NEW YORK (MainStreet) — Shopping has never been easier than it is today, as websites and mobile devices evolve to make the experience increasingly convenient, but the downside is that buyer’s remorse is just one click away as well.
If you need a new set of dishes, it used to require a drive to the mall and some walking around to find the right set in the right store. Now, all you have to do is search for one on Amazon for five minutes and you’re done. But the same technology that has made it easier to shop also makes it easier to buy products spontaneously, whether we need them or not.
“The behavior of shoppers online is changing and websites like Amazon are a big reason why,” said John D. Wells, a marketing professor at the University of Massachusetts Amherst, who specializes in researching online retail trends. “We’ve already given these sites our credit card information and addresses and we trust them, all of which makes it easier for us to be more impulsive when shopping, in a way that’s much more difficult in brick and mortar stores.”
At a traditional retail store, a spur of the moment purchase actually takes several steps. You have to pick the item off the shelf and walk it over to the checkout aisle. You then wait, watch the cashier ring up the product and announce the total bill, after which you pick out the proper amount of cash or take out your credit card, the latter of which requires you to review the receipt for the purchase once more before signing it. Add to that the time it takes to drive to and from the store and find parking and you have plenty of potential moments where you can stop and second-guess your decision to buy.
By comparison, the efficiency of shopping online or on mobile devices largely removes the opportunity to pause mid-purchase. If you want a product in one given moment, you will get it in that moment, with little to no delay.
“Payments are made so quickly you don’t have to think about it. There’s no standing in line at the register or having to type in your credit card number,” said Michelle Madhok, founder of SheFinds.com and MomFinds.com, and a shopping expert. “I personally have made purchases on apps and completely forgot that I did it until the box arrived.”
While research on the prevalence of impulse buying online is limited, several older studies hint that it’s more common than you might think. One report from Michigan State University in 2001 claimed that as many as 40% of online purchases were unplanned. In 2008, a survey from GSI Commerce, a market research group, found that nearly half of all men and 60% of women made impulse buys online. But the rate of online impulse buys may be even greater now as each of these studies is based on data collected before the recent boom in e-commerce.
Online retail sales increased by 11% in 2009, hitting $155 billion for the year, according to Forrester Research, a market research company. Moreover, Forrester predicts sales will increase by an average of 9% each year through 2014, when the majority of all retail sales (53%) will either occur online or be influenced by promotions and information found online.
At the same time, millions of consumers have purchased e-readers in recent years, making these the best-selling products for major retailers like Amazon and Barnes & Noble. And perhaps most importantly, smartphones have taken off during the same time period, with consumers downloading billions of apps – some of which allow them to shop and make purchases while on the go.
The effects of all this can be seen today, as one recent survey found that eight in 10 Americans now profess to shopping online at least once a week.
What’s more, Wells, the marketing professor, believes that the rate of impulse buying online has likely outpaced e-commerce growth in general because online retailers have become increasingly savvy at coaxing us to make split-second purchasing decisions.
How Online Retailers Get You to Make Impulse Buys
For every digital retailer, be it a company that sells games through an iPhone app or a website that sells clothing and jewelry, the ability to get you to make spontaneous purchases and make them often is based first and foremost on whether they get you to save your credit card and shipping information on the site. This has a unique effect on the consumer, particularly when partnered with an e-reader or mobile device that can deliver a purchase instantly.
“It’s the perfect business model, pairing immediate gratification with delayed consequences. You don’t actually feel the bill.” Wells said, comparing this tactic to the way casinos desensitize customers to the real value of the money by replacing dollars with gambling chips. “The way you throw around a $5 chip is not how you would throw around a $5 bill. Your cognitive barriers aren’t there.”
The same is true when you let the retailer store your credit card information rather than going through the full payment process each time. Still, this is only one of many ways retailers can influence you to buy.
“What Amazon and other sites do really well is they recommend products based on your purchasing history,” said Ravi Dhar, director of the Center for Consumer Insights at the Yale School of Management. “Online retailers are very successful at getting consumers in the mindset of purchasing and then recommending related products,” This, he says, makes consumers more susceptible to buying products they didn’t initially plan on buying.
This particular strategy seems to work quite well as more than a quarter of web retailers have reported an increase in the average number of items sold per purchase, according to Forrester data. In other words, online retailers seem to have perfected the art of the up sell.
Perhaps the most potent and least discussed tool up an online retailer’s sleeve is to add countdowns to their products and mark items as limited-time offers. Amazon, Target and other major retailers highlight brief sales every day, airlines like JetBlue and AirTran often promote flash sales online and a whole new wave of social deal sites like Groupon and LivingSocial apply a ticking clock to all their deals to grab potential buyers’ attention.
“Online retailers are getting better at creating this sense of urgency that leads to impulse buying,” Dhar said. “Now, consumers have to learn that they are susceptible to these things.”
Indeed, the new tactics these retailers use require consumers to follow a few new rules of their own when shopping. So we’ve asked for suggestions from our experts to help you out.
The New Rules of Online Shopping
Rule #1: Don’t Store Your Credit Card Info
We know it saves time, but allowing websites and apps to remember your credit card information may also cost you money in the long run.
“If you have to get up and go find your credit card to type it in, you might decide to forego the purchase,” said Madhok, the shopping expert. “So don’t store your credit card.”
Sometimes the best option, money-wise, is the less convenient one.
Rule #2: Walk Away From Your Computer
When it comes to impulse buying ,the real perk of shopping online isn’t that you can shop more quickly, but rather that you can select the items you’re interested in buying, but then take your time before pulling the trigger.
“The one-click process will be over before you know it,” Wells says. “Instead, put all the items you want in your online shopping cart, but don’t click through to checkout. Have your cooling off period, get a cup of tea and then come back and ask yourself what you really need to buy.”
Rule #3: Turn Off Your Shopping Alerts
Many shopping smartphone applications, like those available from eBay and Gilt, will alert users anytime there is a new promotion on a product. This can be a great way to keep up with sales, but if you’re someone who is overly prone to making impulse buys, this alert can turn into your financial siren. So Madhok recommends turning them all off just to be safe.
Rule #4: Follow A Budget
Finally, just like with traditional impulse buying, it’s essential to plot out your budget and keep it in mind when making your online purchases to avoid unnecessary spending.
“People shouldn’t confuse the freedom and convenience of online shopping with having more permission to purchase,” said Donna J. Sturgess, president of Buyology, Inc., a company that studies marketing psychology. “Shoppers need to recognize that they have a budget they run their life on, and should spend some time budgeting out their expenses by category of purchase.”
If this seems like too much work, there is a simpler way to keep your spending in line.
“Just ask yourself what else you could do with the money you’re about to spend,” Dhar said. “It usually makes you more reluctant to make the purchase you’re about to.”
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