From the retailer's perspective, sweatshirts are ideal candidates for BOGO promotions. Unlike high-end tailored clothing, sweatshirts have relatively low production costs and high markups. By offering a second unit for free, the store significantly increases its "Average Order Value" (AOV). Even though the profit margin per unit decreases, the total cash flow increases. Furthermore, sweatshirts are seasonal and bulky. They take up significant warehouse space; using BOGO deals at the end of winter allows stores to quickly clear out old stock to make room for spring collections without the negative stigma of a "clearance" bin.
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At its core, the BOGO sweatshirt deal relies on "zero price effect." Behavioral economists have found that people often overvalue items when they are free, even if they didn't originally intend to make a purchase. When a shopper sees a sweatshirt priced at $60, they might hesitate. However, when the offer becomes two sweatshirts for $60, the perceived value of each item drops to $30 in the consumer's mind. This creates a sense of urgency and a feeling of "winning" against the retailer, which encourages a faster checkout process. Even though the profit margin per unit decreases,
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