You know, I guess from our perspective, we do try to communicate with the brands and see if we can do a bit of collaboration. But at the end of the day we're really about, you know, what products are driving the traffic, what are the current products that everyone wants. And if they happen to be included in the sale, they're obviously the ones that you really beat your chest about.

[Voiceover]: Yeah, because that's even that, that's not a new tactic. Right. Because retailers have been selling the front page of their catalogs for decades.

Dave Dennings: Exactly. Nothing's, I mean, that's the beauty of it. Nothing, you know, nothing's really changed the way we can deliver it and you know, the experiences have changed and we can be more clever and. But I think these periods is. And again, totally my opinion, but these periods are just grassroots retail. You know, they're peak periods where people expect great deals on great product and they're out to hunt a bargain.

[Voiceover]: Yeah, they are. It's just how do you, how do you remain profitable during that time? It's great for customers, there's absolutely no doubt about it. It's. It's just that addressing that concern, isn't it of half retailers are really pulling their hair out.

Dave Dennings: Yeah. But I guess again, I guess it comes down to it's part of that, you know, it can be and it should be part of that clearance strategy as well. So you know, you might have product that's, you might have product that has struggle to sell or you've got large numbers, you've bought a lot of depth in it. Maybe you lead out that product, maybe that product does get a bigger discount. But whilst you might be burning your margins on that product, maybe some of your other products are not included. Because we do find during this period, not as much as some other periods, but you do find you are still going to be selling full price product and at the end of the day you've got traffic on your site so you hope that some of that product, it doesn't get included or maybe afterwards, you know, you have a period of full price spend but your brand awareness is up and everyone's still driving out there, you can try and pull that margin back for the month.

[Voiceover]: Yep, spot on. There are other ways to make up for it. It doesn't all have to be bundled into that one sale, does it?

Dave Dennings: No.

[Voiceover]: Have you seen, so we've talked a lot about product discounting. Have you seen things like services used during these periods to come across really great bargains? So whether that be free express shipping or free installation or extended warranties that are for free, things that people would normally pay for or would be seen as a really great value add. Have you come across any instances where you've seen those used during these peaks periods to deliver value that means that you can retain a little bit more product margin?

Dave Dennings: Look, in the space that I've been in, I would probably say not. I think unless someone's carved a really tight niche again like I said, or they've got really strong vertical product. I think at the end of the day, you know, what is a customer's expectations? Well, all year round they get free shipping on, you know, threshold they've become accustomed to. I don't think the customer expects any adjustments in their shipping. I don't think the customer expects any adjustments in their returns. I think the customer just expects that they're going to get a discount, be it deeper or across a broader range of product on the side. Again, when people are out shopping presents, they're also not about buying the sale product. So you know, when you talk about margin erosion, you know, giving away a discount on your full price product is obviously hopefully be helping stabilize the discounts that you're giving potentially on your sale products. So you know, that's sort of my thoughts on that.

[Voiceover]: That makes sense, makes total sense. And the last strategy that I just want to touch on is around bundling and merchandising that way. So if you talk about how do you get smart around this and you talked a lot about gifting and around people buying presents, you can really protect a little bit of margin, can't you, by putting bundles together that people might not normally think about. So if you think about, hey, someone's going to be shopping for dad, most people shopping for dad don't really have anything set in mind. But if you go, hey, we can combine these board shorts with this wax with this hat and it's going to cost you 100 bucks, people will kind of see the value in that and you'll, you'll get a little bit more margin dollar terms, maybe not percentage wise, but maybe capture a larger basket size there if you can do some really intelligent bundling.

Dave Dennings: Yeah, I think that's a good point. I think that again though, what I would say with that, you know, is that's a, that's what I would call, I don't know how sophisticated it is now, but it's more that sophisticated during the year type strategy. I think in these peak periods, if you were asking, if I was answering that question, it would be more about, okay, you've got someone on the site, they've come there with the intent to buy. They've got an intention to buy certain things. But again, the idea here would be using clever user recommenders other people have bought. You might like these items and that sort of thing, because you're really trying to get people to spend some time on site in this particular case, because normally you're driving them in, you want them to find what they want, purchase it, convert and get out. That's the experience that most people want all year round. But I believe during these big periods, people are thinking about, oh, maybe I could get a gift. Oh, look at that, that'd be perfect for that person. Oh, actually, I didn't even think about that, but look, how good would that be? So, yeah, it is that one opportunity you've got, I think. Try to be utilizing your recommenders and pushing that product in front of people. Try to keep them energized and purchasing and build up your. Build up your items in cart.

[Voiceover]: Yeah, I'm totally getting where you're coming from, Dave, and I think that you're saying that basically you've got two key days, Black Friday Cyber Monday, maybe throw click frenzy in there, maybe the days in between Friday and Monday. Yeah, Just to get as much as possible and not get too sophisticated. Just basically take what you can get, make hay while the sun shines and don't overthink it too much. But I really do think if retailers can stop and plan and this planning, this can't happen the month before, this has to happen six months. So a bit. Sorry about 2019. This podcast probably should have come out a bit earlier, but if you're thinking about Black Friday Cyber Monday around, you know, May June, I think it comes down to being able to use a few of these tactics to be a bit smarter around how you do it and not have to give away so much margin every time. But absolutely, yeah. And I just think too, a lot of it comes down to how you measure success. So traditional retail is obviously huge on year, on year.

Dave Dennings: Right.

[Voiceover]: And a lot of the time year on year is measured on revenue. So you've got sales goals which you have to hit, which is whatever it is. So it's 28% up on year, on year. Then you're under pressure to hit that. But I think if you actually look at it and you go, what was our actual margin? Can we beat our margin rather than hit our. Beat our revenue? You may play the game a little bit differently.

Dave Dennings: Yeah, definitely. I think Surf Stitch is definitely. I mean, they've got more of a, you know, we've obviously when I was there, it's more of a margin focus now obviously with new owners and the idea of making sure that we're running profitably, there's definitely more of a focus on margin. I think strategies like you said earlier, you know, maybe holding off on product or creating vertical product that you hold off on, that you don't launch until you get to this period. But when you discount it, you're still getting a good intake margin. So that helps balance out the product where you're really carving margin, you know. And I think the other big area that people forget about and we've forgotten about in the past as well, so to speak, is fine tuning and getting your experience for a customer on selecting things like the right sizes of product and product descriptions and making sure because returns is a killer. So in these sales periods, you know, when we're talking about people being motivated to buy, they're over motivated to buy in many cases and they're buying things just because they, and, and you can, you can be cheering and clapping one day and then prying the next. Your returns rates doubled. So I think one of the things, the takeaways that I would definitely give would be just do everything you possibly can to logistically get that stuff out when you need to, when you're under the highest of loads for the year. But ultimately, you know, make the returns experience seamless. But ideally try and keep those returns down.

[Voiceover]: That's a really good point. Especially if you're putting a lot of effort into that, that discounting season to clear old stock. The last thing you want is to cost yourself more by getting more returns in. But then also then the cost of getting rid of those returns when you're out of that sales period becomes a lot harder.

Dave Dennings: Oh, 100%. Yeah, absolutely. And if this is your strategy for getting rid of those returns, unfortunately you don't have an opportunity to only have people returning your full price product. You're potentially getting back a lot of the product you're getting back. Maybe your things you've really carved margin out and you know that's all coming back. So if you double your return rate during this period, you know, it could be thousands of dollars worth of product coming back in the door. So you know, all those little things all year round, refining size charts, making sure descriptions are right, making sure product details are correct. It's at its most important during this bio frenzy period.

[Voiceover]: That's a stellar tip. That's really good.

Dave Dennings: Yeah.

[Voiceover]: What about in terms of marketing? Have you seen any specific marketing channels work much better than others during this sales period.

Dave Dennings: Look, it's not really. Again, it's not really. It's not really my area where I've sat. But again, what I've picked up or learned from the guys that I've worked with, who have been some really clever guys, some clever people, is that, you know, watching it really closely because again, conversion's high. So, you know, not doing your paid. Doing your paid channels, which are always, you know, generally quite effective, but watching them hourly and, you know, understanding what. That. What that return on ad spend is. And potentially if it's really, really high, you know, you're driving more traffic, you're driving more money at it because you know you're going to get a great return on it. So watching it really, really closely, I think is what's been a benefit for us in the past. And definitely I've seen the guys do some pretty good stuff with that sort of thing. So I think all your traditional channels tend to fire during this period, like email and that. But being clever with it, texts, you know, sending out SMS is when you're trying to give something a boost at your peak. Hourly days, hours during the day and things like that. People are expecting emails, they're expecting lots of communication. So it's that one unique time you've got where you can just. You can do a little bit of bombarding.

[Voiceover]: Yep. Yeah. Well, thank you, mate. I really appreciate your time. If there's anything that I've got out of this. I think there's a. There's a couple of key points from our conversation and it is that for retailers, this discounting season is just so critical, especially around budgets and around even, even stock churn. So it's really important that we get it right. And to do that, we need to be planning at least six months out for this time. Second part of that is that this isn't just a marketing job to be done. This impacts the whole business. And whether that is your tech to make sure your stack holds up all right, whether that is your returns policy and how you do that, whether it's your merchandising, whatever else, it really is a whole business effort to make sure that this key period works well. And then thirdly is that as much as we want to protect margin and we can be as smart as we want around tactics to protect that margin, this sales period is really about the customer. So the customer will tell us if we've been successful and. And we've really got to make sure that we're there for them and we're listening to what they want during this period, not just kind of trying to set the agenda because that's when we will really lose if we try and get too smart about it.

Dave Dennings: Yeah, absolutely, mate. That's well sung.

[Voiceover]: Right, well, thank you very much for joining us, mate. I really appreciate your insights and sharing some of your experiences, especially from your surf stitch days. And hopefully we speak to you again soon.

Dave Dennings: Yeah, mate, thanks very much for having me. It was really good.

[Voiceover]: So that's it from us for episode two of Add to Cart. Thank you so much for joining us. And thank you again to Dave Dennings for sharing his tips around smart discounting. We hope that you got a few tactics that you can take out of it, if not for this year, then hopefully next year in your planning. And good luck for everyone participating in what's coming up with Click Frenzy, a Black Friday and Cyber Monday. Exciting times. If you're after more e commerce news and insights focusing on Australia, but bringing you stuff from all over the world, you can sign up to 12High's Highmail newsletter, which is available at 12High.com au imail that's H I G H M A I L available for free. Just leave your email address and we'll send it to you every month. And we promise that it's full of good stuff. Coming up next week, we have Josh Newport back from Shopify plus and he's going to be speaking with us about headless commerce. What is it and how can your business use it and is it right for your business? We're really looking forward to that conversation. So if you have any questions, hit us up. And we'd love to ask him your questions as well. All right, guys, that's it from us this week. We will see you again very shortly. Until then, trade well.