[Editor's Note: Yes, there are price advantages to shopping online. But there are also significant advantages to maintaining strong and healthy local economies that keep jobs in your community, contribute to local charities, and make it fun to go downtown. These merchants are hurting and need your support. If it's only a few bucks difference, think long-term and buy local. Save your online purchasing for the really large discounts. And if you're a local business owner, join forces with others to bring this message to your local area (my book tells how).
—Shel Horowitz, Editor, Frugal and Fashionable Living and Author, Guerrilla Marketing Goes Green.]
There was a day when the concept of ecommerce and Internet retail seemed questionable. In the late ‘90s, everything from groceries to dog food had its own website. Then within less than a year, it all disappeared. Had online retail—the wave of the future—only been an illusion?
And then it all came back. Online retail didn’t happen all at once, but little by little, people started buying their merchandise, such as toner cartridges, online. There are different reasons for this trend, ranging from smartphones to shipping companies, but the most basic one is very simple—price. So why are some things so much cheaper to buy through the internet?
One of the main reasons for cheaper Internet prices is that ecommerce sites require very little extra investment. When you walk into a brick and mortar retailer, you’re surrounded by extra costs. Either someone invested the money to build or buy the store, or they’re paying rent. Those large spacious rooms full of merchandise have to be lit, warmed, cooled, and cleaned. Of course, the biggest cost by far is all the staffing—people stocking shelves, setting prices, watching for shoplifters, and helping you check out. Every worker you see represents a salary and more extra costs. Those expenses are shared across every item in the store, and added to what you pay when you shop there.
Internet retailers have costs too, but the cost of building a website and maintaining an inventory hardly compares with the costs of traditional retail. These savings translate into savings for you, because of the next factor.
In a free market, competition drives prices down since buyers want to shop wherever they can get the best price. In the past shoppers, paid attention to broad trends, like which store generally had the best price on produce. No one had time to check bananas in every grocery store. Online retail has only taken this to a new level by making comparison shopping convenient and instant. Many sites do the work for you, pulling all the major online retailers together on one page, and letting you pick the best price. To survive, Internet retailers have to price very competitively.
Direct Deals with Distributors
The most significant factor that makes some products cheaper online, however, is direct relationships between ecommerce merchants and distributors. Perhaps you’ve bought something online and wondered how the company could afford to offer excellent prices with free shipping. Doesn’t it cost more to send the item across the country?
What you may not have thought of is the fact that the same merchandise would have included shipping costs if you bought it in a brick and mortar retailer. At some point, it came from the manufacturer to a distributor, and then to the place where you bought it. Online retailers are increasingly forming direct relationships with distributors, who then ship directly to your home. The retailer never has to handle the inventory. By cutting out extra steps and unnecessary intermediaries, they can price merchandise much more cheaply and save you money. These direct relationships also let them negotiate better prices and cut out waste, letting you save money on other merchandise.
This is the key to the success of online retail and the explanation for why so many people now buy things online. Direct relationships with distributors bring better prices, and therefore more customers. Expect this trend to continue for the future.
By Joel Arnold of Inkpal.com. Inkpal sells printer ink and toner cartridges online at amicable rates, and will ship directly to your home or office. They also feature articles about 3D printing— a revolutionary technology that has multiple perceived benefits across various fields.
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