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How much money can you save when shopping online compared to physical stores? Image Credit: Shutterstock

Dubai: When shopping and spending your hard-earned money online, there have constantly been debates as to whether it truly is cost-effective – given that buyers are mainly enticed by the discounts.

The answer is often - yes, it is at most times easier on the pocket when buying products online, but one needs to keep in mind that it isn’t always the case and that there are multiple caveats to this. And if it is indeed cheaper, how do online-focused retailers make more money than brick-and-mortar stores?

Shopping online can save you money, especially when you couple it with online savings codes, combo saving deals and free shipping offers. Even before the COVID-19 pandemic, online shopping was growing at an incredible pace in several countries.

While there are benefits to online shopping, it’s worth looking at some of the consequences it has as, like many things, it comes with both positives and negatives.

Long-running race with physical stores

Although competition exists between online and physical retailers, with the retail dominance of the likes of Amazon and other related industry peers, people are unlikely to abandon brick-and-mortar stores in favour of online shopping, as research has continued to prove that the experience simply isn’t the same.

However, the online world has several advantages that give it an edge in many areas.

From the amount of choice and massive inventories that’s impossible for physical stores, to the convenience of the lack of opening or closing hours, the ability to swiftly find the best price for what you want, and the easy access to customer reviews – online shopping is still leading the race.

From a business owner’s perspective, while you may think that doing business online is inherently cheaper, mostly due to the lack of need for a storefront and its associated costs, there are many ways in which it can quickly become financially straining to do business online.

Rising cost related to ‘returned goods’

Industry experts often debate about the question of dealing with returns as the costs associated with restocking a product that has already been opened lead many firms to throw away the items that are returned to them, and with billions of items being returned every year, costs pile up.

Even if items are later resold, the returns are part of the costs associated with shipping. While the initial mailing costs are usually covered directly by the customer or through some other scheme such as minimum orders, analysts opine returns are now increasingly expected to be paid for by the merchant.

Surveys frequently indicate that nearly half of all customers report they would not order if they had to pay return fees.

One research analytics group had found that, for an item sold for Dh89, returns would cost Dh11 at a 20 per cent return rate, or Dh20 at a 35 per cent return rate, which is a typical rate for clothing purchased online.

‘Showrooming’ trend continues to rise

Research also indicates that a currently popular trend among shoppers is to go to a brick-and-mortar store to check out and compare the features of a product and then buy it online at a lower price.

Multiple mobile applications are now available to shoppers to check competitors' prices both online and in-store. Some customers ask the brick-and-mortar sales associate if the store is willing to match prices seen online.

Although the global trend of ‘showrooming’ can frustrate brick-and-mortar operations, surveys show it has forced many stores to improve their services.

Retail studies also show that globally multiple outlets have now launched the ‘in-store’ feature on their digital shopping application that allows shoppers in the stores to scan barcodes, read customer reviews and find out about the latest discounts that might lower a product's price.

However, as such mobile applications do not show competitors' prices, it still makes it a step down from what can be accomplished when shopping online.

Key takeaway and shopper tips/checklist

With predominantly the online experience going to keep people enticed, online shopping is here to stay as it’s hard to ignore the benefits it brings to shoppers. However, online habits have a direct consequence on physical stores, so it’s worth taking a step back and asking whether it’s worth the costs.

Here are some popular expert tips one can use when making the most of online shopping to earn most out of your money.

Check websites, compare prices and set alerts: After deciding what you want to buy, compare prices across shopping sites and set price alerts for products you're interested in, so you can be notified when available at your desired price.

There are price comparison websites like Pricena, which show prices of items across major shopping portals and let you set alerts for product price, and with a browser extension like CouponBot you automatically get the codes on your browser.

Make the most of cashback and discount offers: Every shopping website has tie-ups for cashbacks and discounts with one or more banks, either on an ongoing basis or during special sales.

However, check the terms and conditions for minimum eligible purchase or maximum discount or cashback on offer. In case of cashback, check in how much time will it be credited, and will it be to a wallet or your card.

Some sites offer an additional discount or cashback on purchases from their mobile application. If there are multiple offers on a product, check how best they can be combined to get a better deal.

Check bank cards or wallets for offers as well: Most bank and wallet applications now flood dozens of emails, SMSes and notifications relating to special deals and offers.

These could be for product discounts and cashbacks, for purchase via their mobile application, or even use of their credit, debit card or wallet during a certain period or beyond a specific amount – regardless of which site you buy from.

As such notifications or intimations may also offer bonus reward points, set filters or labels to track such mails and ensure you don't miss out on offers.

Check for free delivery: Check if delivery is free or if there is a cost. Some sites have free and priority delivery for premium members.

Most online shopping sites are now a marketplace, so there is a lot of competition among sellers too. For all products, websites display a list of offers from other sellers. From there you can check which seller is offering the best price, free or paid shipping, and also their seller rating to indicate how reliable they are.

Check product reviews: If an offer price seems too ambitious or unrealistically steep, check reviews for that product. Reviews on the shopping site could be biased, but there are authentic ones as well.

There are other websites that publish product reviews too. Keep your budget and requirement in mind -- what works for someone else may not work for you.

Reviews may also indicate if the product shown is a previous version, hence priced lower. There are also dedicated Facebook pages and Twitter accounts that share deals. You can also ask for recommendations on social media and respondents often revert suggesting lower priced alternatives for a product.