How online retailers get customers to spend more money

One of the smartest developments in the online retail sector is the integration of machine-learning algorithms which can study a user’s behavior.

The online retail industry has made it easier than ever to make a purchase, it’s literally just clicking and buying from a variety of products so widespread that your local store can just never catch up. This has also fuelled compulsive buying, which has become so convenient that ‘online shopping addict’ is a real term in 2020 and brands are capitalizing on it.

Every brand is online, from clothes to cars, almost everything can be at your doorstep by clicking a few buttons. Online retail sales amounted to USD 3.5 trillion in 2019 and are expected to grow to over USD 6 trillion by 2022.

But how do online platforms make us buy more?

How online retailers drive sales

The industry has developed a lot over the years and consumer expectations have followed the trend. What initially started as a marketplace for a limited category of goods now offers millions of products. The exorbitant shipping costs and delivery times have turned to free and same-day deliveries.

The marketing and selling strategies have also developed over time to influence customers into buying more products.

One of the smartest developments in the online retail sector is the integration of machine-learning algorithms that can study a user’s behavior and create a profile.

The profile can contain user’s attitudes, aspirations, and psychological criteria depending on how deep you are in the ecosystem of a company and what data you let it collect.

Amazon, for example, has a very vast ecosystem. It offers millions of products that can hook users up for a significant period of time on its own but apart from that it has separate apps for movies, music, e-books, audiobooks and much more. The e-commerce giant is also getting into hardware and offers Alexa smart home speakers, Fire TV stick and Kindle e-book readers.

Your profile is then used to show you advertisements and recommendations about what you might like and are expected to purchase. The recommendations are shown within the platform, on the homepage, along with the product listings under categories like “Frequently Bought Together” and “Similar Products” and if you have a smartphone app, it also sends out notifications about products that the algorithm thinks you would end up buying.

Ever browsed for a product on Amazon and ended up having its advertisements all over your social media accounts? That’s how advertisements supported by algorithm work. Your data including your browsing behavior is used to show you advertisements of products that have the most potential to be converted into a purchase.

Apart from the algorithm, these online retail platforms organize ‘sale days’ like Singles Day and Prime Day during which they give steep discounts on many products but only for a limited period of time. This puts pressure on customers and creates a fear of missing out, thus driving them to make more purchases.

Chinese retailer Alibaba’s 24-hour Singles’ Day shopping blitz hit a record in November last year with USD 38.4 billion worth of sales, while Amazon sold 175 million items during two-day Prime Day extravaganza in July last year.

Online retailers also use other sneaky tricks like setting a minimum purchase limit for free delivery and when your order falls short of the limit, they suggest you the things you can add to your order to qualify for free shipping.

Faster delivery speeds have also played a big role in boosting online sales. One-day delivery is the new standard in developed countries and big companies like Amazon say that they plan to take the standard even higher, to same-day deliveries.

These faster delivery speeds often come with loyalty memberships offered by e-commerce companies. These memberships come at a cost and offer customers additional benefits like free and faster deliveries with no minimum amount limit, additional discounts, and faster and personalized ordering.

Such memberships have proven to be effective in increasing sales and loyalty of a customer towards an online retailer, who understands the fact and works hard to make sure the experience is convenient for customers so that they get hooked!

(Disclaimer: The opinions expressed are the personal views of the author. The facts and opinions appearing in the article do not reflect the views of Devdiscourse and Devdiscourse does not claim any responsibility for the same.)