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  • 02.06.17

Online Shopping Prices Are Actually Basically The Same As In-Store Prices

Unless you’re buying drugs. Then you’re going to pay for needing them right away.

Online Shopping Prices Are Actually Basically The Same As In-Store Prices
[Illustrations: vasabii/iStock]

The benefits of e-commerce, it is usually said, are two-fold: One, your purchases are delivered directly to your door, and two, because of the lower overhead, the prices are cheaper. But checking out the goods in a bricks and mortar store, then scanning the barcode and ordering from Amazon–as some deal-obsessed people do–might not actually be the cheapest strategy, says a new study from MIT. After dispatching 323 researchers to compare prices across 10 countries, the authors found that there isn’t much price benefit to ordering online: online prices usually match in-store prices.

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The study compared 38,000 prices for 24,000 products, between December 2014 and March 2016. Overall, prices matched 72% of the time. In the U.S., that figure was slightly lower, at 69%, and in the U.K. it rose to 91%.

That’s prices as a whole. If you look at individual product categories, the differences change. For instance, in electronics, where you would expect people to do a lot of research and comparison shopping before buying, prices are the same around 92% of the time. Clothing is 92%, but drugs are only priced the same online 38% of the time.

This, says study author and professor of information technology and management Alberto Cavallo, is down to exploiting desperation–also known as supply and demand. “[Y]ou go to a drugstore. There we found that in-store prices are higher. It makes sense. When you go to CVS or Walgreens, you need the product immediately, and you are willing to pay for that convenience.”

Office supplies were even further off, with online and offline prices only matching up 25% of the time, although Cavallo has no theory as to why this might be. Possibly it’s down to offices having accounts set up with suppliers, so they always buy from the same place no matter the price, with a corresponding lack of comparison shopping.

These numbers seem surprising. After all, the common belief is that online shopping is cheaper, because online retailers don’t need to maintain storefronts built on expensive downtown real estate. But that argument only holds if prices have anything to do with the costs of doing business, which seems to be something of an old-fashioned idea in today’s super-sophisticated retail environment.

Prices, then, are pitched to make us feel comfortable about buying. If you’re just as likely to buy online as in a store, have done a little research, and aren’t desperate to have the item ASAP, then you can shop around. And in this scenario, online retailers charging the same prices as stores still win on convenience. Main street stores, on the other hand, have an incentive to make their own prices match the online prices so their customers don’t feel like they’re being ripped off. So from either side, equal pricing is advantageous.

So with prices taken out of the equation, you can focus on other factors, like convenience, or the ease with which you can return good bought online, or your desire to support local businesses. Unless, of course, you’re buying drugs or office supplies, in which case you’re on your own.

About the author

Previously found writing at Wired.com, Cult of Mac and Straight No filter.

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