Ecommerce discounts are powerful tools for online businesses. They’re used to drive conversions, acquire customers, and increase order value. When online shoppers can compare prices instantly and abandon carts just as fast, the right discount strategy turns hesitation into action. In fact, 64% of customers say discounts speed up their purchase decisions.

Below, we’ll explain ecommerce discounts, including percentage-based promotions, free shipping offers, referral incentives, and flash sales.

What’s in this article?

• What are ecommerce discounts, and why do they matter?
  
• What types of ecommerce discounts are most effective?
  
• What is a percentage-based discount?
  
• What are the benefits of free shipping or volume discounts?
  
• What are first-time customer and referral discounts?
  
• How do flash sales affect customer behavior?
  
• How can businesses create a profitable ecommerce discount strategy?
  
• How Stripe Checkout can help
  

What are ecommerce discounts, and why do they matter?

Ecommerce discounts temporarily reduce the costs of goods and services sold online. They make customers feel like they’re making a smart choice, and purchases are easier for them to justify.

Here are some ways discounts benefit ecommerce businesses:

• Reduced cart abandonment: Price remains one of the strongest drivers of online shopping behavior, especially in competitive markets in which alternatives are one click away. Promotions can persuade customers to complete purchases instead of leaving, with 65% of customers saying targeted promotions are a top reason to make a purchase.

• Increased customer acquisition: First-time customers are often more willing to try an unfamiliar business when there’s a financial incentive. Discounts lower the perceived risk of that first purchase, which helps turn shoppers into customers.

• Faster sales, more cash flow: Discounts can speed up sales or help clear slow-moving inventory. Used smartly, they let businesses influence buying behavior without permanently lowering prices.

• Reinforced retention: Targeted discounts can give existing customers a reason to return.

What types of ecommerce discounts are most effective?

No single discount works in every situation. The most effective ecommerce promotions are the ones that match a customer behavior or business goal.

Here are some options:

• Percentage-based discounts: Customers can quickly gauge the value of these discounts. This makes them especially effective for sitewide sales, seasonal campaigns, and first-time purchase incentives.

• Volume-based discounts: Volume-based pricing encourages customers to add items to their cart. “Buy more, save more” is a compelling hook.

• Free shipping: Customers often value free shipping more than an equivalent price discount. If the discount is tied to a minimum order value, it can also increase average order size.

• First-time customer discounts: These discounts are most effective when they’re positioned as a one-time welcome. When paired with a strong impression after the purchase, they can encourage repeat buying.

• Referral discounts: These discounts reward people for their loyalty. They tend to attract customers with higher customer lifetime value (LTV).

• Limited-time and flash discounts: Promotions with fixed time periods can drive sharp increases in traffic and sales. They’re most effective when used sparingly so customers feel urgency rather than learning to wait for the next sale.

What is a percentage-based discount?

Percentage-based discounts reduce the cost of items by a fixed percentage. They’re the most straightforward way to change how customers feel about the price of an item.

Here’s why they work and what to remember:

• They tie the savings amount to the purchase amount: Because the amount saved and the total cost are related, these discounts feel fair across low- and high-priced items.

• They’re easy to understand: Shoppers don’t need to calculate thresholds or compare bundles to see the deal they’re getting.

• They’re flexible: A business can apply percentage discounts broadly or narrowly according to inventory, seasonality, or acquisition goals. They work equally well for sitewide sales, category-specific promotions, and customer-specific deals.

Because percentage discounts apply to every eligible item, they can substantially decrease profits. A seemingly small discount often requires a large increase in sales volume to maintain profitability. Calibrate your percentages so you still earn a profit.

What are the benefits of free shipping or volume discounts?

Free shipping and volume discounts shape how customers perceive the total cost of an order. They can increase overall order sizes while bumping up conversion rates.

Here’s why customers respond to these promotions:

• Free shipping removes a major checkout blocker: Free shipping eliminates a cost late in the purchase flow that otherwise might seem unexpected or unfair. In 2024, 48% of shoppers abandoned a cart because costs such as shipping and tax were too high. Customers tend to value free shipping more than an equal discount on the product.

• Volume discounts reward larger purchases: These discounts give customers a reason to add additional items. They work especially well for products that are bundled or frequently replenished.

• Minimum thresholds increase average order value: Free shipping tied to a minimum spend encourages customers to add items rather than check out early. Many shoppers are willing to increase their order to avoid paying for delivery.

Free shipping isn’t free for the business, and volume discounts lower per-unit margins. If you use these discounts, make sure any added cost is offset by bigger orders or increased efficiency.

What are first-time customer and referral discounts?

First-time customer and referral discounts lower the barrier to entry. Referral discounts have the added benefit of rewarding repeat customers.

Here’s how they turn interest into action:

• First-time customer discounts reduce hesitation: A welcome discount gives a new customer a reason to choose you now instead of comparison shopping.

• Referral discounts build trust: People are often more likely to try a business when someone they know recommends it. Referral discounts incentivize happy customers to spread the word.

• Rewards for everyone perform best: When the referrer and the new customer receive a discount or credit, both sides are motivated, and participation and conversion rates increase.

Deep first-time discounts might drive one-time purchases, but they can lead to weaker retention. Smaller, thoughtful incentives tend to attract customers who are interested in the product rather than just the deal.

How do flash sales affect customer behavior?

When a discount is temporary, customers are more likely to act immediately. Flash sales can spur them to make purchases they’ve been considering.

Here’s what happens:

• They create urgency: When faced with a temporary opportunity, customers tend to act more quickly.

• They concentrate demand into short periods: Flash sales often produce sharp increases in traffic and orders over a narrow time. This result can be useful for hitting revenue targets or clearing inventory quickly.

• They attract new customers: Short-term sales bring in shoppers who are looking for promotions. If the product and customer experience meet their expectations, some of them will buy again.

It’s possible to overdo flash sales. Running them too frequently or predictably can teach your customers to wait for the next sale rather than buy at full price.

How can businesses create a profitable ecommerce discount strategy?

A profitable discount strategy requires intention. The right mix of discounts can benefit your customers, your inventory, your operations, and your bottom line.

• Start with an objective: Every discount should have a clear objective, such as landing new customers, increasing order value, clearing inventory, or reactivating lapsed customers.

• Know your margins: Understanding how much additional volume you need to offset a discount helps prevent promotions that look successful for revenue but fail in profitability and growth.

• Use thresholds and conditions strategically: Add specificity with minimum order values, limited eligibility, or product-specific discounts. Focus incentives where they matter most to avoid discounting purchases that customers would have bought at full price.

• Try targeted discounts: Personalized offers tied to customer behavior often outperform broad promotions. Targeting increases relevance for the customer while reducing margin loss.

• Measure beyond the initial sale: Track how discounted customers behave over time, even after the promotion window. Retention, repeat purchase rates, and LTV determine whether a discount truly succeeded.

How Stripe Checkout can help

Stripe Checkout is a fully customizable prebuilt payment form that makes it easy for you to accept payments on your website or application.

Checkout can help you:

• Increase conversion: Checkout’s mobile-optimized design and one-click checkout flow make it simple for customers to input and reuse their payment information.

• Reduce development time: Embed Checkout directly into your site, or direct customers to a Stripe-hosted page, with just a few lines of code.

• Improve security: Checkout handles sensitive card data, simplifying Payment Card Industry (PCI) compliance.

• Expand globally: Localize pricing in 100+ currencies with Adaptive Pricing, which supports 30+ languages and dynamically displays the payment methods most likely to improve conversion.

• Use advanced features: Integrate Checkout with other Stripe products, such as Billing for subscriptions, Radar for fraud prevention, and more.

• Maintain control: Fully customize the checkout experience, including saving payment methods and setting up post-purchase actions.

Learn more about how Checkout can optimize your payment flow, or get started today.