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Hidden Costs of eCommerce and How to Manage Them

Albert by Albert
October 17, 2022
in Business
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Online shopping has been steadily growing in recent years and is showing no signs of slowing down. The accessibility of online shopping has made it possible for people across the globe to easily buy and sell products. However, there is an unfortunate downside to online shopping. It can be easier for online retailers to hide additional fees in the checkout process. In order to find the best deals online, you’ll need to know what these hidden costs are and how to avoid them. But first, let’s touch on some of the important characteristics of online shopping and how they impact the shopping process.

Characteristics of Online Shopping

  • Convenient

One of the primary reasons online shopping is so popular is the level of convenience it offers. Compared to brick and mortar stores, online shopping makes it much easier to find and purchase the needed products. There’s no need to navigate store aisles with online shopping. Simply search for the product you need and select a product from a list. Online shopping also makes it easier to view products from multiple stores so you can find the best deal.

  • Wide Range of Products

Another essential characteristic of online shopping is the number of products available to consumers. Physical storefronts have a limited amount of storage because products have to be aligned on shelves for the customers. In contrast, online retailers can have a small warehouse stuffed with products ready to be sent to buyers. This allows online retailers to hold a larger and more diverse collection of products in a smaller location.

Online shopping has also grown to offer more than physical products for consumers. There are all sorts of businesses that operate online that focus on everything from leadership development consulting to AI implementation. Online shopping is the ideal starting point if you’re in need of a particular product or a niche service.

Some of the Most Common Hidden Costs

  • Markups

A markup is an increase in the price of a product to offset an increase in the cost it takes to offer that product to consumers. This may sound complicated, but the logic is pretty straightforward. The more it costs a company to produce and sell a product, the more it’ll charge for that product. Markups can occur for a number of reasons ranging from a low volume of raw materials to incredibly high demand. However, markups are most common in online shopping when a company is offering its product through a third-party vendor. For example, many products are more expensive through Amazon than they are on the company’s own website. This is because most companies mark up the price of their products on Amazon to offset the cost of maintaining an Amazon seller account.

  • “Free” Shipping

Online shoppers love free shipping. In fact, some studies have shown that online shoppers are willing to pay more for an identical product if it includes free shipping. Once online retailers noticed this, they began increasing the price of their products to offset the cost of shipping. This is why it is referred to as “free” shipping. Consumers are still paying the price of shipping, the fees have just been rearranged.

  • Extra Charges

There can also be additional charges that are specific to online shopping. Depending on where a product is being shipped from, the shopper might be responsible for taxes, handling fees, or international transaction fees. Products that are bought internationally might also be priced in the home currency of the company. Remember to be aware of the conversion rate when purchasing products from international companies. There is a chance that the conversion rate isn’t in your favor and the product is actually more expensive than you expect.

Strategies to Avoid Them

  • Compare Prices

It may sound like an obvious step, but the importance of comparing prices cannot be understated. As we previously mentioned, one of the strengths of online shopping is its convenience. Use that convenience to your advantage and compare products from a few different retailers. Once you’ve settled on a specific company you should still take a moment to browse a few different vendors. This will ensure that you get your product at the absolute best price.

  • Pay Attention to Shipping Costs

We’ve already touched on “free” shipping, but that isn’t the only pitfall awaiting online shoppers. Expedited shipping options can also cause online shoppers to pay more than they expect for a product. Take a moment to decide if a faster delivery service is necessary for this order. If you decide that you can be patient enough for a longer delivery you may be able to save a few bucks. Some online retailers have an expedited service selected by default, so be sure to check your selected shipping option.

  • Be Wary of Impulse Purchases

Though the convenience of online shopping is mostly considered a benefit, it can have its downsides. One of the downsides of it being so simple to shop online is that it can become too easy to make purchases we don’t need. Lightning deals and limited offers only make this issue worse. Be diligent when shopping online and ask yourself if you truly need everything in your shopping cart.

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