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The following can be the reasons for cheap prices:
1) They provide a platform where sellers meet the buyers directly, hence the cost of middleman is eliminated
2) They do not have any retail channel as per say hence they save cost on shop rent, electricity cost, etc, the expenses entailed with abrick and mortar store
3) They usually tie up with courier companies and crack an excellent deal for each delivery per month
4) They start their own delivery company like Flipkart in India did, hence saving on the delivery charges
Most of them doesn't have tax and most of them were stored in a place wherein you don't need to pay for storing it.
Cost effectiveness is the secret.
I agree with the experts answers. Thank you.
In Online selling the companies almost eliminates the cost incurred on Storage, Margins of Middlemen (Distributor, Wholesaler and Retailers) which is a handsome amount. This would then passed over to the Customers. This is how the heavy discounts are offered to end consumers even earning the profits on sale of their Products.
I agree with the answer of "Ruchira Shah", the idea of on-line selling is that, eliminating any extra charges that are not related to the product/service provided, such as, rent, middlemen, etc. Therefore, offering the best competitive prices in market.
