Promotion Codes Open Pandora’s Box:

Unlike Moira Rose, most of us have heard of promo codes.

Promotion codes mean different things to different people. Most people know about promotion codes as everyday consumers. Promo codes have a particular use for brands and online stores as retailers. But for a small group of internet grifters (bad actors & resellers), promo codes are a tool to exploit e-merchants and effectively steal their goods!

What do promotion codes mean for different people?

1. Retailer: A way to reward your most loyal customers and attract new ones. It’s a way to congratulate and thank them for buying, supporting, and loving your brand.
2. Consumer: A way to justify buying a product you’ve had in your cart.
3. Bad actors: A way to abuse the system.

We’ve all been tempted: I won’t buy skincare products without creating a new user account for that 20% new user discount #InHouseMaterialGirl. There are different levels of abuse! To us, bad actors are people who systematically abuse promo codes to make a profit, and these are the most flagrant and egregious serial promo code abusers.

What is promotion stacking?

As a beloved dog mom to an English Springer Spaniel (see photo for dog tax), I use Pet Company frequently for food, toys, and medication. As someone who cannot say no to my dog, I have become a “loyal” customer, and Pet Company often sends me discounts.

I found out that many of these codes could be used together — I was able to get 8 ball toys for Yofi for only $3 by combining or “stacking” promo codes!

I also learned that I could repeat this process and buy as many toys as I wanted for a meager price. I could have resold the toys on Amazon for a handsome profit (~$4,500 if I did it 100 times), but as a good actor 😇 I chose to donate them to my local humane society.

I won’t go into specifics about how I did it. You’re going to have to trust Yofi and me — he very much enjoyed the balls, and so did the pets at my local humane society!

Promo Code Abuse

Resellers and Bad Actors utilize various Pet Company promotions such as birthday promotions, sitewide promotions, and Consumer Services issued codes to increase their profit margin. Resellers use bots to take scaled actions like mass-creating accounts — No account is used twice, and the sole purpose of account creation is to unlock various promotions. Since resellers buy the product with XX% off, they can quickly sell it on second-hand markets with little to no markup. Their consumers pay up to 20% more on third-party sites, giving Resellers up to 35% profit on each product.

Here’s the Impact on Pet Company

Let’s pull up this handy-dandy chart from my previous article.

The company is fulfilling $50+ of items shipped and sold for $3. I only did it three times, but I have flown under Pet Company’s radar. I was not trying to hide each time by using a different email, address, etc. These items probably cost more than $3 to produce, and the inventory management, e-commerce management, and supply chain cost way exceed the $3 checkout price.

This means Pet Company is taking a net loss on the sale, and there is no external value — no new customers acquired, and they’re simply losing money.

Marketing & Forecasting

Pet Company’s metrics are skewed due to the mass creation of accounts. If Pet Company were looking at their new membership growth, they would see an increase in the monthly membership, misleading with many of these new members being bad actors. Is that a positive signal that Pet Company should build decisions on…? Probably not.

Pet Company’s marketing is now looking at the 30% discount/Buy One Get One Free as a successful campaign. They say my users love the discount codes, and it was a success! Just look at all these brand-new user accounts! However, they are not diving deep enough to understand the intention and identity of their users, like the arbitrageurs and profiteers trying to make money off the brand.

Returns

If I returned the product I could not sell, I would get a refund on the items I sent back to Pet Company. These returns are expensive and time-consuming for a thing to be returned, restocked, and re-shipped ($16 per unit) if sold to a consumer. A compounding impact of returns is reducing the product’s value once re-entered into inventory. Sometimes, they may need to liquidate the returned product as they have missed the sales window or sell at a reduced price because the item is “deadstock.”

How can Yofi Help?

BotNot is an intelligent solution that helps aid your supply chain, decision-makers, and analytics without impacting the user experience. We holistically assess every transaction to determine if the individual is a good or bad actor. We look at hundreds of features to evaluate humanness and fairness to help ensure brands are prioritizing their most loyal consumers. We assure you, following the promotion code, you will see a reduction in the cost of arbitrage… might as well give us a try ;).

Thanks for reading — if you want more tips, please DM me on Twitter!

Love,

The Yofi Team

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