How Online Retailers Make It Easier to Spend Money

As pleasurable as shopping can be, the sensation you feel when it comes to actually paying for your new goods can seem more like pain. Whether you've felt a pang when handing over a $50 bill to a cashier, or you've flinched at the thought of how much a purchase is depleting your checking account, you have felt what psychologists refer to as the "pain of paying." (See also: Questions to Ask Before You Buy)

While not everyone feels such pain equally, retailers work hard to lessen that pain of paying for all their customers, in the hopes that tightwads and spendthrifts alike will spend more than they intend. In particular, online retailers are experts in decoupling the pain of paying from the joy of shopping.

Here are four ways that your favorite Internet shopping destinations have made it easier for you to spend money — whether you really want to or not:

1. Putting the Focus on Time

Pretty much any transaction you make will cost you in either time or money. Going to a free concert will cost you nothing financially, but you'll likely have to wait in an impossibly long line to get in. On the other hand, spending $350 to see a big-name act will cost a great deal less time, but your wallet will be much lighter.

What's interesting about the cost vs. time issue is that researchers have found that consumers tend to have more positive attitudes toward products that focus on time, rather than money. According to Cassie Mogilner and Jennifer Aaker, this is because time is less fungible (that is, less easily replaced) than money. This explains why many people are willing to spend more for convenience: they can never get back the time they spend doing things themselves or waiting for shipments, but they can always earn more money.

Online retailers are well aware that their customers don't want to wait. Look at the number of retailers that offer multiple shipping speeds at the end of your transaction. You don't have to wait the usual three to five business days if you just click on the "Want it Tomorrow?" button. For many, the financial cost is less important than the time cost.

You will also see many sites focus on the convenience of remembering your credit card information. It's sold as a time-saver, even though what it is doing is taking away an opportunity for you to rethink your purchase. (See also: How Retailers Manipulate You Into Spending More)

2. Bundling

Imagine you are purchasing a new camera. Would you rather pay $300 for the camera, which includes the lens, the flash, several memory cards, and a case, or $150 for the camera and have to purchase each accessory separately?

If you're like most people, you're more likely to choose the first option. That is because even though it is possible that you could spend less overall for your new camera if you buy each piece separately, you will have to evaluate each transaction separately, and feel a separate pain of paying. According to research by neuroeconomist (and yes, that's a thing) George Loewenstein, "individual purchases force us to make a specific decision for each transaction…by offering combined packages, ALL potential customers can reduce their buying pain to one transaction if they so choose."

If you've ever wondered why Amazon offers you information on what items are frequently bought together with the specific item you're researching, it is because the retailer is hoping to reduce your pain of paying. If you need all three "frequently bought together" items, then you are more likely to click the handy-dandy button that places all three in your shopping cart. Without that option, you may decide not to buy anything, since you would have to go through the cost/benefit analysis of each purchase separately — and who wants to do that? (See also: How to Make Better Decisions)

3. Offering Reviews

While the presence of reviews on online retail sites may seem like a simple and necessary part of shopping for something you cannot see in person, retailers also benefit from it in other ways. According to the New Economics Foundation, one of the seven principles of Behavioral Economics is the fact that other people's behavior and opinions matter:

"People do many things by observing others and copying; people are encouraged to continue to do things when they feel other people approve of their behavior."

Retailers get to take advantage of our social natures by offering reviews — both good and bad. By allowing us to see what our peers have to say about particular items, we are more likely to buy. Our thinking may follow these lines: "Everyone seems to feel pretty 'meh' about product X, but there are nothing but raves about Y, even though it's a little more expensive. I guess I'll buy Y."

Many shoppers who are swayed by reviews might have been perfectly happy with a product with only mediocre reviews, but taking into account what the crowd has to say is enough to make their decision easier (and less painful). By following the reviews, a customer has not just made a purchase — they have joined a community.

4. Giving You Default Options

When you get right down to it, we are all creatures of habit — which can be another way of saying that human beings are essentially lazy.

But making choices is difficult, and consumers can often be paralyzed by indecision when offered too many choices. Default options take away that choice paralysis, giving you an option that you simply do not have to think about.

In addition, having something given to us as a default often means that we value it more. Ned Welch of marketing firm McKinsey & Company, explains it this way:

"Defaults…work partly by instilling a perception of ownership before any purchase takes place, because the pleasure we derive from gains is less intense than the pain from equivalent losses. When we're 'given' something by default, it becomes more valued than it would have been otherwise — and we are more loath to part with it.

Savvy marketers can harness these principles. An Italian telecom company, for example, increased the acceptance rate of an offer made to customers when they called to cancel their service. Originally, a script informed them that they would receive 100 free calls if they kept their plan. The script was reworded to say, 'We have already credited your account with 100 calls — how could you use those?' Many customers did not want to give up free talk time they felt they already owned."

Online retailers will often offer default settings that both allow you to avoid having to make a decision, and help you to feel as though you're owed a service or product.

For example, many retail sites will allow you to sign up for a premium service (such as Amazon Prime) for a free trial period. However, at the end of the free trial, the default option will be for you to be charged and signed up for the full-price version of the service or product.

In such cases, not only will you have to make a specific decision to cancel (and therefore go through the tough decision-making process of weighing the costs and benefits of losing the premium service), but you will now feel like you're losing something you feel entitled to. It's much easier to simply allow the default to take effect.

Remember That Retailers Hold the Cards

The field of Behavioral Economics is a fairly new one — but retailers have understood the principles of what makes people irrationally spend money for hundreds of years, if not longer. Online retailers have unique opportunities to use technology to relieve you of the burden of your extra cash — and even the savviest of Internet shoppers has fallen victim to some of the methods used by retailers to reduce the pain of paying.

The best way to keep your money where you want it is to avoid surfing retail sites unless you are looking for something specific, and to take the time to make thoughtful decisions about your purchases.

Because you can count on the fact that your favorite online retailers have your number.

Have you ever succumbed to one of these online retail techniques? How do you resist them?

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