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eCommerceBuying Products Online May Prove To Yield Only Temporary Savings

Buying Products Online May Prove To Yield Only Temporary Savings

Direct-to-Consumer Shopping: Saving Money?

Online shopping can make life a lot easier for consumers. There is greater price transparency, which eases price comparison, and coupons abound that can help save one even more money.

Lastly, it’s very convenient to have products shipped to one’s doorstep rather than driving to a shopping mall.

But, there is perhaps an overlooked drawback to this convenience in that e-commerce brings significant economic disruption that consumers may have to pay for in ways not immediately apparent at the time of purchase.

The Other Side Of E-commerce

The latest example of how online shopping is revolutionizing consumer behavior, although not available yet, is P&G’s eStore, which will offer a flat-rate cost of shipping on products they currently offer in grocery stores and other brick-and-mortar outfits. Thus, instead of driving to the store to buy laundry detergent, shoppers can buy from home without paying a bundle on shipping.

It makes buying staples crazy convenient, but saving money today might mean one has to pay for it in terms of added social costs down the road due to the loss of employment DTC causes. P&G will essentially be competing with the very retailers to which it is distributing.

Of note, they certainly aren’t being singled out, they are just one of more well-known brands to initiate such an undertaking. It will be interesting to see if P&G will honor coupons on their eStore website, or only in the grocery store. And, it will also be interesting to see how the prices compare to what is offered at the brick and mortal location.

The E-commerce Revolution Already Seen

The explosion of e-commerce has definitely equalized the playing field for consumers, which can’t be argued, however, it also has contributed to the decimation of businesses and industries. The traditional, in-store video rental business as an example is getting its lunch eaten by cable on-demand, Hulu, Redbox, Netflix, and others.

While moving more to an online distribution model for movies makes delivery more efficient and expeditious, it also means that hundreds if not thousands of more employees will be out of work in the future. Those consumers won’t be spending money on non-essentials any time soon until they land another job.

The Benefits of DTC

But, the DTC model can be very positive, too, other than bringing greater price transparency and convenience to consumers. By squeezing out waste in a product or service distribution model, ideally, companies can pass on those savings to consumers and allocate more money for research and development and investment, which cascades to other demands for workers.

The Future

Expect to see more DTC activities continue into the future. The potential for eliminating inefficiency in the economy is certainly there, though it won’t be pleasant to see abandoned storefronts in the wake of all the disruption.

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