Editor's note: This column is part of 'Why Do We?' — a weekly video series hosted by culture expert Martin Lindstrom that untangles unique quirks of human behavior. Click here for the full series page.
Why do we think a $4.99 shipping cost is too high, even though the cost of the online shopping came to $435.97? It is a topic that thousands of experts ponder every day as they think about how to entice us to spend more online.
Remember that little timer counting down (only 14 minutes left!) as you check out during a Black Friday sale? Or the classic "Limited Offer" displayed in virtually every store? These approaches are developed to make us spend more — and faster.
And it works! During Black Friday in 2023, Americans spent approximately $60 billion. That's an average spend of $708 per person. Online sales alone reached $9.8 billion, marking a 7.5% increase from 2022.
Read more: Best Credit Cards for Online Shopping
The psychology of consumption underpins the design of nearly every major website you spend time on, and like it or not, Artificial Intelligence is playing a major role in monitoring, analyzing, and evaluating every click and decision you make.
This brings me back to the $4.99 shipping cost.
Although it sounds simple, this hesitation over shipping fees plagued the industry for nearly two decades. At least until the world's third largest company, Amazon, came up with a brilliant idea: Prime. From the consumer standpoint, the idea of only spending $14.95 per month for unlimited free shipping is a no brainer. Gone are the woes of exorbitant shipping prices, and finally the consumer can feel the mighty power of control!
Except, what the Prime user probably doesn't think about is exactly what those Amazon executives did: Prime members spend an average of $1,400 per year on Amazon, which is more than double the $600 annual spending by non-Prime members (and probably a lot more than you end up saving on shipping).
Read more: Amazon Prime Visa Card Review
Enter Paco Underhill: retail anthropologist (yes, such term in fact exists), author of the global bestseller "Why We Buy," and a global authority on consumer behavior.
Full disclosure, Paco also wrote the foreword to my book "Buyology," and yes, if you someday happen to see a tall man crawling on all fours along the aisles of a supermarket — trying to see the aisle from a kids perspective — chances are that you've spotted Paco Underhill.
Unique methods aside, with more than 100,000 hours of experience analyzing the truth and lies about consumer decision-making, I decided to ask Paco for advice. Check out his response to my latest Why Do We....? interview while Liza Donnelly captures the conversation via her magical illustrations.
Uncommon Knowledge
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
About the writer
Martin Lindstrom is the author of several New York Times best-selling books, including "Buyology," "Small Data," "Brandwashed," and "The Ministry ... Read more
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