How do companies offer Free shipping

[Nama Ensou]

Originally Posted by mc1

...selling art prints on ebay, where I had to separately wrap, stamp, mail, and keep the customer happy (even though I got a bulk discount on the packaging, and a mailing discount, and only mailed once a week)...

Sounds like you're on the side of no-free-shipping then? I'm not even sure how this scenario of yours figures into this whole thread.

[mc1]

Originally Posted by Nama Ensou

Sounds like you're on the side of no-free-shipping then? I'm not even sure how this scenario of yours figures into this whole thread.

No, not at all. However, I don't think economies of scale can completely account for the difference in pricing. It's just a factor, and not the answer to every pricing question.

Sure, Guitar Center may ship hundreds of guitars and other products every day, and there is an economy for the shipper to pick those up at one warehouse all at once. But after that, those parcels are pretty much in the same stream as any other parcel.

So I just can't see how economy of scale can account for the fact that Guitar Center (or in Canada a company like Long and McQuade) can ship me a $99 guitar for free, but if I need to ship it the same distance it will cost me over $100.

[Nama Ensou]

Originally Posted by mc1

No, not at all. However, I don't think economies of scale can completely account for the difference in pricing. It's just a factor, and not the answer to every pricing question.

Sure, Guitar Center may ship hundreds of guitars and other products every day, and there is an economy for the shipper to pick those up at one warehouse all at once. But after that, those parcels are pretty much in the same stream as any other parcel.

So I just can't see how economy of scale can account for the fact that Guitar Center (or in Canada a company like Long and McQuade) can ship me a $99 guitar for free, but if I need to ship it the same distance it will cost me over $100.

I'd sure like to hear from someone in the shipping business, but then I still believe that where they get the free shipping capability from is only partially found in their greater shipment volumes, with the rest of it being covered by their ability to buy bulk, for less than others and hide the shipping cost within the additional profit ceiling that becomes available as a result.

So, if I'm right, you're charged $100 because you're exactly the kind of customer where the opportunity lies to draw a profit margin from, and the bulk shippers get pricing not available to one-time shippers.

[mc1]

Originally Posted by Nama Ensou

So, if I'm right, you're charged $100 because you're exactly the kind of customer where the opportunity lies to draw a profit margin from, and the bulk shippers get pricing not available to one-time shippers.

Yes, I agree. I wish I would have written it as my opening statement.

I have no problem not getting the same rate as a huge shipper, but I don't think the system is fair, and that annoys me.

[rllink]

Originally Posted by mc1

.

The conclusion I have come to, is that the average Joe shipper is very much subsidizing the big companies shipping costs. They are getting a deal that is ridiculously low, while we pay the bill.

I finally get this and you are right, we the regular guys are making up the difference. But that's the way everything works, not just shipping prices. I have a similar discussion with my sister about how people with money can invest it and get more money and that brings in even more money that they can invest and they just keep getting richer. People like her who live paycheck to paycheck can't do that and somehow that just seems discriminatory to her. I guess that is life.

[godfreydaniel]

This article is from last year, but still worth reading:

https://www.moneytips.com/how-does-a...-free-shipping

[godfreydaniel]

Originally Posted by rllink

I finally get this and you are right, we the regular guys are making up the difference. But that's the way everything works, not just shipping prices. I have a similar discussion with my sister about how people with money can invest it and get more money and that brings in even more money that they can invest and they just keep getting richer. People like her who live paycheck to paycheck can't do that and somehow that just seems discriminatory to her. I guess that is life.

We “regular guys” aren’t subsidizing Amazon when we pay higher shipping rates for packages we send. Amazon alone ships over 2.5 billion packages a year. Read the article I linked to above.

[Nama Ensou]

Originally Posted by rllink

...people with money can invest it and get more money and that brings in even more money that they can invest and they just keep getting richer. People like her who live paycheck to paycheck can't do that and somehow that just seems discriminatory to her.

People with money get to risk it, and normal people can do that as well. The ones who do well with it are the ones who learn how to make calculated risks, and believe me, they lose a lot at times too. What's truly discriminatory is to pretend that people who don't manage their money don't have any opportunities. Many who became wealthy started out with nothing. Let's get back on track with the shipping charges.

[Nama Ensou]

Originally Posted by mc1

I have no problem not getting the same rate as a huge shipper, but I don't think the system is fair, and that annoys me.

It seems pretty fair to me. I wish it could be cheaper for guys like us, but then someone else would have to subsidize our individual shipments, which would eventually come out of our own pockets, either in higher prices or taxes.
I'm no happier than you are about how much it costs to ship items, but this is really a modern concern only understood by people living with such things even being available in the first place.

[rllink]

Originally Posted by Nama Ensou

People with money get to risk it, and normal people can do that as well. The ones who do well with it are the ones who learn how to make calculated risks, and believe me, they lose a lot at times too. What's truly discriminatory is to pretend that people who don't manage their money don't have any opportunities. Many who became wealthy started out with nothing. Let's get back on track with the shipping charges.

Sorry for going off track if that annoyed you, and thanks for the lecture on finances, but it would be better spent on my sister, not me.

[mc1]

Originally Posted by godfreydaniel

We “regular guys” aren’t subsidizing Amazon when we pay higher shipping rates for packages we send. Amazon alone ships over 2.5 billion packages a year. Read the article I linked to above.

I read the article and thought it was interesting. However, I don't think it completely answers the question of how Amazon can offer free shipping. As it states in the article:

One of the main mechanisms that makes free shipping feasible is that merchants are paying fees on the back end that you do not see as a consumer.

This certainly implies it isn't the only mechanism, or even the sole main mechanism. It's just another part of the whole equation.

And there are many more companies than Amazon that offer free shipping. Amazon is a special case. Interesting article, though.

[Nama Ensou]

Originally Posted by rllink

Sorry for going off track if that annoyed you, and thanks for the lecture on finances, but it would be better spent on my sister, not me.

Not at all, I really enjoyed it and hope I did your sister some good.

[Nama Ensou]

Originally Posted by mc1

I read the article and thought it was interesting. However, I don't think it completely answers the question of how Amazon can offer free shipping.

One of the keys to the kingdom so to speak is bulk pricing, to where they get items for enough less that they can still turn a profit, even eating the price of shipping.