Attention, Amazon shoppers. There could be a cleanup needed on … your budget.
Yes, Amazon makes shopping easy. It could also be cost effective. The platform’s prices are typically 11 percent lower than those at speed-shipping peers Target, Walmart, and Jet, according to Profitero.
But sale price is just one factor in deciding whether you use Amazon to spend money or actually save it.
4 ways Amazon is saving you money
If you’re not sure how effective an online shopper you are, Amazon offers you a way to find out. Click on your account, scroll to your past orders, and you’ll see every item you’ve purchased on the site.
You might see orders that you now regret. To avoid making similar shopping mistakes in the future, consider these four money-saving strategies.
1. Buying used
Amazon is infamous for putting pressure on brick-and-mortar booksellers, and I’m a tiny part of that movement. Most of my Amazon purchases are used books.
The savings explain why. Say you wanted to read Daniel Kahneman’s “Thinking, Fast and Slow,” one of the best books for beginner investors. You’d find that Amazon’s new prices beat Barnes & Noble’s. But you’d also learn that buying used could cut the hardcover price from about $21 to about $10 or the paperback cost from $10 to $5.
It’s possible you could find Kahneman’s book for a lower price in a used bookstore in your neighborhood. But not having to go searching for it also saves you time.
Saving money by buying used, damaged, and refurbished on Amazon goes beyond books. Amazon Warehouse allows you to find offers posted by third-party sellers. It’s a particularly good spot if you’re looking for an electronic on a budget.
2. Holiday gifts
Every order I placed in my first three years of using Amazon, from 2010 through 2012, was a gift for someone else. I’d always hated going to the shopping mall, browsing through stores, and not being able to compare prices side by side.
Buying presents on Amazon, you can more easily set and stick to a budget. During the holidays, for example, I set a maximum $50 budget for each family member. Seeing the itemized listing for sales tax and shipping keeps me honest. In a store, I would have spent too much just to shorten my to-do list.
Finally, buying presents on Amazon is especially a money-saver if you use some old-fashioned good sense. Make a list of gifts you’d like to buy, find the best prices for each, and group them into one cheaper shipping option. If you’re not an Amazon Prime member, you need to spend $25 to qualify for free shipping.
If you’re buying presents for family that lives farther than a drive away, Amazon’s free shipping saves you money, plus a trip to the post office. And it provides gift wrapping just like brick-and-mortar stores.
There are all sorts of ways to find the best price on an item before or after you check out. When buying shoes and clothing, you might find Amazon’s price goes up or down based on your color selection. My favorite running shoes are $10 cheaper in beet red and lime punch, for example.
If you’re in the market for a big-ticket purchase like a TV, you could use a price tracker like Camelcamelcamel to alert you to the best time to buy. There are also money-saving options if you already bought the TV. You could link your account to a refunding service like Earny or Paribus in case the TV drops in price.
If you prefer, you might also check out web browser extensions like Honey. They also provide price tracking while showing the cheapest buying option on Amazon to help you get the best price.
4. Going Prime
By now, you’re probably already familiar with Amazon Prime, a $10.99 monthly or $99 annual membership that provides fast, free shipping on all orders. Whether Prime saves you money, it does offer the convenience of never having to pay for delivery.
But there are other ways to qualify for no- or low-cost shipping via Prime:
- Anyone can get a free 30-day trial.
- EBT cardholders only pay $5.99 per month.
- Students are offered a free six-month trial before a $5.49 monthly or $49 yearly charge.
- Families and roommates can share a family plan to save money.
Aside from the media streaming benefits of going Prime, being a member includes discounts on actual items. Using Amazon Family, for example, new parents can save up to 20 percent off the cost of diapers and baby food.
If you’re not a Prime member, you could still save up to 15 percent on family essentials using the platform’s Subscribe & Save program. You would need to subscribe to and receive at least five deliveries per month to score the discount.
4 ways Amazon isn’t saving you money
You could save hundreds of dollars by shopping on Amazon instead of Walmart and Jet, according to an analysis of 25 popular products from Business Insider. But there are exceptions to the rule. Toilet paper and laundry detergent, for example, can be more expensive on Amazon.
So it’s important to remember that just because Amazon can save you money doesn’t mean it will save you money all the time. Here are four ways it might be costing you.
1. Grocery shopping
In our analysis of grocery delivery services, we found that buying food online is generally more expensive than heading to the store yourself. That’s the case for Amazon Fresh, even though the service dropped its price to $14.99 per month.
Including the required Prime membership, you’d pay $279 per year to have your groceries shipped to your door. To make sure that cost is worth it to you, take these steps:
- Compare Amazon Fresh’s prices to your local grocer’s for your most frequently purchased items.
- Account for other costs of going to the grocery store, such as gas for the car.
- Ask yourself if the convenience of online shopping and home delivery makes up for the difference in cost.
For example, I’ve found Amazon Fresh’s prices to be competitive but not better than my grocery store, which is just two blocks away from my house. But just because cost outweighs convenience for me doesn’t mean it will for you. Run the numbers and decide for yourself.
2. Cart add-ons
When you click on an Amazon item you’re considering, you’ll be shown a couple of other buying opportunities under the headings:
- “Frequently bought together”: A second item that can complement your purchase
- “Customers who bought this item also bought”: Other related items
- “Sponsored products related to this item”: Other related items from third-party sellers
It’s possible that these suggestions remind you of something else on your shopping list. But it’s more likely that these advertisements tempt you into buying something you weren’t planning to purchase. These kinds of cart add-ons can end up costing you money.
This also goes for making smaller purchases to reach the $25 minimum before free shipping kicks in. When the minimum was higher back in the day, I once found myself buying a sports water bottle ($12.95) that I didn’t need and guitar picks ($1.22) I never used.
3. Buying in bulk
You might log onto Amazon wanting one of something and instead buy a dozen of it. The deal was too good to pass up, you might rationalize to yourself.
But you only save by buying in bulk when it’s a product that you:
- Need more of
- Can realistically store in your home
- Won’t burn through faster when you have more of it on hand
- Can’t buy for less money elsewhere
I tested this theory by buying a 24-count of my favorite cereal for $134.98, or $5.62 per box. I found that I ate more of this sugary treat because of the discount, not because I wanted to eat more of it. There was also little-to-no savings. The cereal cost $5.99 per box at my grocery store but was often on sale for $4.99.
4. Browsing deals
With its daily deals and grocery coupons section, Amazon is ripe for wasting time and money searching for and buying things you don’t need.
You could rationalize that you’re scoring an even better deal by using the Amazon Rewards Visa Signature Card. But you’ll still be buying something that wasn’t necessarily on your shopping list.
Here are a few ways to avoid these tempting deals on Amazon and other sites:
- On second thought: Ask yourself if you’d buy the item in a brick-and-mortar store.
- Sleep on it: Wait 24 hours before adding the item to your cart and checking out.
- Stick to the list: Ask yourself if this is a “want” that you can live without.
Make the most of Amazon by saving, not overspending
It’s understandable to go to Amazon for a sale the way you might go to Google for an answer. And, sure, Amazon does help you save money at times. But it also might encourage you to spend more than you should.
If you like shopping on Amazon but want to do a better job at saving money, think about changing your spending mindset. Then, log back in and stick to your shopping list.
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