Online booksellers act as both a service provider & product retailer. The service end of business includes book reviews, book recommendations, one-click purchasing, a smooth purchasing interface, great selection, etc. while the product end of the business is purely the pricing of the product since books are commodity with no product differentiation. The fundamental advantage of online book selling comes on the supply side, through cost savings in inventory and in all the other costs of operating physical stores. Due to the information-rich nature of books, the information provided about these products has a great value to the majority of customers. The current ability of online booksellers to provide published reviews, reviews of fellow readers, bestseller lists, author recommendations, customized recommendation, etc. makes this form of business very valuable to the consumers. In addition to that, the future ability of online booksellers to deliver e-books to be read on laptop, palmtop, etc, to deliver out-of-print (or first run) books printable on demand at customers nearest point, to allow authors to self-publish, and to use consumers purchasing information to target advertisers provides competitive advantage against traditional booksellers. .
In brick-and-mortar operations, placing items next to each other to increase cross-selling usually isn't physically possible. Changing shelf placement upsets other product affinities and store space is limited and inflexible. With online retailing, a virtual store offers endless possibilities for tailoring "shelf space" for each shopper. However, many a time the economies of selling physical products online suggest that in many areas, strong brick-and-mortar retailers may have an advantage, because of their existing resources and expertise. In case of grocery industry, a significant proportion of groceries involve perishables such as produce, or items that require freezing or refrigeration.
