Holiday watch: Black November deals that don’t break the bank

What a difference! Back in the third week of October, when we surveyed sites in conjunction with the release of the MarketLive 2011 Consumer Shopping Survey, we found that just 1 in 4 merchants had launched an early holiday campaign.

But now,  as the second week of November draws to a close, Internet Retailer reports that many sites are offering not only holiday gift guides and shopping previews — but also deep discounts. Whereas in the past, bargains typically debuted on ‘Black Friday’ — the day after Thanksgiving — now merchants are offering discounts throughout the month, spawning the moniker ‘Black November.’

By offering early discounts, merchants hope to drive shoppers to commit to holiday purchases rather than waiting until the last minute — and, of course, early-season buyers can be enticed to return for additional purchases later in the season.

But it’s a thin line to walk. Offering bargains now could backfire, inspiring shoppers not to buy now, but to hold out for even more drastic deals later. In other words, by promoting discounts early, are merchants setting the bar low — and will shoppers expect it to drop lower?

The savvy solution to this challenge is to focus early discounts tightly — and use them to drive sales of regularly-priced items. Here’s a quick survey of deals leading merchants are offering:

Free or discounted items with purchase.
Rather than slashing prices on key gift items, merchants are offering free companion items with purchase, or discounts on other products. This tactic not only maintains price margins for popular gifts, but also boosts convenience for shoppers, who can cross more items off their lists with a single purchase. Best Buy is offering a free camera bag and memory cards when shoppers purchase cameras.

Example of holiday discount from Best Buy

Rewards for participation.
The early holiday season is an ideal time to encourage shoppers to connect with brands through multiple touchpoints, and merchants are offering discounts that reward shoppers who join social networks and sign up for email updates. This promotion is a gift that keeps on giving for merchants, who boost followers and subscribers, as well as for shoppers, who get a discount. Lowe’s promises shoppers who “like” the brand on Facebook a sneak peek at Black Friday deals, along with a chance to win featured items or gift cards.

Example of holiday offer from Lowe's

MarketLive merchant Gaiam sent email subscribers an invitation to pick their favorite product from among Gaiam’s name-brand favorites and receive a $10 discount with free shipping. The offer is another win-win: shoppers not only get a price cut, but they’re also crowd-sourcing which products (presumably) will feature in later holiday discount offers.

Example of holiday offer from MarketLive merchant Gaiam

Buy more, save more.
Merchants are offering to subtract a percentage or dollar amount off, depending on how much shoppers spend. Shoppers are encouraged to commit to purchases now, while receiving an instant price break — and merchants get to apply the discount across the total purchase price, rather than marking down individual items. In this 2010 example, King Arthur Flour offers tiered discounts of 10, 15 or 20 percent depending on purchase total.

Example of 2010 holiday offer from King Arthur Flour

Merchants are also offering buyers discounts on future purchases. While this tactic lacks the immediacy of an instant price break, the right combination of price and reward can motivate shoppers to purchase now. For example, Victoria’s Secret’s Secret Rewards program gives shoppers who buy just $10 of merchandise now the opportunity to win a reward card worth up to $500 — a potentially huge payoff for a small investment. The promotion is timed to encourage repeat holiday purchases, with reward cards being given through the end of November and redeemable through Dec. 21.

Holiday offer example from Victoria's Secret
Tight timing.
Merchants who offer sweeping discounts are doing so with strict time limits built in — sometimes expiring within just a few hours. This tactic encourages shoppers to buy immediately, before the ticking clock runs out, as well as limiting the potential revenue impact of costly offers for merchants. MarketLive merchant Cuddledown offered free shipping sitewide with no threshold for three days only. Not only is the time limit tight, encouraging shoppers to purchase now, but the cheeky messaging suggesting the deal is only available because the company president is away indicates that it might not be offered again — further incentive to buy now.

Holiday offer example from MarketLive merchant Cuddledown

For more holiday tips, be sure to download MarketLive’s 2011 Merchant Guide to Maximizing Holiday Sales . Meantime, which ‘Black November’ deals have caught your eye, and why?