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Online shopping biases that you wouldn’t have guessed existed

Before you shop online this festive season, ensure you don’t succumb to certain biases.

Often shoppers think what they are doing is rational. It might not be the case if their cognitive biases cloud their decision-making. Cognitive biases are ways of thinking that may not necessarily reflect reality.

A Princeton 2019 study of 11,000 shopping websites found that online retailers use various tactics to capitalize on cognitive biases of buyers.

Before you shop online this festive season, ensure you don’t succumb to them. 

Following are the most common cognitive biases encountered by individuals while shopping:

1. Anchoring effect

It is the tendency of individuals to give more importance to the initial piece of information – the anchor – over everything that follows. For example, if a T-shirt costs Rs 1,000 without a discount, while another one costs Rs 1,000 but its seller strikes-out the MRP of Rs 2,000 to reveal its discounted price. Instinctively, you see a bargain in the latter as the original price acts as an anchor in representing its true value. 

Similarly, online retailers might initially list expensive items on the search results so that the relatively lower-priced products don’t seem so expensive.

How to overcome it?

Many sellers can actually inflate prices before offering discounts. So, crosscheck if discounts are genuine and products really worth the price.

2. Bandwagon effect

It is the tendency of individuals to give more importance to a product simply because it’s trendy. People queuing up outside the Apple store to buy the latest iPhone are a case in point. Online retailers use various tactics to trigger the bandwagon effect. For instance, by highlighting that the item selected is a ‘fast seller’ or that many people viewed or bought it in the last one hour. 

How to overcome it?

Try not to keep up with the Joneses. Have a shopping list and individual budget for each item. It will ensure you don’t get carried away and overstretch your budget. Read bad testimonials, if any, before the rest.

3. Scarcity bias

It is the tendency to give greater importance to products that are scarce. So, typically an online seller will display there is only ‘one’ or ‘limited’ stock remaining to create a sense of urgency among buyers. Count-down timers run on websites to indicate that the deal will expire in the next 15 minutes.  

How to overcome it?

Don’t get bogged down by the timers. The Princeton survey found that the stocks were often available for sale at the same price, even after the discount period was over. 

4. Sunk Cost Fallacy

It is the tendency of people to continue an action if they have invested considerable time or effort into it, even if it might make them worse-off. Online retailers often make use of this drawback. For instance, service or delivery charges are added and revealed to you only while checking-out. Since you have spent much time on the buying process, you are likely to go ahead with it.

How to overcome it?

Don’t do shopping at the last minute. Go through the fine print and blacklist all retailers who are known to resort to such cheap tactics.

5. Default effect

It is the tendency to stick with options that are assigned by default due to inertia. Some online retailers try to cross-sell products by capitalizing on such bias. So, for instance, if you are buying a laptop online, an USB charger or insurance get automatically added to the cart. Or, an exotic candle to your cake order using pre-selected checkboxes. If you do not want it, you might have to remove or uncheck it from the cart. Also sometimes, a higher value or quantity of a product is selected by default. 

How to overcome it?

Always double check your items in the shopping cart. 

6. Loss aversion

It highlights how we fear losing considerably more than gaining something of the same worth. Free limited period of a magazine subscription is a case in point. Thanks to loss aversion, one is more likely to opt for paid subscriptions after its expiry. 

How to overcome it?

Nothing is really free in this shopping paradise. Stay away from limited free trials and subscriptions.

 

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