Amazon Prime Day 2024 is nearly upon us and with it, a chance to win a huge credit card statement and notifications from Monarch that you blew past your ‘Shopping’ category budget a couple thousand dollars ago. Despite the fact that there are many great deals to be found, the vast majority of people make terrible money decisions on Prime Day and end up spending way more than they expected and planned to.

In this blog post, I’ll share why people overspend on Amazon, and how you can better inform yourself ahead of this year’s Prime Day to not fall prey to the same traps.

Amazon doesn’t want you to know how much money you’ve already spent

Image source: Midjourney AI.

There are ways to get a report from Amazon on your entire order history and spending but they don’t make it easy. There’s a reason there isn’t a big button right on your Amazon home page titled ‘Click here to see how much money you’ve spent on Amazon!’

From Amazon’s perspective, the less informed you are about your actual spending, the better. You can focus on ordering cool stuff instead of having to look at a running tally of all the money you’ve already spent.

Amazon’s design is a lot like local anesthetic–you know what’s happening, but you don’t feel the pain of spending until later.

In fact, it takes four clicks from Amazon’s home screen to view a receipt for an order. If you go to your order page, it will simply show you the pictures of the items you ordered so you can see all your cool stuff. You have to drill in further to see the price you had to pay.

By obscuring or otherwise making it more difficult to track your spending outside of third-party applications or a spreadsheet, Amazon hopes you will spend more.

Amazon makes a lot of money on each sale

If you are selling on Amazon, you can expect to pay anywhere from 15-45% in selling fees. The fees add up fast. Referral fees, closing fees, fulfillment fees, shipping fees, warehousing storage fees, and PPC advertising fees. A fee to display all your fees. That last one is a joke, but the point is these small fees add up in big ways.

Death by one-thousand Amazon smiley cuts.

As someone who has written novels and published them on Amazon & Audible, I know first-hand how quickly these fees add up. Amazon takes a 30% cut on my eBooks, even more on my paperbacks, and a staggering 60% on my audiobook sales. Ouch.

Amazon spends a $#^!-ton of money on marketing & sales tactics

After scouting out the early deals and marketing, it’s clear Amazon is doing more than ever to induce FOMO and break down the usual barriers of resistance that help us evaluate our potential purchases and save money.

Prime Day 2022 set the record for Amazon’s holiday, generating an incredible $12 Billion in sales, a 9% increase from 2021’s event. I don’t gamble, but I’d bet that Amazon will break their record again this year.

As a purely theoretical example, let’s assume Prime Day 2023 breaks the record and does $13 Billion of sales revenue. On a 15-45% margin from selling fees, Amazon will do anywhere between $1.95-$5.2 billion in gross revenue from Prime day. In less than two weeks’ time. That doesn’t account for the fact that Amazon sells a lot of their own products and services that likely command higher margins.

With this much expected revenue, Amazon can afford to spend millions, even billions of dollars on their marketing for Prime Day. So what chance do we really have to resist overspending when confronted with one of the most-expensive marketing onslaughts in human history?

Since its inception in 2015, Amazon has done nothing less than create a new national holiday centered around consumeristic spending. Too bad employers don’t give us the day off as a paid holiday.

Keep your guard up!

Even as a personal finance enthusiast and someone who sometimes has a difficult time spending money (I’m working on improving this skill). My hard shell of frugality can begin to feel brittle during Prime Day if I don’t keep my guard up against the targeted deal listings.

This year, new 2024 Prime Day invite-only deals take things to a whole new level.

I know exactly what Amazon is trying to do to me psychologically, and my first impulse is still to spend money.

If you have time before Prime Day, I highly recommend reading Dollars and Sense by Dan Ariely and Jeff Kreisler. This is an illuminating read about psychology & microeconomics that will help you discover the man behind the curtain and many of the ways retailers like Amazon get us to part with more & more of our hard-earned money. Bonus frugal points if you borrow it from your local library.

A wise man knows himself to be a fool, but a foolish man opens his wallet and removes all doubt. – Dollars and Sense by Ariely and Kreisler.

Conclusion

Wield this blog post as an armament to inform yourself of why most people make terrible money decisions during Prime Day. By building awareness, you are less likely to fall for the gimmicks and overspend. Now it’s time to take this knowledge and find great deals of your own.

💬 Reader suggestions for discussion

  • What are you planning on purchasing for Prime Day?
  • How do you stay frugal and save during big sales like this?
  • Have any questions or comments? Join the discussion in the comments sections below!

Categorized in:

Budgeting, Savings, Shopping,

Last Update: July 1, 2024