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Spending More Money on the Internet

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Here are five reasons according to Forrester Research people spend 15% more on the average online transaction compared to a traditional transaction from a brick-and-mortar store.

You don’t have time to think. Once you have items in your cart, retailers want to move you through the checkout line before you can reconsider. If you’ve already entered your credit card or shipping information with a particular retailer, you’re out the electronic door with a mere twitch of the mouse.

They guarantee you won’t regret it. More than 40% of all online shoppers say product reviews are important to them… However, 80% of online reviews are generally positive.

They won’t let you forget. It uses [your purchase] information to make recommendations for new items and remind you that you didn’t pick up that item you wanted before.

They’ll throw in free shipping. The lure of free shipping is an important tool in getting customers to spend more on each visit. Even if shipping only costs $4 or $5, shoppers will put extra items in their basket that cost several times that much just to qualify.

They’ll reward their best customers. most of the rewards that retailers shell out are just incentives thrown in to get you to buy more, such as a 20% off coupon or free upgrade to shipping. Often, retailers will send these perks out to you right after a purchase, so if there was anything you didn’t get the first time around, you’re motivated to pick it up now.

Online spendingThese are all legitimate ways that, on average, people might be enticed to spend more than they “normally” would, only half-knowing that they are being slightly manipulated. Now, I love the internet. When I’m buying gifts for friends and family, I can go to their Amazon.com wish lists to get them a gift I know they will like, and I will pay less online than I would if I were to buy the same products at the local Borders. (I’ve compared prices.) On the other hand, the accessibility of the internet means I can find things to buy that I wouldn’t be able to find without extraordinary effort.

I have no faith in the statistics in the article. Sucharita Mulpuru says the average online transaction is 15% higher than the average brick-and-mortar purchase. How was this calculated? Perhaps it is based on data from credit card companies. If so, one bias is immediately apparent. Almost all transactions online are done with credit cards, while credit cards may be used mostly when shopping in person, but small purchases are likely to be paid with cash. All those trips to the bodega on the street to pick up a daily newspaper and/or a stick of gum wouldn’t be included if this were the source of the data. If those small cash transactions are not included in the study, the data might be skewed downward.

Here’s another possible source of bias for these statistics. The Internet still has not permeated to the entire purchase-making public. Some people simply do not use the internet, and they may be individuals who have low-value or high-value transactions. The sample populations are likely not identical enough to calculate a direct comparison.

It’s probably likely that the average online transaction is higher than the average in-person transaction, but the reason for the difference — and its accuracy — can’t be deduced without more details about the research.

Updated January 16, 2010 and originally published February 13, 2007. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

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{ 3 comments… read them below or add one }

avatar Emily H.

Of course I spend more online than I do in brick & mortar stores– when I choose to buy online, I usually save up a wish list for a while and buy everything in one swoop, whereas if I go to Borders I’ll drop in for a single paperback.

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avatar Golbguru

You are right, this thing “the average online transaction is 15% higher than the average brick-and-mortar purchase”..sounds like a case of comparing apples and oranges. A careful research would have specified the type of transaction (clothes, electronics, furniture, or a particular retail store and it’s online counterpart, etc.) that was compared.

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avatar fin_indie

Another possibility: it’s worth looking online to see where you can get the best deal for *larger cost* items. Conversely, it’s not worth it to find lower cost items. Where that tipping point is, who knows.

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