Impulse purchases, explained

Roughly two-thirds of anyone who’s bought a product they saw on social media say they later regretted their purchase, per a recent survey from consumer finance firm Bankrate.

🤔 So, why do we do it?... There are a few reasons driving impulse buys, according to experts, and nearly all revolve around the business concept of “friction” – effectively anything, however minor or major, preventing or dissuading us from buying a product or service. For example: distracting product visuals, an unclear value prop, or even needing customers to click an extra time or two before purchasing all increase friction. (Fun fact: this is why one-click checkout is such a big obsession for online retailers.)

A couple ways social media reduces friction for businesses:

• Targeted advertising: This ensures hot new items of specific interest to you are placed right at your fingertips.
• Easy checkout: Then once you see this product, biometric payment options for smartphones (i.e., Apple Pay) means buying it is simply a glance away. Buy-now, pay-later options further reduce friction at checkout, since it attracts more folks who would otherwise be turned off by the price of a product.

💬 Also worth mentioning: New cars, fancy vacations, private jets – it’s hard to tell what’s real and what’s not online. But per Lisa Fischer, chief lending and growth officer at Mission Lane, “Seeing images and advertisements like this can make someone feel insecure about their own financial situation and subsequently cause them to spend more just to feel like they belong.”

📝 Bottom line: Impulse buys – and keeping up with the Joneses – can sometimes lead to real ragrets.