E-commerce as a stockpiling technology: Implications for consumer savings

- The physical cost of carrying the goods bought limits consumers' ability to stockpile.
- Such cost is not present in e-commerce since goods are home delivered.
- I show that customers stockpile more on discounted and bulk items on the internet.
- This implies sizeable savings for consumers as bulk and discounted items are cheaper.

Shopping on the Internet spares customers the discomfort of carrying around heavy and bulky baskets of goods, since the service usually includes home delivery. This makes e-commerce a technology well suited to helping consumers to buy in bulk or to stockpile items on discount. I use grocery scanner data provided by a supermarket chain selling both online and through traditional stores to show that the introduction of e-commerce leads to an increase in bulk purchase and stockpiling behavior by customers. Since bulk and discounted items are sold at a lower price per unit, my findings highlight a new dimension in which online shopping can be beneficial to consumers. According to my calculations, the reduction in the cost of stockpiling triggered by the introduction of electronic commerce generates significant savings.