Where Am I Wasting Money & How Does That Impact Me? – Part 3 – Amazon Shopping

As I’ve been saying throughout this series, we all waste money. If we’re funding our important priorities, like Retirement, Buying a House, Kids College, Travel & Fun, Giving Generously, etc., then that’s OK. But many people are NOT funding their priorities, so wasting money is preventing people from getting what they truly want & need. We’re actually spending money on non-priorities instead. I’ve already discussed wasting money when eating out here, and wasting money grocery shopping here. So, if you want, you can go back and read those posts. But today I’m going to discuss Amazon shopping. And it’s not just Amazon. Any retail company that has survived to this point has developed a solid online shopping experience that encourages customers to part with their hard-earned money.

That said, let’s chat about Amazon. Amazon, as you may know, started off as an online bookstore in the 1990s during the tech boom. There were lots of online stores popping up at that time & attempting to disrupt their markets. And, as you may also know, the vast majority of them crashed in the tech bust around the year 2000. But Amazon didn’t bust. Not only did they not bust, but they’ve become the 800-pound gorilla of e-Commerce. Their revenue is over $500 billion/year! How did they do it?

Going back to the 1990s, and well into the 2000s, the shopping experience for many people included, first getting ready to go out, a stop off at the bank or ATM to get cash or they brought a check book (remember checks?!). Then, a drive to the local mall, finding parking, walking around to the various shops & ultimately making purchases. Then taking those purchase back to the car & driving home. If we didn’t feel like taking a shower, getting dressed and driving across town & spending at least a couple of hours shopping, we didn’t go. And we didn’t spend any of our money. There was a lot of “friction” involved in making a purchase. Amazon changed that.

Following the invention of the credit card in 1950 and subsequently making credit card transactions electronic two and three decades later, there weren’t a lot of movements forward to make things easier, or more “frictionless” until the tech boom in the 1990s. Amazon led the way with innovations to make it easier to shop and buy more. Here are the 5 biggest Amazon innovations in online shopping.

1.) Amazon “one-click”, which was introduced in 1999. As most of us are aware, the one-click feature allows us to buy an item without wading through the checkout process. Store your payment card & delivery address ahead of time & click. That’s it!

2.) Amazon Prime – offers “free” two-day shipping on all items sold by Amazon directly. Free, except for the subscription fee (currently $139/year), of course. This service feeds the shopping addiction by encouraging us to go to Amazon first because we’ll get it fast and “free”. Amazon is also testing and rolling out Prime Now & Prime Air to get your orders delivered in hours or minutes. Amazon is never satisfied with fast service. It can always be faster and generate even more sales. That’s the goal! There’s almost no need to go to a store if we get it delivered fast enough.

3.) Algorithms – We’re all well aware that Amazon is constantly encouraging us to buy things. There’s an algorithm behind what it offers to us and how it offers it to us. Once Amazon knows how we shop, what we’ve recently purchased (or merely browsed), the algorithm kicks into gear. We suddenly get emails and pop-up ads offering the very thing we were merely thinking of buying. Sometimes we get offered things that we hadn’t even thought about yet, but our buying patterns implied. If there’s one reason why we should wonder about the personal information we gladly give up each day, this is it!

4.) Alexa – far from being just a voice that we can query about the weather or sports scores, Alexa is there to let us purchase Amazon goods without even lifting a hand. “Hey Alexa, order me some granola bars and replacement air filters”. Very frictionless. So easy to buy!

5.) Dash Buttons – a physical button sold to allow quick reorders of products. Just click it and the reorder is done!

So, are we powerless to fight the power of Amazon? Do we even care? After all, everything’s so easy and convenient. Why even try to fight it? While there’s absolutely nothing wrong with shopping at Amazon, or anywhere else online, we have to assess what it’s costing us. As I said at the top, if we’re spending hundreds, or thousands of dollars on online shopping each month, we may not be funding our important priorities. OUR priorities! I haven’t met anyone that states that their priority is to do a bunch of online shopping. People want to save for retirement, buy a house, travel & have fun, fund their kid’s college, give generously etc. So, we have to make a decision not to let online shopping rob us of the things that are most important to us.

For many people, just being more aware of how much they’re spending helps turn things around. That’s why doing a budget and tracking monthly spending is so important. If we create a monthly budget where we find that we are spending $1500/month shopping online, but saving little, or nothing for our priorities, we can make a decision to allocate our money differently.

Another level up from that, some people may need to setup a separate bank account for online shopping. Then allocate a decided upon amount of money each month to that account. Then stick to it & only shop with the money in that account.

For those that find it difficult to stop shopping excessively online, there might need to be drastic steps taken. It’s a choice that we adopt the current frictionless shopping model. One way to curb addictive shopping is to delete our online shopping apps. Instead of shopping obsessively online, start shopping in person, using cash. Add back some friction! If you need to get dressed, make sure you have cash, drive to a store and spend time going store to store, you might decide it’s not worth the trip. And you’ll spend less! Again, I only suggest this for people who cannot seem to stop themselves from shopping online & spending too much money on it. Most people will be able to change their spending habits by just doing a budget, tracking spending & holding themselves accountable. (Or having a spouse that helps hold them accountable).

Ultimately, we need to realize that Amazon, and every other online retailer has their priorities. Their main priority is to help us spend more of our hard-earned money with them. They don’t care if that prevents us from funding our priorities. They’re not our friends.

If you’d like to learn more about doing a budget, click here.

If you’re having challenges with online shopping, if you struggle to make your budget work, if you need accountability, or if you’re not funding your most important priorities, click here to setup a Financial Coaching Complementary Consultation. I’ll ask you some questions, we’ll get to know each other and see if coaching is a fit.

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