Dubai: The general consensus is that shopping online can save people a lot of money. However, retailers are working hard to match online and offline prices. So which avenue currently offers buyers a competitive advantage?

At one point online prices were well below retail prices, but over time the price gap between the two began to narrow, despite the cost of running a physical store being considerably more. higher than for an online store.

When dealing with a physical store, factors such as rent, electricity, payroll and fixtures can contribute to gross profit and overhead of doing business, but there is a change obvious trend where prices started to become similar to those in store.

However, as new products regularly hit the market at varying prices, even though online retailers have increased prices far more than physical stores, the increase in prices and margins often goes unnoticed.

Is shopping online always better than offline?

Most consumer products (70%) are priced the same online and offline, according to a recent Global Retail Consumer Study. However, when there is a price difference between the two, 65% of the time online channels were cheaper than offline (in-store) channels, according to the study.

The report was based on an analysis of the prices of commonly purchased consumer products in several categories, including personal care, books, electronics, entertainment, home improvement or household goods and office supplies.

Plus, with price comparison websites guaranteeing you won’t be ripped off, research continues to show that shopping online still has an edge over traditional shopping when you factor in all the costs involved.

Recent statistics also show that the two major reasons why the digital option is preferred over its counterpart is that people can easily access online stores through their devices whenever they want and the ordered products would also be delivered to their doorsteps . So, to put it in a nutshell, convenience.

What is “showrooming”?

A growing trend among shoppers is to go to a physical store to check and compare the features of a product and they buy it online at a lower price. This is called “Showrooming”. There are several apps available to shoppers to help them check competitor prices online and in-store.

For most products, online prices have fallen faster or increased more modestly and this advantage has increased in recent years.

Online prices have fallen faster than offline

For most products, online prices have fallen faster or increased more modestly and this advantage has increased in recent years. For other items, shipping can be a hassle that offsets other benefits that online retailers enjoy, such as low overhead (current or running expenses of a business).

A retail cost analysis from MIT (Massachusetts Institute of Technology) compared online and offline prices at 56 large multi-channel retailers (who made sales online and in physical stores) in 10 different countries, using an application that compared the prices of the same products.

In total, approximately 24,000 prices were analyzed. The study revealed that in 72 percent of cases the prices were the same. Indeed, one area where the chain made little difference was electronics.

In Brazil, for example, online prices are often much higher. The UK and Canada both had a 91% rate of identical online and offline prices. In Japan, however, online prices were significantly lower in 45% of cases. The United States was closest to the average, at 69%.

Why has online shopping always been cheaper than offline shopping?

• Buying online consists of grouping together several online stores in order to find the best price for the item you want to buy, this is how you get the product at a more reasonable price than in the store.
• One of the biggest advantages of buying online is that you can buy direct from the manufacturer and cut out the middleman. Thus, enjoy the product at a very low cost.
• Online shopping offers various discounts, coupons, offers, etc. from time to time. So, you just need to know when and where to look for the product online and save a lot of money!
• E-commerce websites do not need to have their own stores so no infrastructure cost is involved for them and hence the prices are comparatively lower than offline stores.
• In addition, online shopping websites directly import goods from manufacturers and save on freight and commission charged by intermediaries, unlike traditional retail.
• Finally, advertising and marketing have gone digital, which means higher returns for less investment. Thus, the products are cheaper.

The real hidden costs of shopping online

When you first see the product on a portal, it usually looks cheaper. But when you go to checkout, the additional charges such as shipping cost and packaging cost are added. These charges will make the product expensive vis-à-vis the local store.

Some portals offer free shipping if you buy more than a certain amount. Sometimes, just to qualify for free shipping, you end up buying more than you need. If purchased offline, you can receive the product right away. But this does not happen in online shopping.

Even though it barely takes 10-15 minutes to buy the product online, by the time it reaches you, it will take more than 4-5 days. During big sales, e-commerce portals can take too long to deliver the product.

There is an option to return the product, if you don’t like it. But again, the return policy differs from one to another. In the case of some online shopping portals, customers have to bear the cost of returning the product. If you return the product, you will not be paid the shipping costs you paid earlier.

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Even though it barely takes 10-15 minutes to buy the product online, by the time it reaches you, it will take more than 4-5 days.

Online and offline shopping is becoming highly interconnected

Digital shopping continues to grow, but it’s no longer a competition between online and offline. Today, many retailers find that half of their online sales are funded by their stores.

Studies show that while many consumers who have downloaded a retailer’s app use it for online shopping, others use it to get a coupon or discount offer that can be used in the physical store.

An example of how online and offline shopping are now connected

A clothing brand sells its products through its website, app, Instagram and Facebook stores, third-party websites, and physical stores.

A customer approaches the brand on their website and makes an online purchase, but wants it delivered as quickly as possible.

An ideal omnichannel experience (different shopping methods available to consumers such as online, in a physical store or by phone) allows the customer to benefit from flexible delivery options such as online purchase, in-store pickup or same day delivery.

So while the trend of online shopping continues to grow, that doesn’t mean shopping in retail stores is dead. The truth is that a large number of consumers buy both online and offline.

Here’s another example of interdependence: “Black Friday” is primarily a retail event, but shares its sales with its online counterpart, Cyber ​​Monday, a 24-hour online shopping event.

Interestingly, more than 80% of retail sales are still expected to occur in physical stores in the coming year globally, according to several statistics.

Online or offline store: which one is right for you?

As for the question – ‘which is the best option for you?’ The answer is both. There is no better option as you can go online to complete your offline business. It is also true that online sales are increasing and account for 18% of retail sales worldwide.

However, this figure also means that four out of five purchases still take place offline. The truth is, you don’t have to choose at all as there has been a recent trend of traditional retailers opening e-commerce stores and online stores investing in physical locations.

The lines between online and offline retail are beginning to blur, with studies showing that around 85% of consumers want a unified experience across both, and there are currently many businesses offering digital interactions with customers in store.

According to a study by US-based McKinsey Research and Harvard Business Review, omnichannel retail customers spent an average of 4% more on each in-store purchase occasion, and 10% more online than single-channel customers.