This April marks Financial Literacy Month and not-for-profit, Financial BasicsFoundation is highlighting the need for improved financial literacy education to counter the sophisticated marketing tactics used by ultra-cheap retailers like Shein and Temu to lure young consumers into making unnecessary purchases.

Through its free online toolkit of programs and resources, Financial Basics Foundation aims to empower young people to make better choices when shopping online.  

Katrina Samios, CEO, Financial Basics Foundation, said: “Financial literacy isn’t just about saving, investing and interest rates, it’s about being able to recognise value, making informed financial decisions and resisting the draw of manipulative marketing campaigns. . Retailers use sophisticated digital tactics to create a sense of urgency and drive impulse spending, often targeting young consumers who may not fully understand the long-term financial impact of their purchases”.

“By building financial capability, young people are equipped with the skills to navigate online shopping wisely and recognise predatory digital marketing strategies”.

According to recent data from Roy Morgan, the Australian e-commerce landscape is rapidly shifting with budget retailers like Temu and Shein recording unprecedented growth. In the past year, more than 2 million Australians shopped across these platforms every month, generating over $8 billion combined annual sales.

Withinthis consumer-base is 14-24-year-olds which account for 15% and 23% of users onTemu and Shein respectively[1],indicating that Gen Z consumers represent of a new era of e-commerce, with a unique profile of online shopping preferences.

As revealed by a recent NIQ survey on Gen Z consumers, they:

-      Are motivated to find the lowest price possible and actively seek out discounts.

-      Are heavily influenced by opinions, reviews and influencer endorsements on socialmedia.

-      Demand a highly personalised shopping experience, with tailored recommendations thatreflect their individual tastes.[2]

Concerningly, Shein, Temu and similar e-commercesites are capitalising on this trend in consumer desire, using pervasivemarketing techniques designed to hook young users. According to the researchfrom Roy Morgan[1]most Shein and Temu users are repeat customers, and over 40% have purchased 4+times over 12 months. Users subjected to precise targeted advertising andaddictive game mechanisms are incentivised to buy impulsively and overspend,without regard for quality.

Accordingto Financial Basics Foundation, the effects of these predatory marketingtechniques are being felt by young consumers.

Samiossaid: ’E-commerce platforms are becoming increasingly sophisticated in how theylure young consumers, often using tactics that encourage impulse spending,making it easy to lose track of financial limits.‘

Research has shown that gamification in marketing such as integrating game-like elements creates an interactive and exciting experience which appeals to young buyers and increases purchasing intentions. From enticing virtual prize wheels and gift boxes to progress bars and leaderboards, gamification makes shopping more exciting and rewards overspending.

Much of this gamification of shopping also limits the decision-making time consumers have to purchase items, with ploys such as ‘almost sold out’, ‘lightening deals’, and countdowns aimed at rushing the buyer into purchasing. This time pressure is one of the most noted gamification features used by retailers to capture young shoppers. [1]

Social media also plays a pivotal part in Gen Z’s purchasing behaviour, as online reviews and endorsements act to build consumer trust. With a rise in UserGenerated Content (UGC) and influencer partnerships promoting budget retailers, young social media users are driven to purchase through ‘one time’ drops and gamification marketing tactics promoting bargains and trends.

Influencers use tactics such as hauls and Get Ready With Me videos to create an urgency in buying for its audience. Fast fashion retailers are then able to dial up the production of these on-trend items to encourage overconsumption at palatable prices for young consumers. These ultra-cheap retailer ‘hauls’, which promote highly excessive fast fashion purchasing, have become commonplace on platforms like TikTok.

Deepening their connection with young consumers, online retailers tailor data-driven,hyper-personalised experiences to the preferences of each individual. Utilising a wealth of customer data and AI-insights, online retailers push custom product recommendations, target advertising and predict future purchasing behaviour.[2]

DuringFinancial Literacy Month, Financial Basics Foundation is seeking to highlight this issue and promote a balanced approach to online spending. Through its online educational financial resources, they urge young consumers to follow a few basic Financial Rules ofThumb.  

Recognise Marketing Tactics:Understand how personalisation, influencer endorsements and gamification are designed to influence purchasing decisions.

PracticeConscious Spending: Before making a purchase, consider its necessity and impact on your budget.

SeekFinancial Education:Engage with resources that enhance financial literacy, enabling more informed and sustainable spending habits.

FinancialBasics Foundation’s free Financial Rules of Thumb resources offer young people handy hints and tips such as, ‘shop around’ to ensure you’re getting a good deal and ‘sleep on it’ to delaying a spending decision that hasn’t been budgeted for. These tips are a great way to enable young people to consider a purchase more clearly, reducing emotional attachments to products to help manage marketing tactics employed by retailers.

Katrina Samios said: ‘At Financial Basics Foundation we aim to empower young people with the life skills to think critically about marketing tactics and make informed spending choices. By developing financial capability throughout their formative years, young people build strong financial habits that help set them up for a more secure financial future.’

About Financial Basics Foundation:

For over two decades, the Financial Basics Foundation, has been at the forefront of promoting financial capability among young Australians.

Financial Basics Foundation provides resources that have been used inover 2000 high schools across the country and each year, more than 30,000students play its online financial simulation money game (ESSI Money) which teaches teenagers how to earn, save, spend, and invest wisely.

For further information on the research and resources provided by theFinancial Basics Foundation, please visit https://financialbasics.org.au/.

_{[1]Ethicality of Modern Shopping Applications: How Gamification Is Used ToManipulate Customers. https://lutpub.lut.fi/bitstream/handle/10024/167181/Kandidaatintyo_Tarvainen_Matias.pdf?sequence=1}

_{[2] From Data to Delight: Why Hyper-Personalization Is the Future ofBusiness.(Salesforce) 2024 https://www.salesforce.com/blog/why-hyper-personalization-is-the-future/}

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