Marketing Tool: Loss Leaders

Definition of a loss leader: Goods or service advertised and sold at or below cost price. Its purpose is to bring in (lead) customers into the store on the assumption that, once inside the store, the customers will be stimulated to buy full priced items as well.

Need some stimulation and exposure to your store listings? Think about loss leaders. A loss leader, while not profitable in and of itself, may increase overall profitably by encouraging buyers to look at and possibly purchase different things in your store. A loss leader, if quantities are regularly sold, will show up higher in search results and be much easier to find by potential buyers. Loss leaders are what get potential buyers in the virtual door. If you as a seller have other relevant items that will also likely appeal to the buyer, then the loss leader will have a much higher chance of serving its purpose.

Another type of loss leader is fulfillment. For example, if you sell razor blades at regular price, you may want to consider razors as your loss leader. Razors are relatively inexpensive and usually provide only a few sample blades. Another example would be printers - obviously, a printer needs replacement cartridges to operate.