As shoppers prepare for Black Friday and the holiday shopping season, it can be easy for people to accumulate debt that will weigh them down well into the new year. It is therefore helpful for consumers to be aware of some of the tactics retailers employ to encourage them to spend.
For example, most deals that offer savings in the form of free shipping or a free gift if you spend over a certain amount don’t save you money. The practice, called “sparing”, or spending more to save rarely benefits consumers, according to personal finance experts.
“I understand the appeal of going to checkout and a notification pops up saying spend $10 more to get an advantage,” LendingTree senior economist Jacob Channel told CBS MoneyWatch. “But 90 percent of the time, when you break it down, it doesn’t make sense. You’re not actually saving money if you’re spending more.”
Here are five tactics retailers use to get you to spend more, according to the U.S. Public Interest Research Group (PIRG), a consumer advocacy group.
Create a false sense of urgency
The fear of missing out on a good deal can push consumers to make impulsive purchases. Although some deals are actually only good for a limited time, US PIRG identified a number of sellers on Etsy, an e-commerce site for independent artisans, who were using fake countdown timers for deals that don’t expire. Never.
According to a PIRG study, of the 20 best-selling products on the site that have deal countdown timers, 80% of them simply reset when their ticks reach “0.”
“The ‘limited’ time window may not be as limited as it seems and the deals are not as good as they seem,” US PIRG’s RJ Cross told CBS MoneyWatch. “Make your list, compare those items, and don’t get distracted by deals you haven’t had time to think about.”
Implying rarity
Online retailers can call their products “selling out fast!” » or, when a consumer is considering a purchase, display how many other consumers are browsing the same item.
“Retailers and advertisers are always trying to get you to buy more than you need and spend more than you want to,” Cross said in a statement. “Once you know what to look for, you end up laughing when you see these tactics instead of falling for them.”
Pricing Tips
Have you ever wondered why a price says $4.99 and not just $5? When sellers round down an item’s price, it suggests to the buyer that it is less expensive, PIRG notes. Although $4.99 is just a penny less than $5, a buyer is more likely to focus on the dollar figure – $4 – rather than the cents.
According to PIRG, even removing a comma from a high price like $1,200 and posting it at $1,200 can entice someone to pull the trigger. At the same time, breaking the cost of an item into monthly installments can also make the price appear smaller than it really is, the organization noted.
“You’ll still have to pay the full cost, and sometimes even more in late fees, if you’re not careful,” Cross pointed out.
Doubtful testimonies
Many retailers feature online testimonials from customers seemingly raving about a “life-changing” vacuum cleaner or pair of sweatpants. Some of these accounts come from real customers, while other reviews are unreliable because they were generated by a bot or by the company itself, PIRG said.
At its core, it’s a form of peer pressure: buyers are subtly led to believe that purchasing the product will make them as happy as the happy customers described in the testimonial. In reality, many online reviews are fake, especially as AI bots proliferate.
“When looking at product reviews, don’t necessarily take the stars for granted. It’s better to go through the reviews and find ones that look real, include a photo of the product, or make a specific point about the product instead. with a generic rating like ‘great product’,” recommends Cross.
Fear-based appeals
Many marketing pitches and advertisements suggest that your life will somehow be worse if you don’t make a purchase, ranging from the risk of a home invasion to hair loss. With e-commerce, of course, these messages are tailored to your individual interests and tastes, since website cookies track your browsing habits with retailers.
Messages “about how to fix our perceived flaws are increasingly able to find us at any time of day, every time we go online,” Cross said.
