Impulsive buying. Should you be concerned?
Impulsive buying is a tendency to buy unnecessary things, or to buy things despite prospects of more beneficial purchase options in the future. Purchasing things as a process of exchanging goods is presumed to be rational. Still most of compulsive spending occurs when people don’t put too much thought into what and why they buy. People vary in terms of impulsivity. Some know this phenomenon from everyday life. Others still remember these few bad deals they cannot forgive themselves. Impulsive spending may also differ in size. There is a difference between buying a jumper on a sale and buying a thousand cars that are not the best for your fleet: it varies in extend and consequences. Most of research presumes that impulsive buying is typically an area of consumer’s behaviour, however, it may be also a problem of supply management. That is why at the beginning of this text a broader definition of impulsive spending is put forward.
There are many reasons why people buy things that they don’t need or want. First of all, most of people are trained to feel good about novelty of things. For example, we are supposed to feel good about getting presents. When we get a present that we don’t like, it leaves us with discomfort. Sometimes we even feel guilty and ungrateful. The same mechanism works when we go shopping: we want to spark the excitement that we felt when parents gave us a new toy. We feel guilty, if we admit that what we bought was unnecessary waste of money. This particular problem, cognitive dissonance, makes it very hard to improve our purchasing habits.
Secondly, people have limited energy and focus, so when they are exhausted their brains are unable to defend them from making wrong decisions. This is why there are always small chocolate bars at the cashier counter: we are too tired and distracted to see that we buy one for the price of 4 inside the supermarket.
Thirdly, people are afraid of missing out, that there will be no such a good deal available tomorrow. All sales are based on loss aversion. But there is also a reverse problem related to FOMO (fear of missing out): indefinite shopping around when people spend too much time on comparing items and prices. People are afraid that what they may buy will not be the best they could get, so they lose a lot of time and energy. For example, all limited time offers are based on FOMO.
Impulsive buying is a problem, because it may have catastrophic outcomes for our finances. It is worth stressing here that it applies equally to personal issues as to business decisions. Still wrong purchase in a business context may have consequences that last way longer than buying an expensive car to feel less lonely or old. Impulsive buying is associated with certain personality type, so it is important that decision makers know themselves and ideally are trained to mind their own vices. Impulsive buying may have disastrous consequences, even if you are insanely rich, because no matter how much you can afford, your purchase history is imprinted on the health of the planet. Your shopping basket is no longer your business. Every item you throw away ends up in a landfill, so you must buy responsibly! It may be a good idea to seek professional help, if you think that impulsive buying is a big problem for you, but you may first try a few simple methods we recommend below:
Buy it tomorrow
Well, you cannot always buy tomorrow, because by tomorrow the deal may be really gone, but it is a good idea to work a healthy balance between time and money spent. (This method will also shield you from indefinite shopping around.) For example, you can equal a certain amount of time to consider a purchase of a certain value. The simplest example is 1 minute per 1 unit (pound, euro, dollar). So if you are going to buy a chocolate bar at the counter, you spend a minute on thinking about better purchase options or your weight. The balance between time and money must be adjusted to your earning, so on the other end of the spectrum: if you are going to make a deal worth a million pounds, euros, dollars, take a day to think about alternatives. The method will not work in a situation when time is at stake, but in most of situations it will.
Ask yourself some questions
As simple as it sounds, asking yourself some questions will trigger you into thinking about your purchase. Impulsive buying is simply buying without thinking, so it stops the process. Here is the list of questions you may use, but you may very well come up with your own lists. Let me know in comments, if you think that any important ones are missing!
a. What is the exact thing that I need?
Yes, you may realise at this point that it is not what you are about to buy… Have you come here to buy sweets?
b. Why do I need this? What for? How important is the purpose of your purchase?
Impulsive buying doesn’t only mean that you are buying something unnecessary. It may also mean that you are buying a thing that will not serve its purpose. For example: You are buying lights for your bike. You are thinking in an economising mode and you are picking something cheap. They look OK and you think you should be fine. And then you are asking yourself a question: what is the purpose here? And you are realising that the purpose is not to die on the road. And you are picking the best ones.
c. Do I need to buy a new item or can it be second-hand? Can I fix an old one?
Buying second-hand is an option people consider too rarely, especially in business. Buying second-hand you are still able to assess conditions of a purchase, but it significantly saves your resources and increases your environmental responsibility.
d. Can I borrow / share it?
Sharing economy is today’s hot topic. There are few reasons for that. From a business perspective it is an obvious area of disruption. New models push out old ones from the market. When you buy a car: why do you do it? It is cheaper, better for the environment and hassle free to call a shared car. Do you need an ego-boost? Aren’t there cheaper way of ego-boosting available?
e. How long will it last? Is it enough?
As it was pointed out in a bike light example, impulsive buying may mean unreasonable economising on quality. It is better to spend more on something that will really serve its purpose and last long. There are types of product that cannot be cheap.
f. Are you buying because you are spending someone else’s money? (And yes, that includes taking things for free.)
This is a particularly tricky issue, as it applies to youngsters spending their parents’ funds, spouses spending salaries of their partners as well as to supply chain managers… Mind the fact that your purchase doesn’t affect your well-being only. Think twice.
g. Are you buying because you feel like it, a store feels good, a shop assistant is nice?
These are all the wrong reasons. Still they drive so many purchase decisions…
h. Do you want to buy or are you buying because someone else told you to?
There is this joke: a husband is buying a tie and a shop assistant asks him how he liked it. The husband turns to his wife and says: so how do I like it? Make purchase decisions your own! Feel responsible for your choices.
i. Can I buy it online with an option of returning the product in case I don’t like it?
Research shows that people are more susceptible to impulsive buying when they shop offline. It is also harder to shop around when you are offline, so if you have to buy things, try online purchase first. It works like a safety net, if you are an impulsive buyer.
