5 Reasons You Overspend Online

With the holiday season quickly approaching, more and more consumers will turn to the Internet for their holiday shopping needs. Online shopping has been popular for several years and appeals to a broad type of consumer base. This billion dollar business has come a long way from its start in the 1990’s. Today, a consumer can buy anything from Ralph Lauren slippers to a motorcycle headlight online. Physical retail establishments have invested a great deal of money in constructing an inviting e-commerce website.

With the economy making for a leaner wallet this year, consumers will still likely continue to overspend while surfing the Internet. Here’s why:

  1. Convenience The ease of use makes Internet shoppers loyal. There’s no standing in line or any salespeople hovering around to annoy you. The Internet is available 24/7, which means you are not at the mercy of the store’s business hours to shop.  Some websites have product reviews from other users or commentaries on a particular product. Therefore, if Laura from Miami swooned over the green halter dress she received, you may impulse buy the item as well.  Most websites also give you the option to save your credit card information and allow you to track your order until it reaches your door – which means when you re-shop at the store, it is more convenient than ever.

  2. Better Prices We’ve all received sales literature in our e-mail Inbox. Whether it’s that special one-day 20% off coupon or an advertisement for clearance items at our favorite online website, the Internet is full of sales and deals that simply cannot be found in standard brick-and-mortar retail outlets. Online retailers have more control over price and save a bit more money than a physical store, and therefore, they can pass on the savings to you: the impulse-spending consumer.
  3. Better Selection Technological advances in recent years have led to great improvements to e-commerce websites. Online, that red Liz Claiborne sweater that you can’t ever seem to find in the mall is suddenly available in your size and in another color. Online shopping allows for a better selection because more of the products can be displayed over the span of a few dozen web pages. Retail stores only have so much physical space for displays, floor items and stock room clothing and accessories. With the advance of product descriptions, photos, multimedia files and even real-time chats, consumers have a clear understanding of what they are purchasing.  In other words, you have much more to buy online than in a physical store.
  4. Incentives In recent years, online retailers have begun to think of new ways to lure shoppers back to their website. As an incentive for being such a loyal shopper, websites offer rebates, early shopper discounts, refer-a-friend promotions, and even credit card financing specials with discounts attached. The most popular trick seems to be free shipping. Free shipping is often associated with the amount of money spent. This incentive piggybacks on reason #2 – better prices. If your favorite store is having a clearance sale and free shipping is available with a $100 purchase, you would be surprised at how many unneeded items you buy just to take advantage of that incentive.
  5. Add-on Sales The classic marketing add-on sales approach can be found at your local fast food restaurant. The echo from the drive-through speaker saying “would you like fries with that?” is a popular marketing technique. The goal is to have you spend more money by buying a product related to the first one your bought. The same approach is used for online shopping websites. If you spend enough time on a website looking around, you will notice that a brief list of recommended items pops up. It may say “you may also like” or “our editors suggest.”  These ideas and suggestions – collected from customer data – cause consumers to overspend where they would normally spend half of the amount.

Online shopping allows consumers to have more freedom and control over their shopping experience. With the touch of a few keys, a consumer can price comparison shop without getting out of their bathrobe. The fast-pace and wow factors contribute to significant overspending on the Internet.  However, with these strategies in mind, you can break the cycle and not overspend this year!

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