Why aren't office supplies cheaper online?

In a recent roundup of research on consumer prices online and in-store, Charlie Sorrel identifies certain industries that have bucked the trend of everything being cheaper online. Data from MIT researcher Alberto Cavallo shows that while Amazon is still the most affordable option for most shopping lists, office and school supplies show far less difference in price between online and offline ordering than all the other categories surveyed. It was also equally likely in this industry that prices would be higher online than lower, refuting the conventional wisdom that ecommerce always wins on price.

Another recent study confirms that it’s worth leaving the home or office to buy office or school supplies. Anthem Marketing Solutions reports that the average cost of purchasing a typical list of school supplies in a store is 41 percent cheaper than buying them online. Of the 12 categories in Anthem’s study, only office/school supplies showed an offline price advantage.

There are few solid theories as to why better deals for office and school supplies aren’t available online. One possibility is that offices already have accounts set up with suppliers from which they continue to buy without regular comparison shopping. There’s also some evidence that bulk stores, such as Costco and Sam’s Club, are the real emerging competition to traditional office suppliers like Staples and Office Depot, rather than the internet. Bulk stores typically offer their best deals in-store only, and online bulk discount marketplaces have yet to catch up on price and selection. Shipping costs are also a particular challenge for online bulk shopping, making it difficult to compete with physical stores. Putting these facts together, it may be that the typical office buys from a regular supplier for convenience, and supplements when needed with bulk supplies bought at the local discount outlet. The advent of demand aggregators like Jet in the online bulk shopping space may help bridge the gap over time if they are able to compete on both price and consumer awareness.

Regarding school supplies, one possibility is that schools and teachers may be heavily restricting what students can buy, driving up the cost of an online purchase. Online shoppers often hunt for the best deal and are willing to adjust their preferences if it can save them a few dollars. They might opt for a different color notebook if its priced better, or buy the pens with the best bulk price instead of the ones that they enjoy writing with the most. Online shopping is built around the discovery process, where the shopper’s initial targeted product may change as less expensive, better reviewed, or more quickly available alternatives emerge. By reducing elasticity in what students are able to buy, schools and teachers may be preventing students from taking full advantage of online discounts.

It’s still unclear why online options haven’t caught up to these market limitations and helped offices and schools get better deals. The market seems to be one of sticky preferences and old habits dying hard, and perhaps won’t change overnight. Given the size of this market, we expect that ecommerce will find a way to win by offering a range of new initiatives that better understand and capture this opportunity.

Jack Lowinger is a social researcher with a Ph.D. from Johns Hopkins University and founder of the online social shopping platform Cartonomy.