This article is a transcript of the video shown here
Hi everyone, welcome to another Shopify video on our channel.
I'm Amos, CEO of BOA Ideas, a web development company specializing in Shopify stores.
I'm glad to talk with you about another topic you'll find interesting, and one we get a lot of questions about.
It's the topic of discounts—a confusing word that we'll try to unpack in a short time, so you leave here as experts.
So what are "promotions"? First, let's start with the word itself. People come to us and ask about all kinds of different terms. How do you offer discounts on Shopify? How do you run promotions?
Everyone sees it differently. We talk about a discount, and the other person has something completely different in mind. Even among promotions themselves, there are lots of different ways to define them—in fact, different types of promotions. And that can even affect the user experience in the end.
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 side—how to use this in Shopify and how to enable it. What we're looking at is how, in certain situations on Shopify, we can let customers pay less than the regular price.
We want to explain that on Shopify, it's not so easy to offer every type of discount people sometimes ask us about. So first we'll explain why not, and then we'll explain what you can do.
Why doesn't Shopify make discounts easy?
Why doesn't Shopify let you create discounts very simply and easily from within 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 websites around the world, you realize this really isn't that common. These kinds of discounts aren't very common—a discount coupon is more common, and of course Shopify offers those. But these confusing, complex discounts are not, and certainly not combinations 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 site and see a lot of complicated discounts, they might either say, "What's going on here? This is chaotic and too much for me," and leave, or they might actually be interested but tell themselves, "I need more time to figure out this promotion."
For example, if you run a buy-five-get-the-sixth-free promotion, the customer realizes they need to explore the site and find six items to take advantage of the discount. They may be excited about it, but they might not have time right then, so they end up not buying anything.
It's true that cultures differ, and these promotions may be less common outside Israel and more common in Israel. So customers here are more used to them, and may even expect them. It's also true that certain target audiences and products are more driven by discounts, including complex, multi-part ones. But it's important to point out that, in general, it's best to keep things simple and straightforward, so they don't just cost you more but also avoid hurting your sales.
Now, people often say to me, "Okay, Shopify is always testing to see what sells the most, and then they implement it, so maybe they just haven't gotten around to testing 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 trust that Shopify isn't just an organization that knows what it's doing; it's also how they make money. If they think something hurts sales, they know what they're talking about.
How can you create discounts on Shopify?
So how can we offer discounts? What are the different 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 Price to display the old price with a strikethrough.
In terms of user experience, this converts the best—even on sites where everything is on sale, and you might say they're tricking you by simply lowering prices. Even those sites convert better than they would if they weren't doing this.
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.
So that's a product discount, or a line discount, as it's sometimes called, and it's 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. Buy 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 the different types of apps available in the Shopify App Store. But it’s important to understand how they work. Sometimes people ask us to enable different types of discounts, and when we say that Shopify makes it difficult for us to do that, they say, “But there are apps—how did they do it?” So I’ll explain how they did it, so you’ll understand the downsides.
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.
I hope I’ve helped you organize all the ideas in this area and that things are clearer now. If you have questions—and sometimes the answers raise more questions after these videos—don’t hesitate to write to us, call us, or ask questions on any platform. We hope you enjoyed this, and good luck. Thank you.
