There is a higher probability of finding better prices on the internet than in shopping malls. Many internet companies operate as online retailers only which means they don’t have to pay any intermediaries such as distributors and they don’t have to hire sales people. Thus, they can pass some of the savings to the customers by offering reduced prices. Internet also enables the customers to do price comparisons in an instant, thus, they can buy from the online retailer that offers the best prices. Internet companies are aware of this thus, they price their inventory competitively. Moreover, companies get bigger audience of their products online so they often put clearance products on sale and offer other deals to clear out inventory faster. Moreover, most customers are also able to save on taxes because taxes are applicable only if the online retailer operates in the same state as the customer.
Shopping mall retailers have higher costs because not only they have to invest in physical property but they also have to hire sales people and managerial staff. Their audience is only limited to the number of visitors in the shopping mall at any time. Thus, they are forced to generate higher sales per customers which mean higher prices on the average. It’s also more expensive for the visitors to compare prices