Five Things to Remember When You Shop Online

If you shop online, you’re already accustomed to getting the hottest fashions and gadgets at the best price—without finding parking at the mall and waiting in lines—delivered right to your door. But these days there are so many Internet retailers clamoring for your business with crazy-sounding sales and discounts, how can you really know you’re getting the best deal when you shop online?

A few weeks back, I hastily bought a coat online when I came across a site having a one-day sale. The subtotal was $100 less than the retail price, but tax and shipping ate up about $25 of that discount. Even worse, when the coat arrived, it didn’t fit. Then, when I exchanged the coat at a store, I received a small refund for the sales tax I paid; the Website charged me more sales tax than I would’ve paid by shopping at a store in my state!

Although I still saved money on the coat with this online sale, the experience taught me there are plenty of little things to watch out for when shopping online. Overlook just one of these things and a deal could turn out to be less fabulous than it looks.

1. Taxes

Taxes follow us wherever we go (just like debt), and that includes sales tax. When you shop online, the tax rate can actually differ from the rate in a local store. For example, I was charged 9.35 percent tax online for my coat but when I exchanged it at a New York City store, the tax was changed to 4.375 percent, entitling me to a refund of the difference. On the flip side, some retailers don’t have to charge sales tax to customers in states where the retailer does not have a physical location. The catch? You may still be responsible for reporting the purchase and paying the sales tax yourself on your state tax return.

Bottom line? Especially on big ticket items, always remember taxes. That price on the tag may not be the price you end up paying, and how much tax you pay will depend on where you buy.

2. Shipping and Handling

Often, the biggest difference between buying something online and in-store is what you have to pay for shipping and handling. (Of course, you have to live through anxious days as your order journeys from the warehouse to your home, too!)

Some online merchants offer free ground shipping on all orders or if you spend a certain minimum amount. Many online retailers charge for shipping and, of course, the faster you want your stuff, the more you’ll pay for shipping, and those charges can quickly negate any price advantages to buying online.

Finally, beware online merchants that advertise super-low prices on popular items but charge inflated shipping fees. On the flip side, merchants offering free shipping may just be marking up their goods to compensate. Buyer beware!

3. Size and Compatibility

It really sucks to find that something doesn’t work for you after have paid for it. Exchanges and refunds may not be much of a hassle if there is a local store affiliated with the site you made your purchase. Of course, that time and effort could have been better spent by making the original purchase in-store in the first place!

What do savvy shoppers do? They visit the store and try on clothing before hopping on their computer to get a better price.

4. Return Policy

If you shop online, then refunds and exchanges can end up costing you.

In case an item doesn’t fit or function correctly, you should get to know a store’s return policy before you decide to submit an order. (For example, although some sites offer totally free returns, some make you pay for return shipping and again for re-shipping the item).

If, for example, I wasn’t sure if a sweater would fit and it could cost me $7.99 to ship it back to the company and another $7.99 to send me the right sweater, that lovely sweater could end up costing me $16 more. No thanks.

5. Cashback

Smart spending is still spending, but getting a little cash back when you do it never hurt. Most people know about cash back credit cards. But a lot of shoppers don’t know about the many online cash back programs available.

Once you are 100 percent sure you want to order something, go through some of the best cash rebate sites such Ebates or FatWallet. Even I tend to forget doing this once in a while, but I’ve realized that the cash back really can add up.

The decision to buy online (and where) comes down to far more than five factors. You might be worried about who will be home to accept the package or if the delivery service will leave it in the wrong place. Some people have reservations about providing payment details online. These days, the chances of something going wrong with an online purchase from big-name retailers is pretty slim. If, however, you don’t recognize a site, use a third-party service like PayPal to pay. That way you have an intermediary in case something goes wrong.

What about you? Do you have other concerns about shopping online? If so, what are they and how did they affect your online shopping experience? It may serve to be useful advice for all other online shoppers.

About the Author: Simon is a recent college grad living in Brooklyn. He writes for an interest rate-tracking Website and maintains his own personal finance blog, the Realm of Prosperity.

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  1. i have been thinking of buying a macbook but since i am not american i keep thinking that the shipping cost will make the thing more expensive that getting it in this country. i have not done the math, it is just an inkling

  2. Especially on E-Bay! There is nothing worse than finding a good DVD for $5.00, and then finding out shipping and handling is $20 to travel across a few states. Shop with caution.

    -Dan Malone-

  3. We get lucky in Florida with no state taxes, and it’s very rare that I pay taxes for anything online since most of it is shipping from out of state.

    What I do usually forget to factor in taxes on are local purchases…especially the big-ticket ones, like cars, appliances, etc.