Sneaky Ways Online Retailers Are Getting You To Spend More: How Many Of These "Traps" Have You Fallen For?
“I might have laughed way too hard at this.”
No amount of online shopping fails can keep my hands off my favourite eCommerce sites.
Now that we are spending most of our time at home, I might have browsed enough online shopping platforms to analyse some of their consumer tactics.
So much so that these online eCommerce platforms can DREAM ON getting me to spend more with their sneaky ways.
” Who am I kidding. R.I.P credit card…”
Tactics Online Retailers Use to Get You to Spend More
We break down some of the tactics online retailers are adopting to help you make smarter personal finance decisions.
Decoy Pricing
The decoy pricing was made famous by the subscription model of The Economist magazine.
| Economist.com Subscription | Print Subscription | Print and Web Subscription | |
|---|---|---|---|
| What does it include? | One-year subscription to Economist.com, including online access to all articles from The Economists since 1977. | One-year subscription to the print edition of The Economist. | One-year subscription to the print edition of The Economist, and online access to all articles from The Economists since 1977. |
| Price | US$59 | US$125 | US$125 |
If you noticed, the Print subscription is priced the same as the Print and Web subscription.
Most people would assume that the weird pricing is the result of a typo and they are getting a good deal by subscribing to the Print and Web subscription for The Economist.
Truth is, the Print Subscription pricing is left there on purpose as a decoy pricing to “trick” you into believing that you are getting a good deal out of it. If anyone were to subscribe to the Print subscription, The Economist benefits from it too.
Weirdly Priced Vouchers
Some of the eCommerce platforms allow you to purchase credits at a lower price.
Here’s an example:
| How Much You Pay? | Value of The Voucher |
|---|---|
| $12 | $20 |
| $40 | $50 |
Would you pay $12 for $20 worth of credits or $40 for $50 worth of credits?
The above marketing strategy relies a lot on our instant ability to calculate the cost we are saving for either of the packages.
| How Much You Pay? | Value of The Voucher | How Much You Save? |
|---|---|---|
| $12 | $20 | $8 |
| $40 | $50 | $10 |
With that, most people would have gone on to pay $40 for $50 worth of credits, which is the less optimal choice!
The best decision can be made if one breaks down how much credit he is getting for every dollar he pays.
| How Much You Pay? | Value of The Voucher | How Much Value Are You Getting Per Dollar? |
|---|---|---|
| $12 | $20 | $1.67 |
| $40 | $50 | $1.25 |
In fact, the $12 for $20 package makes more sense if we look at the returns from each dollar.
Another way to look at it is that if you were to spend $36 purchasing 3 of the $12 package, you will be getting $60 worth of credits in return.
Turns out, you will be paying $4 lesser as compared to the $40 package and getting an extra $10 worth of credits!
“Why Not Get A Bundle”
Have you ever went online shopping for a pair of chino shorts only to end up having their bundle of 25342 chino shorts delivered to your house?
” Just me, on a normal day trying to buy a pair of Chinos for $33.99.”
” That was until this 2 pack Chino shorts bundle came into the picture and add on 500 times of stress and 30 more minutes to my online shopping trip.”
It the eCommerce retailers’ job to try to convince you into spending more on their platform. One way to do so is to bundle items up at a discounted price, enough for you to think twice and turn your hair grey while you are at it.
In this case, one technically saves $9.01 if he goes on a bundle and purchases an extra pair of shorts.
The other way to look at this is that you just spent an additional $23.
P.S. I am not shopping during office hours hoh!
Charm Pricing
When was the last time you managed to do anything with a one-cent coin?
I flipped one into a wishing well, and… my wish didn’t come true.
Charm Pricing is a strategy that intentionally reduces a round number by one cent or ten cents.
By intentionally reducing the price by $0.10, it makes the price visually more appealing to consumers.
This is because our brain associates $29.90 to $20, and $30 to $30. That 10 cents difference has a psychological impact of $10 in our thought process when deciding on the dress.
This strategy is backed by research done by Manoj Thomas and Vicki Morwitz in the year 2005. You can check out their research, Penny Wise and Pound Foolish: The Left-Digit Effect in Price Cognition to understand more.
This pricing strategy’s impact amplifies when it comes to big-ticket items. It makes a $1,000 item more convincing by when they price it at $999.90.
Something to take note of for your future online shopping “trips”.
Minimum Order for Free Delivery
Online platforms are using free delivery as an add on for consumers who spent a minimum amount of money on their purchases.
Having recently compiled a list of online grocery platforms and alcohol delivery, we noticed the use of minimum order for free delivery being used all the time.
Truth is, for every purchase that meets the minimum order for free delivery, the delivery cost is already included in the profit margin made by the company.
A healthy habit to adopt will be to give your order a second thought by factoring in the delivery cost.
If your intention is to purchase only $20 worth of products and the delivery cost is at $5. You will only spend a total of $25 for that purchase.
If you are trying to go for free delivery with minimum spending of $50, you end up spending an additional $25 on your purchase.
Promo Code for First Time Users
Ever wondered why first time users seem to get the best deals on every online retail platform?
Having done a compilation on Lazada promo codes recently, we noticed that New Lazada customers get to enjoy a great deal of $8 off a minimum spend of $20.
Yet, when it comes to existing customers, chances of such deals are as good as winning the TOTO.
I certainly hope that all online platforms value customer loyalty.
While customer loyalty is important, acquiring new ones is essential to business too. Consumers can only hope to treasure their first-time customer promotion privilege for now.
Traps, Traps Everywhere
Consumers are constantly surrounded by various price traps and sales tactics when they shop online. It is an ultimate test to your ability to withstand temptations and your “ability to Math”.
I was once taught this method of adding a product in your shopping cart for two days before making your purchase.
This way, you will have ample time to think if you really need the product.
While this method works for the majority of Seedly Personal Finance Community members, it certainly did not work out well for me.
I just purchase another pair of sneakers despite having 273 of them.
I’m so weak! Again, not shopping during office hour.
