Amazon is one of the biggest online retailers in the world, selling everything from plush toys to groceries. It has changed the way people shop for items and the online retail giant is showing no signs of slowing down since then. According to a Business Insider article, Amazon was able to generate $43.7 billion in revenue during the first quarter of 2017, which is quite impressive but still a bit less than what financial analysts had predicted.

To beat the competition, Amazon has been offering many services like free shipping, competitive pricing, and Amazon Prime for the convenience of their customers. All of these, however, come at a cost which the retail giant has to cover using some other methods and to remain profitable. Some of these tricks are very simple and exploit basic human impulse while others use complex algorithms to predict customer behaviour.

In this article, we have collected some of these psychological tricks that Amazon uses to make its customers overspend and we hope that knowledge of these will make you save money while shopping on the company’s website.

15. Algorithm Based Suggestions

It should come as no surprise that Amazon uses the data provided by its customers to sell more products to them. The company employs the use of a sophisticated algorithm that can suggest the right products to the right customers at precisely the right time. This increases the chance that a user will end up buying one of these suggested items.

Vadim Bichutskiy, director of data science at Innovizo further explains this in detail that Amazon has pioneered the art of developing a data-driven strategy for both cross-selling and upselling. According to an estimate, almost 35 percent of Amazon’s revenue is generated from cross-selling, and this is money coming out from your pockets.

14. Free Shipping Offers

Consider an example of when you’re looking for an item to buy on Amazon. Normally you would search for it, click once it shows up and before you hit the “Add to Cart” button, you might notice that it comes with free shipping so you probably end up thinking it is your lucky day.

There are a few ways through which Amazon offers free shipping to its customers, you can either pay $99 a year for an Amazon Prime membership which allows for free two-day shipping on items or you can spend at least $49 on other qualified items for free shipping. The reason for this is that shipping isn’t actually free for the retail giant as the estimated annual shipping costs for the company according to Forbes reached $11.5 billion in 2015. When customers pay extra for a Prime membership or increase the number of items in their cart, it allows Amazon to offset some of these costs. This has proven to be a good strategy to get customers to spend more money online.

13. Making You Buy An Amazon Prime Membership

Amazon Prime was launched as a customer loyalty program with the goal to get customers to spend more. Since then it has grown into a large service with an estimated 40 million people with memberships in the U.S. They are given different incentives like free shipping, unlimited video and music streaming and discounts on countless items.

The trick behind Amazon Prime is that once you spend money on the membership, you are bound to take advantage of all the benefits it has to offer. According to a report by Consumer Intelligence Research Partners (CIRP), Amazon Prime members spend a whopping $1500 in purchases each year compared to a modest $625 a year spent by non-Amazon Prime shoppers. Amazon Prime has allowed the company to acquire more customers and increase its revenue by the billions.

12. Access to Prime Instant Video

People with Amazon Prime memberships can also enjoy access to Prime Instant Video which allows them to stream many popular shows and movies for absolutely free. This service does not directly make Amazon any money but the company has recently discovered that people who end up using this free service are 10 times more likely to rent or buy movies that are not accessible from the free service compared to non-Prime customers. All it takes is for the user to get hooked on the service after which the company can sell them paid content.

11. Ordering With A Single Click

It should come as no surprise that Amazon actually owns the patent for 1-Click ordering, a service that has generated billions in revenue for the company. All that is required from the customers is their credit card information and shipping address after which they can simply click a button and place orders without having to go through the checkout process.

This is a very simple yet effective technique which encourages impulse buying, effectively disconnecting the user from how much money they are actually spending.

10. Using Dash Buttons

Currently, there are more than 70 different Dash Buttons being offered by the retail giant Amazon. These buttons allow customers to order common household items like diapers, detergents and other supplies by the simple click of a button.

While to some this might seem like a very convenient service, others think of it as another strategy by Amazon to disconnect its customers from keeping their spending habits in check. Another problem with this entire concept is that the brands offered via these buttons are quite limited, meaning that the customers are not always getting the best rates on items they need. They end up spending more and Amazon rakes up all the revenue.

9. Promotions On Kindle Products

Every once in a while, you are greeted with a nice offer on a Kindle product when you access Amazon. These promotions come around advertising cheaper deals on Kindles or e-books. While it may sound like a very exciting offer, you should probably think twice before buying one since it might end up costing you more in the long run.

According to a report by CIRP, customers who don’t own a Kindle spend only $725 a year at Amazon compared to an average $1450 spent by Kindle owners, a figure which is nearly double than non-Kindle owners. This just proves that Amazon Kindle and e-books are a big source of profit for the retail giant.

8. Offering Prime Day Sales

Prime Day is a 24-hour shopping event organized by Amazon during which Prime members can enjoy some really nice discounts on a variety of products. One of the strategies used by the retail giant during this promotion is to offer customers a free, 30-day trial of Prime membership so that anyone can participate in this event easily.

This allows Amazon to acquire more customers for their Prime program as well as increase profits and cross-selling opportunities. According to CNN Money, Amazon Prime Day sales had shot up a jaw-dropping 93 percent across the U.S in 2015.

7. Urgency via Lightning Deals

Lightning Deals are scattered throughout Amazon’s website and these are usually limited to one per customer with short expiration times. Using this technique, Amazon is able to create a sense of urgency which makes the customer spend money on a seemingly good deal out of fear of missing out. A status bar under each deal shows the percentage of items already availed by shoppers and the percentage that is still available.

While the company has never really shared how much revenue it generates from these deals, it has been observed that Amazon almost doubles the number of lightning deals it offers during certain holidays. Amazon Prime members, once again, also have an advantage here getting a 30-minute-early access to these deals.

6. Sales Generated From Amazon Echo

Most of us are aware of Amazon Echo, a wireless, voice operated device launched by the retail giant featuring artificial intelligence. Similar to Kindle, promotions of this particular device can also be seen ever so often on Amazon’s website. It can do a number of tasks which include playing games, setting alarms, answering questions and most importantly, telling you whether you need an umbrella or not.

This sounds awfully similar to Apple’s Siri and Google’s Assistant but there is one very big difference, Echo allows customers to blindly purchase items from the website. It’s artificially intelligent software has also been given a friendly persona named Alexa, making you feel as if you’re interacting with a friend rather than a company. According to an estimate, more than 3 million Echo units have been sold since June 2015.

5. Availability of Limited Stock

We can guarantee that you will never see an item labeled as “Fully Stocked” on Amazon. The reason for this is that such a statement will never motivate a potential buyer to take action and make a purchase.

Many merchants on Amazon are fully aware of the fact that if an inventory of fewer than 20 items is entered, the product page will show the number of items remaining. This, once again, creates a sense of fear into the customer since they do not want to miss out on buying an item and then having to wait for it again. While showing the remaining inventory can be helpful for customers in certain scenarios, it also makes them pull out their wallets faster which only means more money for Amazon.

4. The Loss Aversion Effect

Quite often it might seem that everything you come across on Amazon is being offered at a discount. This is yet another strategy employed by the retail giant to get customers to spend their hard-earned cash on items across the website.

By displaying the original price of a product next to the discounted price, companies like Amazon take advantage of the loss aversion effect. They essentially end up making the customer believe that the cost of missing out on a particular product will be greater than the actual cost of the product. A good example of this would be if you came across a $200 item discounted to $150 for $50 in savings, the high original price next to the discounted price will make the discount seem more reasonable compared to if you just saw the product being sold at $150 without a discount.

3. “Order Today and Receive Item By Monday”

This one shouldn’t be new to a lot of people and quite frankly, all of us have come across this at least once when shopping on Amazon. So, what happens is that you are searching for a product, browsing the page with its information when suddenly you come across this message, “Order within 20 mins and you’ll have the item by Monday”.

At this point you’re not even thinking about whether to buy the item or not, instead, you’re thinking about how fast the product is going to show up on your doorstep. It can be very difficult not to fall for this one since similar to some of the other psychological tricks on the list, it creates a sense of urgency as well.

2. Using Amazon Prime Now

We have already covered how Amazon is able to offer free shipping on certain products but there is also another service which Prime members can avail. Amazon Prime Now offers items like groceries, household items, gifts and much more in a delivery time of two hours or less.

As of now, this service is limited to only specific locations but the list of these will only grow with time. The reason why this is a waste of money is that Prime Now essentially makes customers spend money on items they can get themselves and it is another reason due to which a large number of people will consider getting an Amazon Prime membership.

1. Employing Third-Party Sellers

Amazon has grown to become such a huge platform that most people don’t even bother looking at where their merchandise is actually coming from. Instead of housing products in warehouses that cost a fortune to maintain, Amazon is using a new method where it is employing third-party sellers.

How does that work you ask? Well, Amazon’s Marketplace allows thousands of small businesses to sell items to millions of shoppers under the Amazon brand while the retail giant can sit back, relax and generate billions in revenue.