E-tailers warned over coupon ‘scam’

Online retailers could see their profits disappear if they do not act quickly to control a “black market” in promotional codes and online coupons, which are being sold on Ebay and on specialist sites.

Web agency Logan Tod spotted the problem after discovering that online buyers were “parachuting in” to clients’ check-out processes at the point where they had to input a discount code, apparently out of nowhere. Logan Tod chief executive Matthew Tod says that tracking these customers back showed that they were coming from sites that were trading in such codes.

Retailers whose coupons are being traded include Currys, Dixons and Tesco.

Tod says: “E-tailers have to take control of their promotional codes and make them unique to individuals and non-transferable. Some clients have said to us ‘Yes, but we’re getting new customers’ – but what quality are those extra customers, how loyal are they and what are they costing? This is altering website conversion rates and ultimately affects potential revenue generation.”

Logan Tod has also found that consumers are increasingly abandoning the online purchase procedure at the point where they are being asked to input a promotional code. Tod believes that this is because the input request is alerting them to the fact that they could potentially get a discount, so they are then searching the Web for the code or coupon.

Another area where e-tailers are potentially losing margins relates to affiliates. Tod warns that some affiliate sites are collecting discount codes and using them to generate increased traffic. In such situations, e-tailers could end up paying twice – once for the discount code and then again in commission to an affiliate.

Sites offering online discount codes include: www.cantbarsed.com/ promotional-codes.htm, www.hotukdeals.com, www.promotional-code.co.uk and www.vouchercodes.com.

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