How Much Discounting Costs Margin by Ecommerce Product Category

GoPro: 760 bps of gross margin, isolated to promotional activity (Q1 FY2025)

GoPro's own reporting isolates the promotional line more cleanly than almost any other company in this dataset: in the first quarter of fiscal 2025, higher promotional activity, explicitly including discounting slower-moving products, cost 760 basis points of gross margin on its own, before other factors were netted in. Subscription and service revenue (up 270 bps) and lower operating costs (up 290 bps) partly offset that hit, leaving the quarter's overall gross margin decline at a smaller 200 bps. That gap between the isolated promotional cost and the smaller net decline is itself informative: the promotional line was doing more damage than the headline number suggests, other parts of the business were quietly absorbing it. This lines up with our companion research on inventory turnover, where GoPro's inventory fell 16% year over year over the same stretch. Discounting slow-moving stock is very likely how that inventory reduction actually happened.

Mattel: 480 bps of adjusted gross margin (Q4 FY2025)

Mattel's adjusted gross margin fell to 46% in the fourth quarter of fiscal 2025, a 480 basis point decline the company attributed primarily to higher discounting, alongside inflation and foreign exchange, as it accelerated promotional activity to manage inventory and support retail partners heading into 2026. For the full year, adjusted gross margin was down a smaller 200 bps, meaning the promotional hit was heavily front-loaded into the fourth quarter specifically. That timing tracks exactly with what our companion research on inventory turnover found: toy inventory builds through the year ahead of the holiday season, then sells down sharply in Q4. This is the margin cost of that same liquidation window, not a change in Mattel's underlying pricing discipline.

Mattel's disclosure names discounting as the primary driver but blends it with inflation and foreign exchange in the same figure, so treat this as directional rather than a pure discount-only isolate.

Nike: approximately 180 of 190 bps total FY2025 gross margin decline

Nike's gross margin fell 190 basis points to 42.7% in fiscal 2025, and the company's own disclosure attributes roughly 180 of those basis points to a lower average selling price driven primarily by higher discounts and channel mix. That's an unusually clean isolation for a company this size: almost the entire margin decline traces back to discounting rather than cost inflation or other factors. The pressure didn't ease afterward either, Nike's fourth quarter alone saw a steeper 440 bps decline, again attributed to higher discounts and channel mix. Read alongside our companion research on inventory turnover, where Nike's roughly 103-day inventory cycle is the slowest of the non-outlier categories measured, a longer hold time before a unit sells is exactly the kind of pressure that pushes a retailer toward deeper, more frequent discounting to keep inventory moving.

Signet Jewelers: 80 bps of margin gained by pulling back on promotions (Q2 FY2026)

Signet Jewelers is the one company in this dataset that shows the promotional lever working in reverse. A refined, more disciplined promotional and assortment strategy added approximately 80 basis points of merchandise margin expansion in the second quarter of fiscal 2026. The company then flagged the opposite move for the fourth quarter: a planned pivot back to broader promotions to meet consumer expectations, expected to cost some of that margin back. Both directions point at the same underlying number, discipline around promotions is worth roughly 80 bps either way for a jewelry retailer, which is a meaningfully smaller lever than what electronics, toys, or apparel showed above. That smaller number is consistent with jewelry's role in our companion inventory turnover research, where Signet's roughly 172-day inventory cycle reflects considered, infrequent purchases that are less responsive to a short-term markdown than an impulse category would be.

Wayfair: gross margin held near 30-31% despite expanded promotions

Wayfair doesn't fit the pattern above at all, and the reason is structural rather than a difference in discipline. Reporting on Wayfair's promotional strategy describes a model where much of the cost of a discount is funded by the roughly 20,000 suppliers on its marketplace rather than absorbed directly by Wayfair itself, with about 70% of revenue during promotional periods still coming from full-price items as customers browse past the discounted listings. Wayfair's own reporting confirms the outcome: gross margin has held steady in the low end of a 30-31% range even as promotional activity expanded. This is the same asset-light structure our companion research on inventory turnover flagged for Wayfair's extreme (and similarly not-comparable) turnover ratio: a company that doesn't hold much of its own inventory also doesn't absorb much of the direct cost of discounting it.

The supplier-funded discount mechanism is drawn from industry reporting on Wayfair's promotional strategy, corroborated by Wayfair's own disclosed gross margin range holding steady through the same period. Not a company-stated basis-point figure like the other rows above.