Online discounts and consumer behaviour: Anyone who shops online knows how easily a discount can change a buying decision. A flash sale announces a 60-minute countdown. A pair of shoes priced at ₹3,500 carries a struck-through price of ₹5,000 and a prominently displayed 30% discount. The shoes were not on the shopping list, but the offer appears too good to miss. At checkout, another prompt appears: “Shop for ₹1,499 more and get ₹500 off.” By the time the order is placed, the customer has spent more than intended, convinced that money has been saved.
This is the peculiar arithmetic of an online sale. A discount reduces the price of an individual product, while the marketing surrounding it encourages additional purchases. The household may end up spending more than it would have without the sale. Online platforms exploit the difference between what consumers need and what they perceive to be a bargain, using price comparisons, limited-time offers and personalised recommendations to bring forward purchases or encourage spending that was never planned.
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There is nothing inherently objectionable about online discounts. They are a normal feature of competitive markets, allowing firms to clear inventory, attract customers or respond to rivals. Consumers benefit when sellers compete on price. The problem arises when the presentation of a discount begins to influence what people buy, rather than simply how much they pay.
India’s festive shopping season provides a useful illustration. Datum Intelligence projects online sales of ₹1.50–1.55 lakh crore in 2026, an increase of 25–29% over the ₹1.20 lakh crore recorded in 2025. The forecast suggests that growth will come from more shoppers placing more orders, even as the average order value declines. Online retail is expanding through the frequency of purchases as much as through the value of individual transactions.
Festive promotions have also become part of everyday shopping. Flash sales, expiring coupons and quick-commerce countdowns create repeated opportunities for impulse purchases. As shopping applications become more adept at recommending products and reducing the effort required to buy them, the distinction between responding to an existing need and acquiring a new one becomes harder to maintain.
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How online discounts change consumer behaviour
In conventional economic analysis, a price reduction encourages consumers to purchase more of a product, other things remaining equal. Online platforms can influence demand through other means as well. They alter the reference price against which consumers assess an offer, draw attention to products that were never under consideration and make postponing a purchase appear costly.
Richard Thaler’s work on transaction utility helps explain the attraction of discounts. In his 1985 paper on mental accounting, Thaler argued that consumers assess a transaction partly by how favourable the deal appears relative to a reference price. Satisfaction comes from obtaining the product and from believing that the transaction itself was advantageous.
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A pair of shoes marked down from ₹5,000 to ₹3,500 can therefore feel like a gain of ₹1,500. The buyer has nevertheless spent ₹3,500. Whether the purchase represents good value depends on the usefulness of the shoes and the price at which they could otherwise have been bought. The struck-through figure encourages the customer to regard the difference as money saved, even when the higher price has little connection with recent market transactions.
Such reference prices are especially effective when consumers have limited information about what a product ordinarily costs. A discount calculated against an inflated or rarely charged price can create an exaggerated impression of savings. The customer judges the offer against a number supplied by the seller rather than an independently established market price.
Time pressure reinforces this effect. A limited-period offer increases the perceived cost of postponing a decision. Shoppers who might otherwise compare prices or reconsider their need for a product are encouraged to complete the purchase before the countdown expires. Competing sellers remain available, but the opportunity to examine their offers appears less attractive when the customer believes that the current discount is about to disappear.
Genuine scarcity can justify urgency. A retailer clearing the last few units of seasonal inventory may reasonably offer a discount for a limited period. The concern is with artificial deadlines that create pressure without reflecting any genuine change in availability or price.
The economics of impulse purchases
Online shopping applications have considerable scope to influence the composition of a customer’s basket. Unlike a physical store, where product placement is constrained by shelf space, an application can continuously rearrange its catalogue and recommendations according to browsing behaviour, previous purchases and other information about the user.
Recommendations for products frequently bought together can encourage additional purchases. Minimum-spend thresholds work in much the same way. A customer asked to spend another ₹199 to avoid a ₹40 delivery charge may buy something unnecessary and still regard the transaction as a saving. The arithmetic favours the retailer unless the additional product was worth buying independently.
Payment arrangements can further reduce resistance to spending. One-tap wallets simplify checkout, while credit card offers and equated monthly instalments make expensive purchases appear more affordable. A no-cost EMI may be useful to a consumer, but the terms deserve scrutiny. The financing cost may be borne by the merchant, reflected in the product’s price or offset by the loss of another discount. The monthly instalment tells the buyer how the purchase will be financed, not whether the product is worth its full price.
These practices are not necessarily deceptive. Recommendations can help customers discover useful products, and credit can make purchases affordable when consumers manage their repayments responsibly. The difficulty arises when platforms combine personalisation, artificial urgency and complicated discounts in ways that encourage decisions customers might reject after more careful consideration.
For a household, the distinction is straightforward. Buying a product for ₹3,500 instead of ₹5,000 offers a genuine saving if the buyer intended to purchase it and ₹5,000 was a realistic alternative price. If the purchase was unnecessary, the household has incurred an additional expense of ₹3,500, whatever the advertised discount.
Dark-pattern regulations face enforcement test
Persuasion becomes deception when the information presented to consumers is misleading. A genuine warning that stock is running low helps customers make an informed decision. A countdown that repeatedly resets, falsely suggesting that a discount is about to disappear, can induce purchases on a false premise.
India already recognises the problem. The Central Consumer Protection Authority’s Guidelines for Prevention and Regulation of Dark Patterns, 2023 identify 13 practices, including false urgency, basket sneaking and drip pricing. These cover deceptive claims about scarcity, the addition of products or charges without proper consent, and the delayed disclosure of costs that alter the price initially presented to consumers.
The regulatory concern extends beyond discounts. When a platform advertises one price and adds handling, convenience or other mandatory charges during checkout, the consumer cannot properly compare competing offers. Such practices undermine price transparency, particularly when the customer has already invested time in completing a purchase.
The government informed the Rajya Sabha in August 2026 that the CCPA had penalised nine digital platforms for dark-pattern practices, with penalties totalling approximately ₹20 lakh. The platforms included Zepto, BookMyShow and IndiGo. The enforcement action establishes that the regulator is prepared to intervene, although the amounts involved raise questions about deterrence.
Small penalties may do little to discourage practices that can influence large volumes of transactions. Yet financial penalties are only one part of enforcement. Directions to remove deceptive features, accompanied by continuing scrutiny, can also change how platforms operate. The effectiveness of the regime therefore depends on whether violations are identified consistently and corrective orders are implemented.
India’s regulatory framework already provides a basis for stronger action. The Consumer Protection (E-Commerce) Rules, 2020 require disclosure of the total price and its components in specified circumstances. The CCPA has also taken action against misleading price displays under these rules. The immediate task is to enforce existing obligations more effectively rather than assume that every problem requires another regulation.
Two changes would help. Platforms should make the full payable price, including mandatory charges, visible at the earliest practicable stage of a transaction. Consumers should also have access to a verifiable price history when sellers advertise reductions against an earlier price. This would allow shoppers to distinguish genuine discounts from offers based on inflated reference prices.
Penalties should reflect the seriousness and extent of violations, including the number of consumers affected and the economic benefit obtained. Where the law permits, turnover-linked penalties would provide stronger deterrence against repeated misconduct than modest fixed amounts.
These measures would preserve legitimate promotional activity. Retailers should remain free to offer discounts, reward regular customers and use personalised recommendations. The regulatory objective should be to ensure that advertised prices and claims about availability can withstand scrutiny.
An efficient market requires consumers to have reliable information about the choices before them. Online retailers know the pricing history of their products, the actual availability of stock and the charges that will eventually appear at checkout. Consumers often see only the information selected for display. Greater transparency would make retailers compete more directly on the value of their offers.
For consumers, meanwhile, the most useful question during a sale remains whether a product would have been worth buying without the countdown or the struck-through price. A discount can reduce the cost of a purchase. It cannot make an unnecessary purchase a saving.
Sirjan Arneja is a doctoral scholar at IIM Amritsar. Arun Kumar Bairwa is Assistant Professor at IIM Amritsar. Jadhav Chakradhar is Assistant Professor at CESS Hyderabad.