Is Online Shopping Cheaper Than Buying In Stores?

Many consumers think that prices from online shopping are different to those in physical stores. Read on to find out if online shopping is really cheaper than buying in stores.

Online shopping is another way to look for products that are from previous seasons or for clearance. Housing these types of products in central warehouses allows retailers to sell them longer. They can let these products sit unsold without destroying the profit margin. This practice can then result in big savings for customers who do not need to buy the newly released products.

Advantages of online shopping

Websites that compare prices allow online shoppers to make smarter choices. They are able to easily compare the prices of a product at different stores using one website. Shoppers not only get information on pricing, but they also get reviews on products and sites to help them decide what and where to buy online.

Many online stores are waiving their shipping costs or sales tax charges in order to attract shoppers to make an online purchase. Reputable websites also offer toll-free numbers for those customers who do not want to post their credit card numbers or any personal information online.

Findings in Australia

Alberto Cavallo, an economist at the Massachusetts Institute of Technology (MIT), has taken upon himself an international comparison of the online and in store prices charged by big retailers. He collected the price tags on more than 24,000 products online and physical stores of various retailers in 10 countries, including Australia. And… 72% of the prices were similar. 

Clothing and electronics had the highest percentage of similar prices online and offline. On the other end, office supplies have the lowest share of similarity in prices online and offline. 

Prof. Cavallo compared online and in-store prices in Australia, finding that 74% of prices were similar. However, if there’s a notable difference, big retailers tend to charge higher prices online. Retailers might expect online shoppers to be willing to pay more, or it can be for a delivery cost. 

Australia’s proportion is a little higher than the US with 69% similarity, but lower than in the UK and Canada, both with 91% similarity. 

What do the findings mean for regular shoppers?

Because there is not much difference between online and store prices, the shoppers’ decisions when online shopping should focus more on convenience, the variety of products for sale, and speed of purchase, rather than actual price. 

As the number of online shoppers continues to rise, it encourages big retailers to have a single price for each product across their own stores and outlets, which benefits consumers regardless of their location. This is attributed to the way customers now have access to information on the prices being charged for products in other locations.

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