Why Do People Shop So Much on Amazon.com?

publication date: Dec 7, 2017
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Amazon is in the news constantly, especially financial and consumer news. A frequently covered topic is what company is Amazon contemplating buying next? Or, what product line are they considering entering next? The explicit message always from the media is that Amazon is a big disruptor that will decimate the competition and undermine profitability and give consumers better pricing.

There's only one problem with this narrative - but it's a big one - Amazon's pricing is rarely the best. And, in some categories, their prices are significantly higher. I know this from my own online shopping experiences. A recent survey conducted by LendEDU shows that Costco, for example, offers better pricing on most products compared with Amazon. On the 38 items LendEDU compared, they found that Costco sold the same item on average for 36 percent less (in terms of total cost of all the items, buying them all at Costco was 11 percent less than making the same purchases on Amazon). Costco's pricing was especially better in the categories of food and beverage products as well as home appliances. Amazon's pricing was actually a little lower on branded technology products like a Dell computer, PowerBeats wireless earphones and an Xbox.

To be fair in this comparison, I must point out that Costco is a membership club and their current annual membership costs $60. And over at Amazon, many of their customers pay $99 per year for Amazon Prime which provides two-day shipping at no additional charge on orders and access to their Prime Video services.

Finding the Best Values Online

Don't make the mistake of simply shopping for the lowest prices online. You might get socked with hidden charges, especially shipping, and end up buying from a website that's here today but gone tomorrow. Also, compare sales tax charges which can vary. Plenty of sites cut corners on service. And that bargain on a brand name item could turn into your finding yourself with a counterfeit product that's not up to snuff and without a manufacturer to stand behind it.

In terms of overall value for your money spent online, Consumer Reports gave the highest marks to the following online retailers:

  • BHPhotoVideo.com
  • Costco.com
  • LLBean.com
  • Newegg.com
  • Zappos.com
  • Amazon.com
  • TigerDirect.com
  • Buy.com

 

Both Walmart and Target are beefing up their websites so check them out as well. Also, check out PriceGrabber.com, a website that can help you to see what's a competitive price for a given product you desire. And Retailmenot.com shows you coupon codes that can help you get even better deals on many sites. If you're hooked on Amazon.com even though I've warned you that you're generally paying a premium to shop from them, check out CamelCamelCamel.com which helps you to track the pricing on products you're interested in buying on Amazon.

Finally, be suspicious as to the authenticity of online reviews. There's actually a nifty website - Fakespot.com - that will estimate what percentage of reviews for a given product you're considering on popular websites (e.g. Amazon, Yelp, TripAdvisor, Apple App Store are likely real versus fake.



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Copyright Eric Tyson, 2008 - 2018 all rights reserved.

Eric Tyson is the only best-selling personal finance author who has an extensive background as an hourly-based financial advisor and who does not accept speaking fees, endorsement deals or fees of any type from companies in the financial services industry or product or service providers recommended in his articles, books and his publications.

 

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