Does online shopping make you spend more?

Posted: 5 December 2019 3:50 pm
News

Left: Miniature boxes with shopping trolleys on them, sitting on a laptop keyboard. Right: Marketing and consumer behaviour expert Dr Paul Harrison.

Do you ever get carried away at the virtual checkout? Dr Paul Harrison unpacks the psychological strategies that can influence us when we shop online.

Online shopping has revolutionised the way we buy many day-to-day items. The online world has so infiltrated the way we shop, that for the most part, we simply don't realise how ubiquitous it is.

Whether it's jumping on to the Myer website for the Boxing Day sales, buying a digital subscription on Spotify, catching an Uber, downloading a movie from Google Play, choosing your seats for the theatre and then collecting your tickets at the box office, ordering and then getting your pizza or burger delivered by Deliveroo, or buying coffee beans from your favourite single-origin provider – nearly all of us at some point are using the online environment to buy goods or services.

Australia is currently the 10th largest ecommerce market in the world by revenue. Ecommerce in Australia will continue to grow. The market size is estimated to be A$35.2 billion (US$ 25.2 billion) by 2021, but this probably only represents the tip of the online iceberg.

The online world has completely changed the way that we transact. But we are mostly unaware of the manipulations going on in the background, which influence how we respond to a whole range of stimuli that tap into our psychological vulnerabilities.

No time to think

One of the most critical elements of the online experience is how quickly we move through the online environment as opposed to, perhaps, a bricks-and-mortar or traditional face-to-face context.

Whenever we shop or even make a choice, marketers work hard to activate our automatic and emotional brain, rather than our rational brain.

Sadly, our evolutionary biology is a bit of an ally in this endeavour. It requires significant energy to fire up the prefrontal cortex (the thinking brain), so to conserve energy we tend to feel first and ask (rational) questions later (if at all).

Although it may sound like an oversimplification, we are making thousands of decisions and choices throughout the day. If most of our decision-making happens automatically and emotionally, our rational brain tends to assume that we are making reasonable decisions and therefore accepts them without too much debate, mostly to manage our very fragile ego (nobody wants to feel that they are a bad decision-maker).

The issue here though – and it's important to understand this – is that it doesn't necessarily mean that a particular stimuli will work on every person who is exposed to it.

Any kind of stimuli, such as an ad or even a suggestion from a friend, will work on people who are open to that message and are goal-oriented – they need to actually want the product that the stimuli is connected to, even though they may not be consciously aware that they want it.

There is strong psychological evidence that once someone makes a commitment to a goal – even a goal as simple as "I quite like that luggage/dress/cologne" – it is quite difficult to "undo" that goal. From a marketer's point of view, the key is to get a potential customer to achieve that goal as quickly as possible. They don't want distractions.

For the most part, anybody who clicks through an Instagram story to an advertisement has already committed to at least considering the purchase. The marketer's aim is to then move you to the handing over of your hard-earned cash as quickly as possible. That's why they want you to log in: if they have your details (perhaps including your credit card details from a previous purchase), they can get you through to the purchase in as little as two or three clicks.

Podcast: Dr Paul Harrison on why subscription services are taking over

New offers

The other element that is hidden from our view is the ability for organisations, even small organisations with small capacities, to use sophisticated analytical technology to adapt and change the offer as they learn about consumer behaviour.

As an example, in the gambling industry, the use of artificial intelligence (AI) means that offers can be adapted as the technology learns what consumers are responding to and not responding to.

In the past, if researchers wanted to learn about consumer behaviour, they would have had to run experiments, usually by gathering a whole bunch of students in a classroom for credit and getting them to participate in the study.

Now businesses can conduct experiments online very quickly, without you knowing and without having to go through an ethics process or have their research scrutinised by experts.

When you click "I agree" to the terms and conditions on a site, you are most probably also saying yes to being a psychological guinea pig for a whole bunch of data collection and analysis that will refine how you, and future customers, respond to psychological stimuli. And the return on investment from the business is good because experiments can be conducted very cheaply online.

One factor that is rarely considered is the issue of decision-making asymmetry in the online world.

People talk a lot about information asymmetry – the idea that the business has more information about you and how you behave than you have about them. What is often overlooked in this conversation is a significant psychological power imbalance between the customer and the business in relation to decision-making, which is assisted by the information asymmetry.

So, you may think that it's a level playing field, but behind the screen (or in the cloud), a whole bunch of unfair processes are taking place. Processes that know your next move, usually before you do.

So, what can you do?

It's tricky, because millennia of evolution have informed the dominance of using our emotions to make critical decisions. In the past (and even now) there are times when we need to make a quick, emotional decision, particularly if there is danger present.

Our definition of danger has evolved as our response to it has not. In other words, danger millennia ago was being eaten by a tiger near our home, but in the contemporary world, missing out on a great product or service that will give us some social capital is more likely to represent something that we fear. Undoing that is not as simple as we might think.

However, there are a few ways we can combat our evolutionary predispositions.

If you don't want to fall prey to the danger of shopping online (and I am not saying that all online shopping is dangerous), the key is to activate your thinking brain (which isn't as easy as you think).

The first thing is to slow the process down.

One way to do this is to force yourself to log in every time you go to a website. Clear your cookies regularly. Log off sites. Don't let them keep your credit card details for future purchases.

We have been so captured by this idea of "convenience", that we don't realise how we have become fodder for online sales processes. Convenience manifests online as speed, and speed (as I mentioned earlier) is the friend of a marketer.

The next thing is to ask yourself why you're shopping at all. Have you responded to an online advertisement? Prior to seeing the advertisement were you thinking about buying the product? Does this product offer better value (for money, for joy, for your life, for the world) than what you already have?

A boring (and probably very inconvenient) technique is to journal all the online purchases you've made over the past month or so. This could be buying a product, a service, a subscription – anything where you had to use a computer, a tablet or an app on your smartphone. This is a useful way to audit how much online shopping you really do. Then ask yourself the question: "Am I happy with that purchase?"

Try to be aware of how online marketing could be influencing you (without you knowing). Simply reading this article may assist you to think more about what is influencing your decision making.

But don't get complacent. Information and decision-making asymmetry will always be ahead of you, despite what your supportive ego tells you about your ability to resist the marketers.

We are trying to constantly understand how we can have a happier life, a better life, and a more convenient life. Marketing is very clever at reminding us how easy it is to buy things to achieve this (whether it's true or not).

So, to put the brakes on, simply add the item/s to your wishlist or cart for later – that way you can sleep on it and figure out whether you want the item at all.

Finally, it pays to have a plan before you shop online. Make a list of what you want, set yourself limits, and know when to close the tab. Shopping online is like shopping at the supermarket: if you don't have a shopping list, you are going to be more susceptible to the clever nudges that marketers know work.

Online shopping is here to stay. But with a few simple techniques, you can put yourself in, at least, a better position to combat your evolutionary predispositions, and resist the manipulations of those predispositions to your advantage.

Dr Paul Harrison is professor of marketing and consumer behaviour at Deakin Business School. He is the marketing lead in Deakin's MBA program and is director of the Centre for Employee and Consumer Wellbeing.

Disclaimer: The views and opinions expressed in this article (which may be subject to change without notice) are solely those of the author and do not necessarily reflect those of Finder and its employees. The information contained in this article is not intended to be and does not constitute financial advice, investment advice, trading advice or any other advice or recommendation of any sort. Neither the author nor Finder have taken into account your personal circumstances. You should seek professional advice before making any further decisions based on this information.

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