- Nearly 40% of all money spent on e-commerce sites are the results of impulse buying – it’s big business
- Impulse buying is bad. Left uncontrolled, it leads to credit card debt.
- How to avoid impulse buying
- Are you compensating for something?
- We offer suggestions for alternative activities that are good for you
What is Impulse Buying?
The dictionary says:
Do you impulse buy?
Factoid: Nearly 40% of all money spent on e-commerce sites are the results of impulse buying.
The two most influential factors when making a spontaneous purchase are the special sale price (for a limited time) and free shipping.
Let us ask again, do you impulse buy? Be truthful to yourself now.
For business, impulse buying is a huge opportunity! There is a science behind encouraging consumers to do so. Read How to Sell to Impulse Buyers. Retailers describe these shoppers as emotionally-driven, favoring instant gratification, social status-conscious, and image-concerned, anxious, or less happy/depressed. Techniques that retailers use to encourage impulse buying include:
- Special sale price, usually “for a limited time”. Why do you think that is?
- Brick-and-mortar retailers place nick nacks near the checkout counters.
- E-commerce sites with their easy to use web site with lots of impulse buying suggestions such as “Related items”, or “What others are buying”.
- The one-click checkout makes it very easy. Too easy. Scary easy. One click and it’s yours. Money changes hands, yours into theirs. No longer do you have to put in your credit card info, your shipping address, confirm the item and quantity. Instead, it’s “bam!” And it’s done.
Why is Impulse Buying Bad?
Impulse buying is bad because it puts your ability to save money each month at risk, depletes your savings, gets you into and debt, and eventually erodes your freedom.
“Freedom?” You ask.
“Yes, freedom! Freedom to eventually do anything you want, any time you want, and being able to pay for it. And pay for it just once.”
“Paying for it just once?” You ask.
“Yes, just once. When you can’t live within your means, you’re going into debt.”
For most consumers, it’s usually credit card debt that gets them into trouble. When you’re in debt, you pay for the amount you borrowed (the principal) and interest on that principal. And your total payments snowball in comparison to the original amount borrowed. When you make a monthly payment, the first portion of that payment goes toward the interest for borrowing the principal. Then what remains go towards lowering the amount you borrowed. Let’s go through a couple of examples: