Is your credit card already loaded into your accounts and ready to spend?We’ve all purchased something impulsively online. The decision was likely triggered by a message telling you the item was the last one in stock, or because a retailer offered free shipping if you added one more thing to your order.
It’s common for online retailers to use these kinds of tactics to encourage you to buy in the moment and spend more, with the goal of increasing revenue, explained Lennart Baardman, assistant professor of technology and operations at the University of Michigan Ross School of Business. “Generally, that comes from increasing demand.”
One way retailers increase demand is by appealing to shoppers’ emotions. This includes using discounts or low-stock alerts to create a sense of urgency or fear of missing out (FOMO) that encourages you to react quickly and purchase, said Gary Reichmuth, associate professor of instruction in executive education at the University of Texas at Dallas’ Naveen Jindal School of Management.
“It’s the value perception — if they feel that there’s just a few left, there’s that exclusivity that they’re getting something special,” he told HuffPost. “If there’s a run on products, then there’s social proof, a belief that if other people are buying it, it must be good.”
If you tend to buy things you don’t want or need or overspend, here’s what you should know about the strategies retailers use to encourage impulsivity, why the tactics work, and how to avoid falling into the trap.
An analysis of 200 online retailers by researchers at the University of Michigan School of Information found that they used an average of 19 features to encourage impulse buying. (Large retailers, like Target.com and Amazon.com, included more than 30.) These features included discounts, low-stock messages, countdown clocks and more.
Here’s a look at some of the most common tactics online retailers use to encourage you to buy.
More than 80% of consumers say they’re more likely to purchase something when they have a coupon or discount, according to a 2022 survey by Wildfire Systems.
Offering a percentage off a purchase or free shipping for spending over a certain amount can help retailers sell more items quickly, Baardman explained. While these offers can be costly for retailers, the companies still usually come out ahead if people are buying many more of the discounted items.
“It counteracts that loss in revenue from the discount itself,” he said.
Brands also often offer discounts in exchange for you signing up for email or text alerts or a loyalty program. This enables companies to collect data about your preferences and shopping habits so they can offer product recommendations and personalised offers, explained John Talbott, director of the Center for Education and Research in Retail at the Indiana University Kelley School of Business.
Low-stock messages create a sense of urgency, Reichmuth said. “Retailers are trying to make you make a quick decision, not comparison shop.”
The FOMO of seeing "1 in stock" is real.Baardman said this strategy often works well for airlines and hotels, when consumers are told there’s one ticket or room left at that rate. It speeds up the decision-making process. For products, he said, consumers might not feel as much urgency, as they could check other websites or wait in case the retailer restocks.
Whether an item truly is the last one in stock is difficult to say, but Baardman said most reputable retailers are likely being truthful.
Giving consumers the opportunity to upgrade an airline seat or buy a premium product for a small percentage more, which is known as upselling, is another way retailers drive sales, Reichmuth said.
Other strategies include cross-selling (where they offer a related product at a discounted rate, such as a camera bag if you buy a camera) and bundling, where a discount is offered if you buy multiple related items, he added.
“The whole intent is to get you to spend more to increase your average order value,” Reichmuth said.
These approaches also help retailers move large volumes of products quickly and increase consumer demand, Baardman added. This might be necessary if they have too much stock and need to reduce inventory costs.
Many consumers browse e-commerce sites and add products to their shopping carts, but don’t complete their purchases. Online shopping cart abandonment rates average about 70%, according to the Baymard Institute.
To get shoppers to return and check out, many retailers send cart-reminder messages via email or text message. This strategy has been shown to increase sales.
“Customers get reminded that they were shopping with you,” Baardman said. It instills a sense of urgency and scarcity and makes shoppers feel valued.
“Shopping is a complex activity and the decision-making process by consumers is not straightforward and linear,” Talbott said. “Many factors play into a decision to purchase or not.”
Often, emotions drive shopping decisions, especially impulse purchases, research shows.
Discounts, cart reminders, and other strategies tap into consumers’ FOMO, scarcity mindsets, feelings of accessing something exclusive, and social proof (the idea of wanting something because others have it), Reichmuth said.
“All these psychological aspects make people more likely to buy,” he said. The sentiments may also cause someone to “short circuit any comparison shopping or evaluation” that would help avoid impulse buying.
Each time a customer engages with one of these tactics, it’s also a chance for retailers to collect more data about them, which they can use to further encourage shoppers to buy, Baardman added.
“It allows them to understand their price sensitivities, what types of products customers should be recommended, and how they can personalize the promotions to this customer so that maybe if they give them a 10% discount on this specific product, then they might buy it,” Baardman explained.
But, encouraging impulse buys can sometimes backfire for retailers, such as by increasing return rates, Talbott said. There’s also the environmental impact of shipping and processing returns.
It’s easy to get caught up in FOMO, buy too many things, and spend too much. If you want to avoid it, first recognise that retailers are using strategies designed to get you to buy impulsively, Reichmuth said.
“They are not trying to rip us off, necessarily,” Baardman said. “They’re just trying to get us to buy more to make more money.”
Then, experts suggest these tips for avoiding the traps:
It may be easier said than done, but Baardman said, “If you’re going to buy something, think about, ‘Do I actually want this item or do I need this item?’”
