Free Shipping.....How do they do that!

[imwjl]

Originally Posted by GHS

Cant say for sure because I cant prove it but I would say the products we buy are inflated by 300-400 percent on average. So if a 30lb. bag of food costs 30 dollars in the store chances are the store pays about 3-5 dollars for the bag. No other way they could stay in business if the mark up was not in that zone. shipping of course is negotiated on a massive scale we cannot come near.

Wow would the the stores I work for love that fantasy margin. At best some items that have a lot of shrink (never get sold, have to be partially or all disposed of) or have more labor get 20%. A competitive name brand item is often sold 3-10% markup.

We have to use a few big distributors with big commitments to one to help costs and freight and that still means it costs $ hundreds for each semi that gets to the dock.

A retailer I know with a mix online sales in their brick and mortar operation sells a lot via their eBay and Amazon stores. When the small packages go out it is a little less than I'd pay but there is a noticeable cost with each package. They say they can pay that twice if it is sending items to freight hubs that eventually get sold via Amazon prime.

Freight has always been a big part of our economy. Now it is FedEx, UPS, USPS and other players with fleets in residential neighborhoods and still highways full of big trucks.

[GaryJ]

So, here's a perfect example of what I mean. I've an old tool chest I was thinking of selling on ebay. Weighs 36 pounds.....a little more than a large bag of dog food... and the cheapest shipping coast to coast was $88.00. Twice what I pay for a bag of dog food delivered from Chewy!! Tough to sell anything at those kinds of cost.

[Earl49]

Gary, I can top that. Back when I was home brewing an old friend wanted to sample one of my batches. It cost $29 to ship a six pack via UPS. And the cost of shipping guitars has gotten way out of hand lately, especially if you break the magic 108" dimension.

[guitar george]

A write-off is a deduction from income for tax purposes. The write-off only saves the tax on the amount written off.

For example, if a company writes off (deducts) $10,000.00 in shipping costs as an expense and their income tax rate is 25%, they reduce their taxes by $2,500.00. They still had to pay $7,500.00 for shipping costs.

[Cypress Knee]

Originally Posted by guitar george

A write-off is a deduction from income for tax purposes. The write-off only saves the tax on the amount written off.

For example, if a company writes off (deducts) $10,000.00 in shipping costs as an expense and their income tax rate is 25%, they reduce their taxes by $2,500.00. They still had to pay $7,500.00 for shipping costs.

Hi George,

There is a huge difference between people who work for a W-2 form to file their taxes, and people who file their taxes based on 1099's and Schedule C information.

Basically there are two different tax laws, and W-2 taxpayers will never understand Schedule C/1099 tax laws because they don't live that life.

There are a lot of people out there who do not understand the difference between a write-off and a refund. I've been a W-2, 1099, and Schedule C taxpayer, and will take the refund over the write-off everytime. However, there is much more opportunity for write-offs for 1099/C filers because they take a much different set of risks every day.

CK

[Mr. Jelly]

Don't even get me started on tax avoidance. I know people that have done this. Instead of paying taxes they build a factory with that money. Then they let the business end of the factory go bankrupt. In the end they own the factory and stiff the contractors. It's horrid.

[chistrummer]

Originally Posted by GaryJ

So I've sold some stuff on ebay recently and shipping costs are just crazy. So I wonder, how do these big companies do the free shipping thing and still make money? I know they get a better rate than any individual does, but for instance I can order a 30 pound bag of dog food from Chewy for about what I pay in the store and get it the next day.....delivered. But if I went to ship that same bag of dog food it would cost me more to ship it than I pay Chewy for the dog food and shipping.
Are we as individuals subsidizing these big companies with the high prices we pay to ship stuff? Inquiring minds want to know!

It's covered by the ever shrinking margins US retailers are realizing. I guess in a way the lower wages being paid thanks to those lower margins does mean that some of us at least are subsidizing the free shipping.

[Humbuster]

Nothing in life is free.

Someone always pays.

[Standicz]

Many Aliexpress sellers charge no shipping pretty much worldwide. So if it works across the globe, why wouldn't it locally? Except it doesn't. If I order the same thing from the next city in europe I pay 3€, from next state about 15€ which is often few times more than the item itself. And it does not even matter if it is an allen key or a refigerator, the fee is allmost always the same! I don't think there is any logic to shipping.