Backfiring: The Low-Discount Boomerang Effect Based on Online Purchases
Xiaosong Dong, Wei Liu, and Xing Zhao
International Journal of Electronic Commerce,
Volume 25, Number 1, 2021, pp. 99-123.
Abstract:
Price discounts are not always positively correlated with consumers’ purchases. When purchasing nonessential products, a low discount may reduce consumers’ purchase intentions, resulting in the boomerang effect. Thus, the correlation between the discount rate and purchase volume is displayed as a U-shaped curve. The extant research mainly discusses the internal causes of the boomerang effect in offline purchases but rarely considers the mechanism in online purchases. Using the consumption data of users of the Bestpay platform as our research sample, we explore the conditions generating the online low-discount boomerang effect. Our empirical findings reveal that the low-discount boomerang effect still exists only for nonessential products, but the discount range of the effect is expanded compared with that in the offline channel. Additionally, the effect weakens as the product price increases. The statistical characteristics are not significant after reaching a certain price value. On the basis of these findings, we focus on how to avoid or reasonably use the low-discount boomerang effect in online marketing. Some controllable factors, such as the merchant scale, consumers’ online learning and online product heterogeneity, were shown to affect the interval length of the low-discount boomerang effect. Then we provide solutions to avoid this promotion trap. This study contributes to research concerning low-discount promotions and provides guidance for the development of online marketing strategies.