What is the fundamental difference in the risk-reward profile between using a quantity discount versus free shipping to incentivize sales on Temu?

The fundamental difference lies in how each impacts profit margins and order value. A quantity discount ('Buy 2, get 10% off') increases order value but reduces the profit margin per item, aiming to sell more units overall. Free shipping, on the other hand, doesn't directly increase order value (unless tied to a minimum purchase) but reduces the customer's perceived cost, potentially increasing conversion rates. The risk with quantity discounts is that if customers don't actually buy more, the reduced margin erodes profitability. The risk with free shipping is absorbing the shipping costs without a significant enough increase in sales volume to offset those costs. For example, a quantity discount on 'phone chargers' encourages customers to buy multiple, potentially increasing revenue even with a slightly lower profit per charger. Free shipping on orders over $20 for 'earrings' might entice customers to add more items to their cart to reach that threshold, but if they only buy one pair, the seller bears the shipping cost without a larger order value. Quantity discounts inherently aim for larger basket sizes, while free shipping focuses on minimizing purchase friction.