Demat is a lot more cost effective from the point of view of the company, the broker and the investor. Since there are no physical shares involved, demat is free of stamp duty. That reduces the cost to the investor. Companies do not have to spend crores of rupees in the printing of physical share certificates and then reprinting certificates. The reduced paperwork is a major cost saving for the companies. With bad deliveries almost eliminated post-demat, brokers are able to put their manpower to much better use. There was a time when brokers used to have a complete department dedicated to handling bad delivery, odd lots which were all unproductive use of manpower. All that has changed.
For investors, of course, the benefits are huge from demat. It is also very economical in terms of time, costs, energy utilized, amount spends on postage have all reduced. That is the advantage. Also, there is no discount for odd lots. Whether you sell 10 shares or 1000 shares you are indifferent as long as there is illiquidity. In physical shares, the investors paid a huge price in terms of illiquidity. That is not the case any longer. With demat and online trading, there is the problem of liquidity largely reduced. That is a big advantage.