Younger set buying more on Internet

Getting Started

Your Money

May 09, 2004|By CAROLYN BIGDA

THE INTERNET is increasingly becoming the shopping mall of the young.

Consumers 18 to 49 years old are expected to increase online purchases at an annual rate of 7 percent through 2008, according to Patti Freeman Evans, an analyst with Jupiter Research. And though by that time the demographic will make up roughly half of all online shoppers, it will account for 71 percent of sales.

"The longer someone is online, the more they end up buying online," Evans says, noting a Jupiter survey from this year. "You get to trust online vendors, know how to find things and ultimately buy more."

With the general concern about rising levels of consumer debt, this latest trend might have you cursing the Net and what it will do to your credit card bills. But Evans points out that there is little evidence of impulse buying online.

"The `wow factor' you get in a store is a little harder to achieve" on the Internet, she says. No artfully crafted displays will lure you to buy what you don't need.

Also, the majority of growth has been a "channel shift" mainly from catalogs, not incremental spending online.

So does that mean we can shop on the Web without fear?

Thinking about it, I certainly wouldn't miss lugging my purchases through crowded subways.

But April Benson, a New York-based psychologist and the author of I Shop Therefore I Am, argues that online shopping can easily lead to debt.

For one thing, Internet sites have a unique ability to target their marketing because they can store your buying preferences and even provide personal shopping assistants. Online retailers are also convenient for people with limited time, such as overworked students and young families.

"It's the ease and the fact that it is further removed from the reality of money. You're just clicking the mouse; it's easy and habitual," Benson says. "And Net stores have lower overhead, so their goods are often temptingly priced."

Peter Bielagus, a financial adviser and author of Getting Loaded, a guide to personal finance for young people, agrees. He says a lot of his clients spend weekends in Florida "simply because they got a good deal" on the Web.

"The lower prices of the Internet often tempt us to buy something that we could otherwise never afford," regardless of whether we need it or not, he says.

These bargains also encourage you to place larger orders to save on shipping costs, such as's free shipping offer with most purchases over $25.

Sometimes there are phantom costs. For instance, because catalogs are losing sales to the Internet, more states are trying to make up for lost tax revenue by collecting "use taxes" on Web purchases. A use tax is essentially a charge on items you bought tax-free for consumption within your state, which normally would charge a sales tax.

You are expected to pay the tax when you file your annual return. Despite these ominous signs, let's put things in perspective. In the next four years, online shopping still will make up only 5 percent of total retail, leaving plenty of debt to be accrued by more traditional means.

On an individual basis, though, you should always monitor how much you are spending online. If your purchases get out of control, Benson offers these tips:

Use a pop-up blocker.

Delete shopping sites from your list of favorites.

As a last resort, set up your computer to refuse to accept cookies - pieces of information that are generated by a Web server and stored on your computer.

By the numbers

$585: Annual spending per online buyer, 2004

$779: Estimated spending per online buyer, 2008

60: Percentage of Web users expected to buy online, 2004

67: Percentage of Web users predicted to buy online, 2008

Source: Jupiter Research

E-mail Carolyn Bigda at

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