The dangers of online shopping

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The dangers of online shopping

The dangers of online shopping -  Shopping & Vouchers | MSN Money UK
Online shopping has made life easier for millions of us, but be careful – because shops have an array of tricks to make you spend more than you planned.

The combination of bargain-hunting at the click of a button, avoiding the queues at the check-outs and in the traffic jams and searching for that perfect pair of shoes when most other people are asleep means millions of us are reaching for our computer's mouse.

But while more of us are using price comparison sites, online voucher codes and flicking between websites to sniff out the best deals, we're actually parting with significantly more cash than ever before.

In July alone, UK shoppers forked out £5 billion online, according to the IMRG Capgemini e-Retail Sales Index. This is up 18% on the same time last year and takes the amount spent online in the last 10 years to £250 billion.

"Britons are passionate about shopping online. The combination of ease, convenience and 24/7 access is incredibly compelling," said James Roper, chief executive of e-retail industry body IMRG.

Shops move fast to make you spend more
Retailers have been quick to cotton onto how much we like restocking our cupboards or browsing for a new camera from the comfort of our sofas.

The online shopping experience has evolved dramatically in recent years, with websites welcoming us back by name before making recommendations based on our past purchases or showing us products that customers with similar tastes have bought.

They are also becoming increasingly interactive. Peer reviews and forums fuel conversation between like-minded shoppers, new technology allows the fashion-conscious to pan, zoom and see items on the body via video clips, while targeted advertising is strategically placed to tempt us into typing in our debit card details.

Mark Binnington, marketing director at online retailer Boden, says customers now have a wealth of information at their fingertips to enhance their shopping experience.

"The website has gone beyond being a nicer order form for our catalogues," he explained. "Customers can browse, check stock availability, put outfits together, check fit details, watch videos, see alternative images, read what other customers think and much more. And, mobile, iPhones and iPads will change it even further."

Call them gimmicks or essential extras, but these online tools are helping to convert browsers into buyers.

Don't stop clicking
The online retail market is predicted to double again in the next 10 years as we spend more of our time plugged into technology.

Iain Wilson, managing director of UK operations at Shopping.com, believes social media and increasingly sophisticated gadgets will help to take internet shopping to a new dimension.

"Reviews will become a 'must have' on every product - imagine watching video reviews or instant chat with previous buyers," he said.

"Alongside this, there will be a growth in the whole 'personal shopper' area where shoppers can easily find and view accurate information on products they want. And finally, mobile will explode and mature, giving consumers the tools they need to shop wherever, whenever."

Compare prices and read reviews online with Ciao!

Not all plain sale-ing
While choice and greater flexibility is great, it's also dangerous for our bank balances. The ease of online transactions makes it far simpler to click now and think about just how much we've spent later.

Retailers know this, tempting us with newsletters containing the latest deals direct to our inbox and large banners on the front of the sites offering huge discounts - but only on a limited number of items.

Once we've committed to buy, the classic 'free delivery on orders of more than £100' often has us filling our online baskets with goods we never really wanted just so we can save £3.95 on the packaging costs.

Such tactics have ruffled consumers' feathers and the Office of Fair Trading is currently looking into those commonly used by online retailers to boost their profits.

Sneaky online tricks
One of the most common ways to make people spend more is drip pricing, which can make small purchases a lot more costly. For example, a £5 DVD can end up doubling in price once posting and packaging, a transaction fee and a handling fee are added.

It's a hard tactic for shoppers to resist. In a recent report for the OFT, academics Steffen Huck and Brian Wallace from University College London said: "If a consumer sees a low base price and they make the decision to buy the good, they shift their reference point because they imagine already possessing the good.

"Later, when they realise that there are additional costs and charges, it is thus more difficult for them to give up the good that they already have 'in their basket'. Therefore, they purchase the good despite the increase in price."

So-called 'baiting' is another favourite where only a small number of products are available at a discounted price. These are used as carrots to tempt in new shoppers and often feature on the same page as full price merchandise.

Conversely, retailers are also fond of placing expensive, over-hyped items next to mid-range options to make these seem more of a bargain.

Research from University of London and Mountainview Learning also found "consumers are drawn in to promotions and where the item is out of stock, they predominantly switch to another item within the same store, due to lowered search intentions."

So, once we're drawn in, we're likely to open our wallets.

Act fast or miss out
We're also partial to 'buy it before it's gone' time-limited offers, especially when there's a substantial discount at stake. This piles on the pressure and in turn can lead to us overestimating an item's true worth as we reach for the credit card.

Likewise three-for-two offers and other money-saving deals can make it much more complex to determine individual prices and lead to us buying more goods than we wanted in the first place when we're only making small savings.

Missing the target
By contrast, targeted pricing can work against repeat customers. Retailers can tell exactly what caught a shopper's eye from their browsing and purchasing history, this allows them to target their advertising and could even lead to them charging a higher price because those who have registered with a site are less price sensitive than new customers.

But for a regular customer, seeing something they thought about buying (or perhaps did buy) previously advertised again for a higher price because the shop's algorithms think 'that's what they like', could drive a potential customer elsewhere.

For many of us, this would defy the point of internet shopping, with price being one of the major drivers for going online in the first place and displaying things at higher prices after special offers end undermines the shop's image as a cheap place to go for goods.

Easier to compare and find deals
Figures from PayPal show that 65% of shoppers compare prices online before buying something costing more than £100 and more than half also compare prices on everyday items.

Meanwhile more than 30 million people have used discount vouchers in the last six months to cut the cost of their shopping, with sites such as discountvouchers.co.uk and myvouchercodes.co.uk helping to slice pounds off our shopping bills.

However, savvier shopping does not mean we are spending any less: the temptation to buy more stuff with the savings we've made often proves hard to resist.

PayPal's annual UK online retail report found that obsessive bargain hunters actually spend up to 50% more online than shoppers willing to pay the price on the ticket.

So-called 'cut-throat' consumers who bought groceries online over the last six months forked out around a quarter more than the average shopping bill of £504.

Watch the pennies
Report contributor Sue Hayward says this is down to many people looking to get the best they can within their budget rather than watching the pennies.

"I think most people are looking to make their money go further rather than cutting back. If you have a budget of £300 and you can get a washing machine £50 cheaper online, most people will trade up and get a better quality model online or via a department store or clearance website, rather than pocket the saving," she explained.

Online shopping certainly offers a different - and some might say more relaxed - experience than traipsing down a busy high street on a Saturday afternoon.

However, the rules for savvy shopping remain the same: browse several places to get the best price, avoid the special offers unless they're for things you will realistically use and only spend what you can actually afford.
 
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