Does anybody here use a loss leader to generate traffic for their website? IE buying 20 products @ $100 a piece and selling them for $85 on a first come first serve basis(similar to woot.com). I think that this along w/ some free content could entice visitors to make other purchases and also increase traffic in general. Just looking for some comments really
IMO.. loss leaders are hard to do on the Internet. Most people on the Internet are looking for very specific items so it may not help as much. A few years back we lowered (lowest on the Internet by $10) our price on a medical product and picked up some add-on sales... but it wasn't really significant enough to justify the loss margin in the main product.
You could use a loss leader as a way to build your list and to make additional sales. The way to do this woud be to make sure you collect the buyers e-mail, address etc. via an autoresponder. You could set it up so that they would have to enter their information before they are allowed to check out. After that you just need to e-mail them peridically with new offers.
I've had a similar experience to stuart. The internet is not a book store - where if you offer a book at a super cheap price, the buyer may buy 4-5 other ones that you make money on. If you offer an item below cost online, all that will happen is, that it gets posted on the freebie boards ( fatwallet and a few others). You'll get a few people to buy it and they will never buy anything else. And you just lose a ton of money.