Supermarkets are the masters. Milk and eggs sit near the back of the store, often priced below cost, because the trip to fetch them passes through everything else. The unprofitable milk pays for itself in the cookies, wine, and ready meals that fill the trolley along the way.
Online, the loss leader is usually a product with a clear search-volume hook. A popular item, often the cheapest in its category, priced aggressively to win the click. Once the customer is on the site, the rest of the catalogue does the work: cross-sells, bundles, subscriptions, accessories.
The economics only work if the loss leader actually leads. If the customer buys the discounted item and leaves, you lost money. If they add three other items to the cart, the strategy paid off.
A loss leader is not a discount. It is a deliberate choice to subsidise traffic. That changes how you think about it:
Most repricing rules treat "below cost" as a hard fail. For a loss leader, that floor is exactly where you want the product to live. The rule needs to know which SKUs are loss leaders and let those go below cost intentionally, while protecting the rest of the catalogue. This is where multi-line repricing rules with per-product overrides matter.
Example: A pet store sells a popular brand of cat litter at cost ($14, COGS $14). The loss leader brings shoppers in, and basket data shows 78% of orders containing the litter also contain at least one full-margin item (food, toys, accessories). The average order containing the litter is profitable; the SKU on its own is not.