Question

Pick a shopping product like an appliance or clothing. Compare the price of the good at a store and if you purchase it online. How much difference is there? Why?

Answer 1

Let's take an example of washing machine.

Online price-$1,100

Offline price-$1150

The online products are cheaper than offline products.

Some of the reasons of this difference are:-

1) No physical store required:-There is no need to open any physical outlet in the case of online shopping by the seller and hence saving of rent, electricity, furniture,fixtures etc which ultimately reduces the cost.

2) No middlemen:- Goods are directly purchased from the manufacturer by the seller and no middlemen is involved and hence saving of his margin.

3) Easy price comparability:- Comparison of price is also easier by the customer and hence no seller can charge excessive price from the customer for the same product.

4) Promos and discounts:- usually online giants keeps on giving regular discounts to attract more and more customer and increasing their gross merchandise value.

5) 24*7 availability- the online stores are open 24*7 and more convenient to people as they don't need to travel outside to purchase something.

6) No need of salesman- There is no physical store and hence no need of salesman to sell the product which ultimately saves the salary for the same and pass on the benefit to the customers and hence helps in lowering the prices of online products.