Q: I’m really trying to stick to a budget this holiday season, and I’m doing most of my shopping online. It should be easy to stay on track, so why am I constantly going over budget?
A: Both online and in-store shopping can tempt you to overspend, but the internet is particularly designed to help you lose track of your dollars.
More and more people are choosing to hit the web instead of the mall for holiday shopping. The internet definitely wins for convenience. Since there are no crowded malls, no long lines and no crabby cashiers, it’s much more enjoyable. Plus, you get to shop in your PJs. Can it get better than that?
Shopping the old-fashioned way, though, is not without merit. When purchasing items that need to fit right or that you may need immediately, you might want to head to the mall or local small business. You might even save money that way.
If you choose to do most of your holiday shopping on the internet, though, it’s good to understand why we tend to overspend online.
Why we spend more online
Here are 10 ways online retailers push us to overspend:
1. They push products strategically. The first few products you’ll see when you visit a retail website aren’t necessarily the hottest-selling items; they’re just the stuff the company needs to get rid of most urgently. Most people, though, will assume the products on the site’s homepage are the most popular and will quickly drop one or two of these items into their cart.
2. They offer free shipping—with a minimum purchase. Don’t think the retailer is being super-generous when they offer to sponsor the shipping costs if you spend $50 or more. They’re only luring you to spend more. And it works: Most people choose to fill their carts with stuff they don’t need just to avoid paying the shipping fee.
3. They make it super-easy to check out. Websites make their checkout process ridiculously easy just to keep you buying. If your info’s been saved on the site, you can order your whole cart within minutes. The quicker you make those purchases, the less time you have to rethink them and opt out.
4. They offer spending-based discounts. Online retailers often offer discounts after you’ve reached a certain spending threshold. Just like the free-shipping minimum, these conditional discounts manipulate you into spending more just to qualify—even if you won’t save any money at the end of the day.
5. They change their prices without rhyme or reason. Online retailers constantly adjust their prices according to consumer and market behavior. This tactic, known as “dynamic pricing,” is designed to draw you back to the site again and again just to check the going price. It also prompts you to buy before the price rises again.
6. They use anchor pricing. Retailers want you to believe you’re getting a great deal. They frequently employ “anchor pricing,” or placing items with inflated price tags right next to one you’re looking at now to make your desired item look less costly.
7. Their ads stalk you. Online retailers target you with ads based on your search history. They know what you’re into and they can even determine your style.
8. They have lenient return policies. Online retailers purposely have looser return policies than their brick-and-mortar counterparts. They know you’ll consider these policies when making your purchase and that you’re more likely to buy something online if you can easily send it back to the store.
9. They have a virtual checkout aisle. If you think you’ll save big by shopping online because you won’t be tempted to grab all those goodies that the brick-and-mortar stores have lining their checkout aisles, here’s a reality check: Retailers are smarter than that. They’ve discovered a way to create a virtual checkout aisle, full of last minute add-ons that go well with the stuff you’re buying. It’s all designed to make you drop another item or two into your cart before you realize your total is way above your planned budget.
10. They stay in touch. That subtle email reminder that you still have items in your cart is really just a nice way of nudging you back into. buying mode. Fact is, it works. When retailers send you emails with headlines that scream about “Today Only!” and “Free Shipping on Every Order,” they get your attention. And your money, too.
Spending less online
Should you ditch the on-the-couch shopping and camp out at the mall until the holidays?
You don’t need to be extreme and do all your shopping IRL this year. By educating yourself about the most common manipulative tactics that online retailers use, you’re already better equipped at handling them. You can also follow these tips to keep your online spending to a minimum:
- Shop with a list. Yes, just like the one you scribble before heading to the grocery. Don’t just have a look around your favorite sites. Decide what you want and need to purchase before browsing, and do your best to stick to your list.
- Set a time limit. When there are no store closing hours to curtail your shopping trip, you can easily lose track of the time, which can trigger overspending. Plus, the internet is designed to keep you engaged, and one click leads to another. Give yourself a reasonable amount of time to shop, and once time’s up, snap your laptop shut.
- Never pay full price. Don’t check out without doing a quick search for coupons and discounts on sites like RetailMeNot.com and CouponCabin.com.
- Don’t twist yourself into a pretzel to qualify for free shipping. Don’t buy stuff you don’t need just to avoid a dreaded shipping fee.
- Shop early. You’ll find it easier to stick to your budget, and to avoid the free shipping trap, when you shop early. Plus, many e-tailers offer free shipping with no strings attached as long as you don’t mind waiting a bit for your stuff to show up.
With awareness and careful planning, you can stick to your budget this holiday season—even when shopping online.