Why Are Some Products Cheaper Online?

Online prices: different costs, not non-existent

A store finances a location, a space accessible to the public and reception time. An exclusively online seller can choose another organization: warehouse, centralized preparation or use of a logistics service provider. Depending on the products and volumes, this organization can reduce certain costs per order. It is not automatically cheaper in all cases.

The online seller must also advertise its offer, maintain its site, process payments, package, ship and respond to problems. Some costs are fixed; others progress with each order. An activity can therefore have few store expenses and a lot of acquisition or logistics expenses.

The France Num guide on creating an e-commerce site notably recalls the place of payment and delivery in the journey. For a merchant considering selling online, these steps should be factored into the calculation up front, not after the first few sales.

Volume can help, but it doesn't fall from the sky

When certain costs remain the same, spreading them over more sales reduces their unit weight. Purely fictitious example: 1,000 euros in monthly fees spread over 100 orders represents 10 euros per order; on 500 orders, they represent 2 euros. This calculation assumes that these fees do not change with volume. In reality, a level of recruitment or storage can change the equation.

Volumes can also give negotiating power with suppliers or carriers. This does not mean that all sites get the same terms. A small store launching its first catalog does not automatically benefit from the organization and prices of a large brand.

To say that the Internet makes it possible to reach a much larger market is a reasonable possibility. To say that it automatically brings thousands of times more customers is not. Between the connected population and an order, there is discovery, trust, product choice and payment. Each step can limit the result.

Advertising, commissions and returns change the margin

An order acquired through advertising must contribute to covering this advertising. An order from a marketplace may incur a commission and other fees depending on the contract. A visit from an article is not completely free either: the content requires production and updating time.

Returns are another item to look at. A returned product may require transportation, inspection, repackaging and sometimes restocking. The frequency depends on the activity and the offer. It would be misleading to use a single rate as if it applied to decoration, clothing and technical parts in the same way.

The DGCCRF presents the rules for e-commerce between professionals and consumers. This article does not provide a legal summary: its economic point is that the sale does not end with collection. Preparation, complaints and monitoring remain tasks to be financed.

A numerical example to avoid false shortcuts

Here is an educational simulation, entirely fictitious, with amounts excluding taxes to compare management positions. A product brings in 50 euros excluding taxes. Its purchase costs 25 euros, payment 1 euro, packaging 1 euro, transport borne by the seller 5 euros and advertising attributed to this order 8 euros. There are 10 euros left before fixed costs, returns and remuneration.

If advertising increases from 8 to 15 euros for the same order, this remainder drops to 3 euros. The turnover is however identical. This is why a screenshot showing a lot of orders or a high sales total is not enough to conclude that a store is making a good living.

The formula in this example is deliberately limited: sale minus purchase, payment, packaging, transport and acquisition. This is not a net profit. Real monitoring must include relevant company positions and remain consistent on taxes. The objective is to understand the mechanisms, not to provide a profitability forecast based on invented numbers.

Compare two offers up to the price actually paid

On the buyer's side, the price displayed on the product page is not always the end of the calculation. The DGCCRF recommends comparing prices including delivery. You must also read the characteristics of the offer and identify the seller: a marketplace can bring together several companies behind the same interface.

Let's take another fictitious example: an item is offered for 29 euros online with 6 euros delivery, compared to 34 euros to be collected immediately in store. The first total reaches 35 euros. If the customer orders several items, the costs may be distributed differently. The correct comparison concerns the basket and the service actually desired.

Also check that it is the same reference, the same condition and the same accessories. A refurbished product, a smaller size, or an offer without an item included elsewhere are not perfect equivalents. A price difference may be justified; it can also be real with comparable service. The reasoning must accept both possibilities.

What a local trader can do with this analysis

Trying to be the cheapest on each reference can weaken a small structure. I prefer to start with useful questions: which products make a real difference? What tips reduce hesitation? What services are appreciated? What availability makes buying local preferable in a specific situation?

This difference must be visible before the visit. An explanation of compatibility, a possible trial or a confirmed withdrawal can contribute to the choice. This doesn't turn every customer into a buyer, but it does give a concrete reason to consider the store. Our article on purchasing habits in Saint-Brieuc expands on this question.

A store can also test a small selection online rather than publishing its entire stock. Our guide to digitalization of local commerce suggests a progression. Starting with products that are easy to present and prepare helps you understand costs before expanding the business. Experimentation must be able to be stopped if it mainly adds work.

My opinion: explain the value without making the buyer feel guilty

A customer who compares is not a bad customer. He arbitrates with his means, his time and the information available. Asking them to support local commerce may make collective sense, but that does not exempt them from offering a readable offer and a reliable service.

Digital can help tell the story of what makes a store valuable and serve people further away. It can also reveal that an offer is not competitive. In both cases, better understanding the situation allows you to decide. For me, the digital transition begins with this lucidity, well before choosing a platform.

Frequently asked questions about e-commerce pricing

Is the Internet always cheaper than a store?

No. Compare the same reference, the final basket, delivery and service. Some online sellers are cheaper; others are not on the purchase you are interested in.

Does a merchant site avoid all the charges of a business?

No. The organization changes: site, acquisition, storage, preparation, transport and customer follow-up can replace or supplement the expenses of a physical store.

Does more sales mean more profit?

Not necessarily. If each order contributes too little to costs or increases them excessively, volume can make the problem worse. You must follow the contribution per order and the structural costs.

Should a store align all its prices on the major platforms?

No general rule justifies it. You need to know your costs, your customers and your service differences. A precise comparison is better than a systematic alignment which would destroy its margin.