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Consumers can outsmart online discount strategies, study finds | St. Louis Post-Dispatch

Discounts, coupons and limited-time specials are a time-honored way of juicing revenue, but stores don’t always think about their long-term effects.

Once customers get hooked on discounts, regular prices lose all credibility. J.C. Penney’s revenue plummeted a few years ago when it tried to wean customers off constant markdowns.

In the online world, where a wealth of customer data makes it easy to offer deals strategically, the temptation to discount is even stronger. A groundbreaking study co-authored by two Washington University professors finds, however, that the corrosive effects are just as great.

The researchers conducted an experiment involving 1 million customers on Alibaba, the Chinese company that is the world’s largest online retailer. Some customers who placed an item in an online shopping cart, but didn’t buy it, were offered a discount lasting a few hours.

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Consumers can outsmart online discount strategies, study finds | David Nicklaus | stltoday.com.