The shady economics of ‘buy one, get one free’ deals • Hacker News Board

Re: The shady economics of ‘buy one, get one free’ deals

#31

Post by thaumasiotes » Mon, Feb 18, 2019, 10:58 AM UTC

simonh wrote: post #14

User23 wrote: post #5

My mother always said "50% off what?" Obviously when the merchant sets the nominal "retail" price to whatever they want, they can set the discount to whatever they want too and maintain their profit margin. This is basic algebra solving for one variable given a desired "discount". It's amazing how effective it is though.

I'm only (vaguely) familiar with the rules in the UK, but they include tests to ensure the 'was' price was actually a genuine usual selling price. This includes tests that the 'full' price must have been in place for longer than the promotional period, that it must have been recent and that significant sales were made at that price. Buy one get one free also has to mean you get two equivalent or similar products. Com…

I'd be pretty surprised if British law prohibited "buy a dress, get a belt free" promotions.

Re: The shady economics of ‘buy one, get one free’ deals

#32

Post by chippy » Mon, Feb 18, 2019, 11:00 AM UTC

> Most online clothing brands offer ‘free’ shipping, with the catch that you have to meet a minimum purchase amount (often $100) to qualify. Some 58% of consumers will add additional items to their cart — often things they didn’t originally intend to purchase — just to “save” $5 to $10 on handling fees.

You will find people vigorously defending their behaviour when challenged on this. For example: Amazon Prime.

Amazon Prime is a product that costs you money and makes you spend more money on Amazon, and yet people will defend their spending saying that they are "saving" money.

The shipping is "free" but you have to spend £8 a month to qualify. If you don't spend at amazon during that month you are still down £8 (that's about £100 a year). If you spend something at amazon during the month you are still down the £8 in addition to the money spent at something.

Amazon Prime is a shady product designed to get you to spend money at Amazon.

As the article says often you will find the same product for lower in other places. You just need to do the sums. Another common defence we will see when people respond to this is "Oh I know it doesn't save me money, it's the convenience".

Retailers love making their customers comfortable and not thinking about these shady offers. Imagine having millions of customers so happy they will pay more money to you and defending this very process.

Now... there's also the shady dark patterns the company uses to sign you up for it and make it it harder for you to cancel, but that's another thing!

Re: The shady economics of ‘buy one, get one free’ deals

#33

Post by legatus » Mon, Feb 18, 2019, 11:02 AM UTC

Does anyone know of a book (even better a textbook, if possible) detailing these strategies? This article is about the "BOGO" deal, I'm interested in reading about other kinds of these strategies, and why they work. If anyone has any recommendation, especially for more academic stuff (textbooks or papers), I would greatly appreciate it!

Re: The shady economics of ‘buy one, get one free’ deals

#34

Post by nebulous1 » Mon, Feb 18, 2019, 11:03 AM UTC

chippy wrote: post #32

> Most online clothing brands offer ‘free’ shipping, with the catch that you have to meet a minimum purchase amount (often $100) to qualify. Some 58% of consumers will add additional items to their cart — often things they didn’t originally intend to purchase — just to “save” $5 to $10 on handling fees. You will find people vigorously defending their behaviour when challenged on this. For example: Amazon Prime. Amazo…

You do get the streaming service too.

Re: The shady economics of ‘buy one, get one free’ deals

#35

Post by chippy » Mon, Feb 18, 2019, 11:04 AM UTC

ChrisSD wrote: post #4

> A coffee mug that usually sells for $10 + $3 S&H will go for $13, with FREE shipping. I actually prefer this. It's much better than shops that activity try to hide shipping costs until the last moment. Also it makes comparing prices quicker.

>I actually prefer this

Yes, this is why these tactics work. The human brain is being hacked by shady practices.

Re: The shady economics of ‘buy one, get one free’ deals

#36

Post by dspillett » Mon, Feb 18, 2019, 11:05 AM UTC

Everything even vaguely commercial with the word "free" attached is shady. I'm in a minority here (I must be, otherwise it would stop being common because it wouldn't bring in enough marks) but I've grown cynical enough that the word actually puts me on guard and I go searching for the small print, or it just puts me off completely if I don't have time for the small print.

It isn't just BOGO offers, anything free is suspect:

* Just pay postage! (postage is nearly as much as the item costs on Amazon/eBay/others with delivery included, and it'll take up to six weeks for your item to arrive)

* Do the Great North Run for free! (... plus a £320 charity pledge)

* First month free! (if you don't cancel 27 days before the free month ends you'll be paying for the service for at least 6 months afterwards)

Re: The shady economics of ‘buy one, get one free’ deals

#37

Post by alexgmcm » Mon, Feb 18, 2019, 11:05 AM UTC

chippy wrote: post #32

> Most online clothing brands offer ‘free’ shipping, with the catch that you have to meet a minimum purchase amount (often $100) to qualify. Some 58% of consumers will add additional items to their cart — often things they didn’t originally intend to purchase — just to “save” $5 to $10 on handling fees. You will find people vigorously defending their behaviour when challenged on this. For example: Amazon Prime. Amazo…

I nearly always buy from Amazon though.

I bought from some other online retailers and had bad experiences (stuff taking ages to arrive, customs fees,bad returns policy etc.)

Plus you get Amazon Music and Amazon Video too - I never use them but still...

It used to be a lot cheaper in Spain though to be fair, like 20 euro per year so it was a no-brainer.

Re: The shady economics of ‘buy one, get one free’ deals

#38

Post by Vinnl » Mon, Feb 18, 2019, 11:06 AM UTC

I tend to make a conscious effort to ignore "deals". As far as I know, the one case in which a deal is actually advantageous as a consumer is when that deal encourages consumers to buy more of a certain product at the same time, and the merchant passing part of the scale and predictability savings on to the consumer. For example, if you buy tooth paste every now and then anyway, buying it at the same time as many others might make it cheaper to offer that tooth paste. Or for example having the option between essentially equivalent meal ingredients, more people cooking the same meal at the same time can allow for offering those ingredients more cheaply.

In most cases, however, it feels like they only benefit the merchant, by manipulating the consumer to buy things they don't need, or more expensive things.

I don't think the cost savings I'm missing out on by not making purchases in the first category outweigh the extra costs I avoid by also not making purchases in the second category.

That said, I'd love to hear of more ways of how deals can actually benefit both consumer and merchant.

Re: The shady economics of ‘buy one, get one free’ deals

#39

Post by paganel » Mon, Feb 18, 2019, 11:06 AM UTC

pattle wrote: post #29

rlue wrote: post #21

What makes this really interesting is how living in an economy where prices are both set by the seller and non-negotiable causes consumers to equate asking price with value. As a consequence, BOGO feels like a better deal than one item at 50% off MSRP. A 50% discount is a change in the asking price; the value of this item must have depreciated in some way for the seller to want to get rid of it (e.g., this garment is…

> This isn't even getting into the actual value of perceived value (cf. the sticker price of wine vs. its perceived quality). Really interesting stuff. I fall foul of this trick quite a lot when food shopping. For example if I'm buying a box of cereals and I see one is priced at £1.80 and another is priced at £2.50 but is on sale from £3.50 I'll buy the more expensive one because I'm under the illusion that I'm getti…

What I ended up doing in order to avoid this is that I’ve been buying from the same brands for some time now, i.e. the same soap, the same shampoo, the same butter (truth be told, for butter I fluctuate between two brands), the same chocolate, the same detergent etc. This way I don’t fall for tricks like the one you mentioned because I almost don’t care about any other brands and products than the ones I’m really interested in. I also get to save a lot of time in the supermarket because each time I visit it I know exactly what I want.

Re: The shady economics of ‘buy one, get one free’ deals

#40

Post by Aeolun » Mon, Feb 18, 2019, 11:07 AM UTC

chippy wrote: post #32

> Most online clothing brands offer ‘free’ shipping, with the catch that you have to meet a minimum purchase amount (often $100) to qualify. Some 58% of consumers will add additional items to their cart — often things they didn’t originally intend to purchase — just to “save” $5 to $10 on handling fees. You will find people vigorously defending their behaviour when challenged on this. For example: Amazon Prime. Amazo…

But it is convenient. I pay a small, fixed amount to Amazon, where I can incidentally buy literally everything, and I never have to worry about shipping costs again, nor worry about dealing with a different interface or multiple accounts for any type of goods I want to buy.