Amazon Prime Day: How not to overspend and not fall for the psychological tricks of sales

The two-day Amazon Prime Day sale may seem like the best deal of a lifetime. But is it really so? Marketing Professor Reveals Psychological Sales Tactics, Reports Entrepreneur.

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Whether it's the Black Friday hype or clever social media advertising, the lure of a sale is hard to resist. The promise of huge savings tempts you to click "buy" on items you've been eyeing and even ones you weren't thinking of buying.

Of course, e-commerce giant Amazon is well aware of this fact and has taken full advantage of its Prime Day since 2015. Originally created as a 24-hour sales extravaganza to celebrate the 20th anniversary of the online store, Prime Day has grown substantially every year, expanding the event to 48 hours by 2019, and generated over $2021 billion in sales in June 11. This year, Prime Day will take place on July 12-13.

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With savings on everything from home goods to expensive electronics, Amazon's two-day sale may seem like the deal of a lifetime. But is it really so?

The entrepreneur spoke with Utpal Dholakia, George R. Brown Professor of Marketing at Rice University's Jones Graduate School of Business, to learn more about Amazon Prime Day's psychological selling tactics and how consumers can buy better products without falling victim to overspending and impulsive buying.

How do sales use consumer psychology to encourage buying?

The sales serve several purposes, Dholakia said. First, at the most basic level, sales help change consumer behavior. According to Dholakia, many retail shoppers are habitual, with most people resorting to simple, routine shopping patterns. But sales can disrupt this cycle.

“No matter what the terms are or how good the offer is, the fact that it's selling out signals that something else is going on,” Dholakia says. “That’s the core value of a sale, both from a marketer’s and a consumer’s perspective.”

“Then there is functional value,” continues Dholakia. - You make a much better purchase when there is a sale than when there is not. And all of us, as experienced shoppers, are accustomed to this rule: “When there is a sale, I will probably pay less money.”

We used to believe that sales meant we were getting something cheaper. Of course, this isn't always the case, but on Prime Day, Amazon wants you to think it is.

Amazon Prime Day Size and Scale

There's no denying the impact Amazon Prime Day has had on consumers around the world. Prime Day 2021's staggering total sales of $11 billion even surpassed Black Friday and Cyber ​​Monday sales combined.

“There is no parallel,” says Dholakia. “I know Target and Walmart have tried to replicate this as well, but just given the scale of online shopping and the fact that it's been around for a few years now and shoppers have come to expect it in the summer, it all makes this a very significant event.”

“They are deliberately positioning it as an alternative to Black Friday,” Dholakia continues. — The scale and duration, the number of different sales, how these sales appear sequentially. All of this makes for an event that is hard for most buyers to ignore.”

Amazon positions Prime Day as a monumental, unmissable event and then goes to great lengths to make sure you spend big.

Prime Membership and the Sunk Cost Fallacy

You must be an Amazon Prime member to participate in Prime Day. A $14,99 per month subscription includes fast, free shipping on Amazon products, plus access to TV, music, exclusive deals, and more. By making a Prime membership a prerequisite to participating in Prime Day, Amazon is creating a trap for profitable sales.

“You have to be a member to buy products, and obviously that's a huge incentive to sign up for Prime,” Dholakia says. “So it's complementary in that it encourages people to become Prime members and it encourages more shopping on Prime Day because of the idea that you get free shipping and all these offers that are not available to anyone other than a Prime member.”

Moreover, paying for a Prime membership upfront makes consumers susceptible to the sunk cost fallacy. “With Prime, when you're paying $139 a year, from a psychological perspective it's a sunk cost,” Dholakia explains. “When consumers actually make purchasing decisions later, they don’t consider the cost of that Prime membership.” You think you're only paying the price Amazon lists for an item; "You're ignoring the additional shipping costs you pay up front as part of your Prime membership."

Once you've come to terms with the fact that your "free" shipping isn't really free, you can use a few other strategies to make sure you're getting the most out of Prime Day, and not the other way around.

How to get the most bang for your buck on Amazon Prime Day

We know sales make it look like you're making a bargain, even if you're not, so how can you take advantage of Prime Day without spending more than you'd like?

One key thing to keep in mind is that Prime Day shopping isn't necessarily the end all be all. “If a certain item is on sale for $50 on Amazon on Prime Day, you want to make sure it's out of stock for $45 at Target, Walmart, or somewhere else,” says Dholakia. "Just because it's on sale for a certain price on Prime Day doesn't mean it's the best price you can get, even at that particular time."

It's also important to consider what you're spending your money on, as some items require more thought than others. “If it's something relatively cheap or something you buy often and don't care much about, that's fine,” Dholakia says. “But if you're buying an appliance or a big-screen TV or something like that, you want to do some research and take your time with the purchase instead of getting caught up in this perception that you're missing out.”

And for impulsive shoppers, Dholakia has a few extra tips: “To avoid impulsive shopping, especially for something like Prime Day, it always makes sense to have some sort of plan for what you want to buy, what your budget is, and set some parameters for your buying experience. This will solve a lot of problems - there is no point in continuing to buy things randomly.

On the subject: Amazon Prime Day: how to get a $10 bonus on purchases

Amazon Prime Day, a raucous sale event, is setting the stage for record sales by disrupting consumer behavior and making you feel like you're getting something for next to nothing. If you're aiming for some Prime Day shopping this summer, be sure to plan ahead.

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