The Hidden Cost Of Free Shipping
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- Опубликовано: 16 июн 2024
- FedEx, UPS and Amazon make deliveries on behalf of retailers advertising “free” shipping. But, none of those packages are being shipped for free. There were over 131 billion parcels shipped worldwide in 2020, and parcel shipments are expected to double again in the next five years, possibly reaching 266 billion by 2026, according to Pitney Bowes.
The cost of shipping is becoming ever-increasing. Companies like Amazon, Walmart, Target and even Etsy benefit from economies of scale because they generate mass online sales. This puts them at an advantage to achieve bulk discount rates from carriers. Watch the video above to learn why free shipping is a myth, what it really costs companies to send parcels around the country and how it impacts consumer sentiment.
The big carriers such as FedEx, UPS and Amazon make lots of deliveries, and none of those packages are being shipped for “free.”
“People like free shipping because the word free is very powerful, even if people know that it’s not really free because someone is paying for it,” Kara Buntin, owner of the Etsy shop A Cake To Remember, told CNBC.
There were more than 131 billion parcels shipped worldwide in 2020, and parcel shipments are expected to double again in the next five years - possibly reaching 266 billion by 2026 - according to Pitney Bowes.
“When consumers click that ‘buy’ box, they often don’t see [the] labor that leads to a box on their doorstep,” Ellen Reese, a sociology professor at UC Riverside and co-editor of “The Cost of Free Shipping: Amazon in the Global Economy,” told CNBC.
And those shipping costs are ever-increasing.
“Anyone can offer an Amazon Prime two-day shipping. It’s just the cost that...might incur in providing that service,” Dhruv Saxena, co-founder of third-party logistics company ShipBob, told CNBC. He estimates it may cost a company anywhere from $25 to $35 for a typical two-day shipping rate.
Companies such as Amazon, Walmart, Target and even Etsy benefit from economies of scale because they generate mass online sales. This puts them at an advantage to achieve bulk discount rates, according to the U.S. Postal Service.
When CNBC asked the Postal Service for information about how much money Amazon, Walmart and Target pay the Service to ship packages, the department said no contracts exist, but “there may be possibly an agreement in place with negotiated rates to deliver packages. However, we cannot confirm nor deny an agreement exists.”
This is due to federal regulations dictating acknowledgment the existence of a specific national service agreement “would cause harm and is confidential commercial information that would not be disclosed under good business practice,” the Postal Service said.
Amazon, FedEx and UPS either declined or could not be reached for comment for this story.
“Many [small businesses] have been under pressure, shutting down and closing because they can’t compete, “Jake Alimahomed-Wilson, a sociology professor at California State University Long Beach and co-editor of “The Cost of Free Shipping: Amazon in the Global Economy,” told CNBC.
In a 2019 survey, three-quarters of independent retailers said Amazon’s dominance is a major threat to their survival, according to the Institute for Local Self-Reliance.
“You can’t really plan for how much [carriers] are going to charge or how much [packages] are going to cost when you ship them, and that makes it difficult to offer free shipping because a lot of times you end up with no profit if you’re not really careful,” Buntin said.
Clarification (April 5, 2021): At 11:03 we state that "In absolute terms, Amazon is the largest emitter of greenhouse gases, with total emissions measuring over 60 million metric tonnes of CO2 equivalents in 2020." That could be misleading. Of the six leading retail, e-commerce, and parcel delivery companies, Amazon is the largest emitter of greenhouse gases, with total emissions measuring over 60 million metric tons of CO2 equivalents in 2020.
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The Hidden Cost Of Free Shipping
Here's the thing... I understand that free shipping is just included in the cost. What "free shipping" means to me is that I can directly compare costs without a random surprise fee coming into play at some point. Adding it at the last minute in checkout is especially frustrating. It's like sales tax (in the US), except it's not even consistent.
This is a really good comment 👌
I play around with the shipping system, it's not about rushing threw and buy as fast as possible for me. It's about getting the best deal possible, if I needed fast I would buy from Amazon or local store and pay whatever they charge. Failing to be smart about your purchases is how you lose money via the "free shipping" tag and I would go so far as calling some of those tags scams.
One site I buy from charges flat shipping rates based on x items (no free shipping, for where I live) and their base weight. I toy around adding removing items to max the purchase to shipping cost if I can't get the sweet spot I choose at that point is it worth the cost of shipping to buy (about 75% yes), then theirs local companies who are unfortunately more expensive than importing from the states even if bought in person and yes that's including customs, taxes and shipping costs (I save around $50-200 doing so).
Very true. It is like tipping in a restaurant. I don't think anyone is fooled by this. It helps avoid (as you said) random surprise at checkout.
@@mashhouse7545 Thank you!
@@jonbanks653 Ugh, don't even get me STARTED on tipping. Same surprise fee at the end, except it's up to you to decide how much and you're made to feel guilty if you opt out, and the entire practice ultimately only serves to allow restaurants and the like to weasel out of paying their workers a living wage. Tipping needs to be eradicated.
In the same logic buying from the store is not free: you are paying for store real estate, good’s transportation to store, employee wages. It is just cost of doing business, what do retailers expect , line up in front of the manufacturing facility?
True, but there's so much more going on than just the monetary cost. You don't go: I'm out of milk so I go to the store to buy some to discover an hour later that you are out of eggs so you go to the store to buy some. Then when you want to start making dinner, you notice you don't have that steak anymore that you wanted so you drive back to the store to go and grab it.
But with online shopping, we do expect them to not only ship for free, but also as fast as possible and there are e-tailers today who actually do that. Same day delivery, multiple times a day if you want. And that has a negative impact on so many people and also drives the price up further for everyone.
Retails expect to make profits?
Other things are secondary
but it's bulk shipping, not one item at time
@@Hans-gb4mv No one is ordering single grocery items multiple times a day. That is such a lie.
@@AricBolf Every item in store has a price that includes employee salary, real estate lease, utility bills etc etc. That's why u find online prices are mostly cheaper than in store prices specially on Amazon
Next on CNBC, "Why the labor to build your stuff isn't free."
"well, we don't agree with that and think it's immoral" - Jen psaki
@@fordtechchris "Free shipping not really being free is actually Putins fault, and is the sole reason for rising gas prices and inflation"- Jen Psaki
Free shipping is great, as it makes price comparison between shops much easier. Otherwise you try going for the cheapest site, just to discover that it becomes more expensive than another option after shipping costs are added.
This isn't about "free shipping" it's about how prices are presented on a site.
@@Parker307 That's just pedantic, free shipping and shipping costs included in the visible price is basically the same thing.
@@damnkris That's one of the tricks to increase impulsive buying. As customers don't even need to sum up the shipping cost it is faster to buy and so it's easier to buy stuff you don't really need by impulse
@@ttuliorancao True. That just goes to show how incredibly dumb the US system of not including taxes in prices are. I imagine the US could improve economic growth if that negative economic factor was removed, just like free shipping increases growth/purchases.
Great point
Shipping to a brick and mortar isn’t free either. In both cases, shipping is wrapped into the price.
Right, what to say if both with free shipping and and without free shipping have the same price tag?
@@LittleRadicalThinker exactly, so how do you suppose Amazon does it and still profits? They cheat and lie and abuse everyone they have contact with
I always assumed it either meant the shipper was paying or it was included in the price.
And that's only the start of costs associated with brick and mortar stores!
@@KRYMauL It’s always the customers as a whole paying, no matter what, it’s just how it was paid and how it was shown on the price tag.
Free shipping is very helpful when you need to return a defective item for a full refund, since this also refunds the hidden cost of shipping.
Yes
good point
Agreed 100%. I do not do business with companies that do not offer returns or any reasonable compensation for these returned items. They make it hard so you won't return an item and then you are stuck with it. This is one reason why Amazon Prime is 'King" of retail shopping moving forward.
@@sfcrmsa FREE shipping is really FREE .
just like all Labor is FREE .
Go tell your son to wash the dishes and then throw the Trash .
They're FREE .
@@dongshengdi773 You miss the point. I am not saying Free Shipping is not free, but it is not wrong either. I comparison shop for the best overall price, free shipping or not, but only on certain products. I am tired of getting ripped off by high 'shipping and handling' costs, poor customer service and terrible return policies. Companies take advantage of consumers that use mail order. Sorry companies make it hard for you to return bad, faulty or even the wrong item to increase their profits and rip off the consumer.
Someone told me that it's the best time to buy because there will be a huge pump soon
The cost of living is making people go into different businesses anyways, but my problem is that the rate at which money gets finished on little purchases is so surprising
I saw all this coming I had to switch to Crypto trading and I'm really enjoying the fact I made the right choice because of my weekly earnings
How do you do it please
Because I've tried severally but seems not working
It's very possible because I make $8300 with my little $1300 weekly
Same thing with anything free, like free school, free healthcare, free cell phones, free housing, etc. There's always a cost that you and others needs to pay.
surprised pikachu
Imagine needing CNBC to explain you that in shipping is included in the price😒
@@AErchenkovidiocracy is real
I thought this was common knowledge. $7 product X $3 shipping or a $10 product X with free shipping. I’ll go free shipping even though it’s the same total cost.
And if it's Amazon you pay the membership on top of it.
Same
It is, this video is pointless
Yep, the second choice is a lot more predictable
It's not the same total cost. Free shipping usually ends up costing more once you bundle multiple purchases. Say $7 with $3 shipping. If you order 10 say the cost of the label is $6. That's $76. With $10 and free shipping you end up paying $100 because the seller isn't going to give you a price break. I sell on eBay for a living. If I have multiple of the same item and it's not too heavy or large and I think it's something a buyer will want to buy more than one I will put it up with free shipping.
Yeah when I used to sell it would amaze me that I could list an item for $20 + shipping based on location and not get sales then list the same item for $30 with free shipping and get sales. You're paying for shipping one way or the other.
Doesn't matter if I pay for it, high shipping prices not included feel like bait and switch
I think it's just about being upfront on the total price and helps consumers shop around. Having shipping as an additional fee doesn't help people compare things across websites easily and efficiently.
We all know nothing is free. Customers pay membership fees. Sellers go to the shippers and pay before the package is shipped. Mother earth pays through the environment impacts.
Only a boob pays a membership fee.
The cost of shipping is definitely involved in the price as I understand it . But I still prefer to see the free shipping because i can compare the price between two products without doing an extra addition.
As someone who sells products online with “free shipping”, you’re absolutely right. We have a deal with our supplier for fixed shipping rates, which makes it easy for us. If the customer buys two products, the difference in shipping costs benefit us (as it’s cheaper to buy two packages per package)
You still have to include tax in your addition.
@@divyangvaidya9675 which is automatically calculated in
Shipping included in the cost has always just been a convenience in regards to price comparison. Obviously someone is paying for the shipping. In most of Europe, all sales tax and fees are included in the price of goods so the consumer just pays the price on the sticker; this included tipping as well. No hidden fees in Europe. The consumers obviously know it’s not tax or duty free but rather, it’s just convenient. It should be that way here. We all hate hidden fees or trying to calculate total cost on the fly but we’re all forced to do it anyway until something changes. “Free” or “included” shipping was a move in the right direction.
Hit the nail on the head.
The main point I have against overnight free shipping is that somewhere, someone is breaking their back in a warehouse in the middle of the night. Logistics is a 24/7 thing, but I just hate the thought of said situation. I don't mind waiting for my stuff more than a day. If I really needed it ASAP, I'd go to a store right...
U know there are different shifts and its an easy job
But i know what u mean
I mean thats the job I worked there last mile driver I still want 1 day shipping
The same ppl that complain are the same people against AI and robots lol. are you cool with a robot facility ?
@@gratkov i mean they get things faster in most cases and they dont necessarily take jobs they replace them with other jobs like maintenance people
Today, warehouse and fulfillment center jobs are the new Sweatshop.
I would love to see a documentary about the process CNBC uses to make these videos.
Good idea
@@ameridesign FREE shipping is really FREE .
just like all Labor is FREE .
Go tell your son to wash the dishes and then throw the Trash .
They're FREE .
@@dongshengdi773 🤣🤣🤣
I think they just pull elementary school science projects from the local school.
As Amazon and Ebay attempt to enforce "free" shipping, prices increase. Large, inexpensive items cannot be found.
The labor who does the job of shipping to you does that at a minimum wage. That is the worst part of those companies who ship.
Pro Tip: DEFLATE the Bounce House BEFORE shipping!
Still Amazon items pricing are cheaper compared to in store prices even if the shipping is included in the price.
@@PoliticalMatter FREE shipping is really FREE .
just like all Labor is FREE .
Go tell your son to wash the dishes and then throw the Trash .
They're FREE .
I've been an eTailer for 16 years now, shipping my products has risen in cost dramatically over those years. An interesting aspect not covered in this is how international retailers are able to ship so cheaply when the minimum amount I can ship international for is about $14. How international sellers are able to deliver $5 items is beyond me, some level of subsidizing has to be happening. This issue makes US sellers unable to compete with international except for delivery time. Might make for an interesting story.
That is weird, especially that they use the USPS for final mile. I have a feeling the Chinese gov't subsidizes it, they also probably have huge volume deal with USPS.
@@alb12345672 They do subsidize shipping but not from a factory order
Look it up: How Can China Ship So Cheap? A Secret Revealed AMANDA POFAHL
For items shipped from China, the government there heavily subsidizes their shipping and thus makes their rock bottom shipping prices possible.
@@alb12345672 FREE shipping is really FREE .
just like all Labor is FREE .
Go tell your son to wash the dishes and then throw the Trash .
They're FREE .
By law you cannot call it that in EU. You have to say "shipping included" or similar
With tax u shouldn’t say no tax it’s tax included
Which part of EU? Here in France it is called free shipping (livraison gratuite).
@@avina84 FREE shipping is really FREE .
just like all Labor is FREE .
Go tell your son to wash the dishes and then throw the Trash .
They're FREE .
You also don't have free speech nor gun rights.
@@fordtechchrisMost European countries don't have gun rights because we don't want them. Simple as that. We are not that fond of arming civilians to end up with millitias in our countries, massacres in public spaces, gun drills at schools and lockdowns among others. As for freedom of speech, it was first applied in France in 1789 and adopted in the US two years later where it became the First Ammendment. You are welcome.
Thats why I usually opt for the Audible credit instead of a faster shipping date. I don't want to overwhelm workers and I enjoy just using my audible credits.
What the hell is that?
@@Pernection FREE shipping is really FREE .
just like all Labor is FREE .
Go tell your son to wash the dishes and then throw the Trash .
They're FREE .
11.99 plus 4.00 shipping: 👎🏾
15.99, free shipping: 👍🏾
🤣
On line food orders are not only charging a delivery cost ( U, G, DD), but I have noticed in my area the food price is also higher than if you order for take out.
I'm also an Etsy seller and I do charge shipping separately because rolling it into my item prices just rips off my customer on multi-item purchases since I offer reduced combined shipping--passing on my combined shipping savings to my customers. Buyers also don't realize that Etsy charges us a total of 10% fees on the shipping charges as well as the item price, so that makes our actual shipping costs even higher.
It took the Ontario government 1 month and $90 to ship my driver’s license from Toronto to my home in Toronto. The IMPRESSIVE shipping speed and fee is WAY BETTER than the same day shipping from Amazon, as it made me a better person though delayed gratification and allowed some officer to enjoy a great work-life balance aka unproductive work. I truly loved slow shipping🙄
How it works in a nutshell:
You: $10.00 item + $3.99 shipping (*cringe*)
$13.99 item + free shipping (*opens wallet*)
Not really given you get the chance to compared prices.
But if u weren’t comparing prices when lever u have to add for shipping it feels like u are paying extra. And when it’s free shipping u feel like u are getting a good deal
@@Atlas-hu9wk that's the point. People sign off the moment they see the words free and that's it.
@@sneakerhead4770 exactly
Fr
The fact that this video popped up on my feeds is hilarious. I was just dealing with some free shipping woes just a moment ago 😂😂
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@@whitneyhouston6888 I firmly believe that the success of any investment depends on having the right information, regardless of what others say, do whatever you set your mind to. Warren Buffer always says "be greedy when others are fearful and be fearful when others are greedy". This is certainly the trick to succeeding even when others fail. I made *$200,000* working with *Donald Nathan Scott* a licensed *financial adviser* . It’s been a promising experience so far with him.
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Free shipping is a spam... Literally it's included in your purchase
Scam*
@@MALXCX yeah
@@duducertified5751 Edit your post
Most times its cheaper than in the brick and mortar location.
I think we all know amazon tacks on an extra fee onto all prices for the shipping regardless of what you do
I always calculate shipping costs or whether included shipping. It is not always even called "free" and this is insulting most people are not that stupid. I always try to buy local as possible off Ebay to shorten shipping. What I would like to know what are the long term implications of the shrinking of brick and motar shopping? and the rise of gas prices? and all that packaging? Was boot shopping the other day. There is an incredible the variety of boots available online. Was a bit hard pressed to find something brick and motar, but did, in a 1/2 size smaller than usual. I can't imagine buying boots or shoes online unless you already own an identical pair. Know someone that buys a couple sizes, has them shipped and sends the wrong one back. More shipping costs.
Nothing in this world is free, like the lady said, "Someone is paying for it".
As long as it's not me, I couldn't care less.
ANYONE who has ever shipped one of their own products COMPLETELY understands this. It is not surprising in the least. Personally, the only reason I care about 'free' shipping is that it makes it WAAAAAAAAY easier for me to figure out my actual costs on products, instead of wading through a bunch of taxes and shipping costs in general.
In the end, I just don't even care anymore. HOW MUCH DOES IT COST? No, really. How much? NO, NO... REALLY. How much is it?! Oh, OK. Thanks. That's what I needed to know in order to make my decisions. THANKS FOR NOT SCREWING AROUND TELLING ME IT'S $10 WHEN IT'S ACTUALLY $18.95. lol
🐲✨🐲✨🐲✨
Walmart sneakily added either a $5.99 or $6.99 fee to two grocery items they told me to pick up which I was going to do until I saw that fee, supposedly because I didn't order enough to get the order up to $35. But in the same order, I had also ordered $157.00 worth of non-grocery items! I cancelled the two-item grocery order when I saw that fee but I didn't see it the first time. I saw it when I took a second look st the whole order. That's why I thought it was so sneaky. So look out for this practice. These were not two separate orders. Walmart divided it up into grocery and non-grocery and then added the fee to the two grocery items. Nowhere did I see what it was for or that such a fee would be added. I had no idea they would be so sneaky. So watch out for this.
The so called "free shipping" is damaging to the small shipper. I live in New England and it costs $$$ to ship west of the Missippi. Yet customers balk when charged anywhere near the real cost of shipping. The costs for packaging materials have risen dramatically, even more than the gas needed to get packages to a place where the packages are picked up.
Then raise your price and offer free shipping included in the price. It isn't rocket science.
Looks like you need to understand how to run a business. ROFL
Don't small shippers just use the mail?
@@KRYMauL The mail isn't free. Whether its USPS or Canada Post, government shippers have to pay their drivers as well.
@@strawberry7799a I know, maybe I didn't understand OP.
I love this type of videos
Good vid, I wanted more!
Ellen Reese : as much as you have a comment / opinion about consumer spending. The reality is that if you break the cycle of spending, then goods don't get manufactured, workers are given shorter work week or get laid off for cost cutting, and all those who's job is to create, support, and deliver the product will not have jobs simply because no one is buying. There has to be a balance of how these items are environmentally manufactured vs what method of shipment to choose to offset the carbon footprint. This is a very complex issue that impacts everyone who is at the last link of the chain
The reason why I choose free shipping is because of the shipping costs is so high to Hawaii, I can get another item for the same cost as the shipping to get free shipping. For example I needed some HEPA filters for my old canister vacuum. Amazon had 5 for 10 dollars. If I just shipped it as is, I would have need to spend 8 dollars on shipping for standard shipping rate. That is almost twice the price of the Filters. I bought some foam filters for the vacuum and microfiber cloths to get free shipping. I basically got the foam filters free and a discount on the microfiber cloths for the price of shipping the HEPA filters by themselves. Free shipping isn’t a myth it’s the only way I do business online.
4:27 when showing graphs pls mention what are the values on both axis.. in this case, how would anyone know what's the y-axis percentage? Market cap? Market share? Yoy Revenue? Yoy Inc/dec in cost of shipping?
For those of us who are older, buying something from a different city/state/country used to be extremely cost prohibitive due to insane shipping rates. In addition, smaller markets had much smaller selection and prices often varied significantly between regions. So shipping items has really changed this for the better. Wider selection and better prices as a whole.
The issues raised in this video are actually very good problems to solve. If we fix these issues over the next decade, which I assume will occur, we are all going to benefit.
I think taking the 2020 emissions of Amazon by itself might be a little skewed. With the pandemic, a lot more people were buying items online. My wife has been working at Amazon since 2020, and touch wood, she hasn’t sustained any injury. I think the injury part depends on what part of the warehouse you work in.
Delivery actually is more green. Why have countless consumers drive to the mall when you have a few trucks delivering everything.
A typical small package shipping is around $7. Running around town to multiple stores that do not have an online priced inventory cost about the same in gas + car wear and time. Only problem I have is when I need 4 items and there is no consideration that shipping 4 items cost much less that 4 times shipping one.
I live in Switzerland, and I'm often tempted to buy products on-line from American shops because similar items are either just not available here, or are exorbitantly expensive. However, virtually all US shops that offer "free" shipping offer it only for U.S. delivery, and charge their international customers the full international shipping rate. Which means that we're paying double whack for shipping, because of course that "free" U.S. shipping is built into the product price. If there was a commensurate reduction in international shipping, then I'd be interested, but as it is, I just click away whenever I see "free shipping on domestic orders" and full rates for international customers.
That’s because there are few to no warehouses near you
@@hotdog7346 Yes, but why should I subsidize US shipping for other customers AND pay full rate international shipping? They should at least offer reductions on the international shipping, even if they can't offer it free (i.e. subtract out the US shipping cost from the price).
@@zeldacheri you don’t get it. If there are no amazon warehouses near you, you will pay more shipping. Businesses build warehouses near customers based on population density. Nothing unfair about that.
eBay forces sellers to offer FREE POSTAGE by stating that offering free postage gets them higher rankings.
The benefit for eBay is that the actual postage cost is now included in the price of the item, so eBay can now charge more seller fees.
That increases the cost to consumers of course. eBay "Free Postage" is not free, it is in fact an extra cost.
You are so right ! People have no idea how many fee's ebay charges it's seller's. Nor, do they understand how the shipping really works free shipping to a state one state over is way different that sending it free shipping across country. With Ebay's new update we are going to be charged twice for shipping, once the regular shipping fee and another time hitting shipping because we used promoted.
The thing I hate about free shipping is you often have to pay more for free shipping, I try to only buy what I need and a lot of the time I have to buy something else to get “free shipping” it depends on how much the shipping cost is whether I just pay the shipping or not
Now CNBC needs run a news story explaining how universal health care will never be free, nor will college tuition.
That's why I like the idea of Ship To Store. In theory your order just goes along existing logistics chain instead of making 800 special trips to individual houses. But when I actually use it they're like "uh, you want to pickup what?" And I have to wait 20 minutes.
In Europe, where tax is included in the products prices, I see in Amazon, for example, is not free. But i can return and get refunds in Prime easier then in other shops. Most shops are still struggling with understanding how online prices works.
Some only shops don’t realize, that price costs must be different from physical stores. The rent, is much more expensive in physical stores then shipping from warehouses somewhere in the countryside. And dealing with returns are also not taken in account.
It’s very bad to see how companies don’t know how their prices are made. How to price a product has a lot of variables, that have to be considered.
Last week, one simple 7 oz. box of rye crackers is $2.87 at my local Whole Foods. On Amazon, its parent company, the price is $5.99, plus shipping. Free shipping costs an additional $139.99 per year. Plus all the extra gas, truck wear and tear on roads, box disposal, etc.
" Plus all the extra gas, truck wear and tear on roads, box disposal, etc." All of that happened anyway on it's way to your Whole Food's shelf.
Free shipping costs $0, if you spend at least $35. Paying for Prime is STUPID
In 1998, everyone laughed at Jeff Bezos for saying that eCommerce would take over the retail market place. Now people are complaining that Amazon is too dominant. Manufactures used to dictate terms to the retailer. Then, Amazon serves the customers so well that now the manufactures are crying. Ellen Reese will say that transport is causing pollution. What is the alternative? Retailers going to a big box store. Employees going to a location. Shoplifting, police interactions at the retail setting. FYI, everyone is always trying to cut cost.
free shipping is bad because a lot of people are taxed for every dollar spent on item price. Especially on expensive items. Luckily I am not taxed on shipping. EBay in comparison sucks with having to pay a lot more shipping because sellers are so diverse and often don't realistically combine shipping in a fair manner. Amazon however, I prefer if they stock the item and ship it because I usually do buy up to the free ship threshold so in that regard it is complementary. I often try to get the most items I need for one shipping rate.
It also is a mechanism to encourage consumers to make shipping decisions that lead to an efficient delivery
I do not even think about it, what I think about is the price in the end for me. If I see a price on Amazon then I will also price match it with Walmart etc. With gas prices these days, sometimes the cost of driving to the store especially since im not in the city is more than any shipping cost online or any somewhat inflated price online. I am definitely guilty of mass consuming though, packages arrive here daily.
I always knew there was a catch!
You have to compare. Sometimes prices are the same but shipping is actually cheaper since you wont have to drive anywhere. Time and money saved.
Thanks for all those who commented. I thought it's going to be like the credit card points where everyone pays for yours. but it's just basic business management. Saved 10 minutes of my life.
Yes, I realize the "free money" or frequent flyer miles etc are funded by those who carry a balance on their cards. I didn't force them to not pay the balance in full each month. I don't feel a bit guilty about it.
Really not feeling guilty about 5% cash back on gasoline from one of my cards right now.
Consumers compare price; If one seller offers the same item with free shipping, and another seller offers the same item but adds shipping, it is an obvious choice who the consumer is going to buy from.
Of course, nothing is 'free', but it all boils down to how efficient a seller runs his/her operation to absorb the shipping cost, and remain profitable.
My thoughts exactly. Found a pair of Levi’s on ASOS with “50% discount” and bought the same exact pair from Amazon for half the price ASOS was offering. A little research goes a long way.
“Free” shipping basically means it’s included in the price of the item.
Bought a large folding table for around $40 on Amazon. Weighs maybe 40 lbs. Got it the next day via UPS. Probably cost more than $40 to ship--probably more than $100.
Well that is obviously going to happen if you ship longer distance...
@5:14 Etsy is expensive, on eBay, to zone 8, I pay $3.86 for 4oz, $9.39 1lb Priority Mail or $6.28 1lb First Class. I know they said Priority Mail but unless it cost more I would ship it First Class.
I prefer to sort by lowest price including shipping. Sometimes the free shipping is cheaper but often on ebay it's cheaper to buy the one with a small shipping fee.
That is why I don't do free shipping. If someone is on the east coast they save shipping money, otherwise I would have to include "free" shipping for the most distance possible shipping location.
Offer free shipping puts pressure on other businesses who can’t afford to do so? Why is that a problem? Should A student feel bad getting an A because it puts pressure on students who can’t afford to get A?
They seem to equate free shipping with expedited shipping, which is hardly the case.
It is crazy that you can buy a USB cable for ~$5, which is cheaper than you can get the same in store, and it has free same-day delivery (after paying for Amazon Prime anyway).
For retailers that are worried about expensive shipping to further away areas, just do what Amazon does and only offer free shipping within range of your stock. If you lose a customer because of this then that's preferable to selling the product at a loss.
Etsy and Amazon seller here, 1: Etsy does not provide better pricing than any other platform using USPS Commercial pricing, it's the same for everybody, unless you're a huge business I guess (10 M or more). The bad thing about free shipping is that consumers tend to underestimate the price of It, they think shipping an small item costs 1-2 dollars, when in reality the minimum price to ship anything with USPS is 3.56 and that is a small envelope with less than 4oz. 2: Amazon actually provides better pricing for its sellers using their fulfillment network than USPS. Consumers need to understand that if you're buying a physical item for 15 dollars or less with free shipping, chances are that someone is paying 25%-40% of that price just in shipping.
I already knew this, nothing is free. They past the cost on as another type fee.
I live on Big Island Hawaii. WE LOVE FREE SHIPPING HERE. If we see an item that is $25 and free shipping then we see the same item $25 and $8 shipping, we take the one with free shipping.
Is this video about free shipping or how unions are good and Amazon is bad?
Thought the same.
I usually love CNBC, but I fear the 12 yr old narrator snuck over from the MSNBC studio for this one….
Just another video trying to convince you why big market is bad. Im paying for the cheapest deals.
Ikr also I love Amazon's customer service and ease of returns.
@@ray8380 exactly, they always overlook the fact that Amazon is obviously much cheaper for the end consumer. If anything it's driving the competitive market, but they're the lowest prices so...... Like why buy something from a brick store when you can pay less from Amazon. "Because supporting small business" nah, i'm just looking for the deal....
Like others have said, I think most with a brain can understand 'hey, shipping isn't really free'...the problem is, no one else tells the truth! It used to be, that if you made a 'buy it now' on e-Bay for $5...you then found out that 2-ounce package cost $29.95 to ship! WHAT? That's a 'Priority Mail' cost of $FOREVER POSTAGE (less than $1), combined with $28.95 of 'handling' (aka 'profit adjustment'). Don't LIE to me about it, just ask $33.95 to start with! Ok, don't...I'll shop on Amazon! Even other 'big box' stores can't get delivery dates accurate. Wally Blue says 'will arrive by Thursday, but Thursday arrives and you check on it, and free-or-not, it hasn't even 'shipped-to-store' yet! Ok, so get the price SET and the delivery date SET, and let me know! This is a no-brainer, and is why no one is listening to 'excuses' anymore.
Hold on! When I buy a product there are additional costs then what the actual physical item cost to manufacture. Thank you cnbc for allowing the scales to fall from my eyes.
Environmental costs would be a lot higher if those goods weren't shipped in bulk, but instead bought at millions of little stores by millions of people driving on and off to those stores all the time.
I used to work at Walmart and a manager told me the overcharge online was maybe free shipping,I didn't tell him I'm not as stupid as he thinks,to keep from being fired LOL
I wonder what the turnover rate is on the actual logistics operation floor. Do fulfillment handlers stick around, despite the back pain, strenuous work environment, tight schedule, etc..?
They will stick around, as long as there's not a better job opportunity.
But their employees can count on zero loyalty - they'll leave immediately when something else comes along.
That's why turnover rates are so high, constantly hiring fresh new workers... because there's always someone to replace you with.
How does it impact the environment anymore than traditional brick and mortar shopping? The only difference in this case is the final few miles between the store/warehouse and your home is done by the individual driving a car to pick up the items rather than a delivery truck going to your house. If anything this is more environmentally friendly because there's less travel time involved if a delivery truck is handling numerous orders at once? Am I missing something here?
Some online store use third company shipping like lasership
OK so which is more efficient. A long time ago the store had trucks deliver to a loading dock at the department store. It was unloaded and they stuffed things all over around the store. Xmas was hell for this task. They had people who put the prices on items and unpacked them. People who stocked the shelves. People were expensive so they made them part time and removed benefits. Then they used a central warehouse for the trucks and tried to reduce cost more by removing people. Items went from the warehouse to the stores. Broken items were tossed. Some stuff was returned to the vendor. Some stuff was marked down and down. My favorite game was buying $120 pants for $12 after Xmas. Store mark up was double their cost so I made money off Nordstrom. If it didn't sell and they could not return to the vendor because they didn't want it either, like books which would have the front cover torn off before tossing them, then it was tossed out. Originally broken toys could be taken home by employees to try and fix. Old Xmas decor could be taken home. That was changed and it had to be tossed out. Now we have Amazon struggling with returns and shipping. Same problems and they are trying to use robots or just throw out the returns. Labor costs are very high and they lose money trying to not just throw stuff in a garbage dump. Remember people used to try and return items they had worn or purchased a year ago. Now Amazon gets those people buying new pants and returning the used. There are no people manning a desk for returns because that would cost money. I had to return something after Xmas and waited an hour for them to take my box from me which I had packed and labeled. They were renting space in a local department store and using low cost temp employees. I assume my stuff is now in a landfill based on news people tracking Amazon returns. I would have liked to return it directly to the people who made it with my complaint about shoddy work. Of course people in China would not care. No one cares. Having a display store where you see the item has not worked because the item you actually get may be quite different. As the cost of items go down you get what you pay for. Junk. I have a fan made in the 1950's in the US which still works, makes no noise at all and is the best fan I own. I bought a fan locally, made in China, which lasted one year. I realize this is intentional to sell more fans, but it is really irritating and makes more garbage.
Free shipping is a great deal if you live in an area that has relatively high shipping cost.
Shipping cost will depend on how far the shipper is from you and sellers always charge the highest cost to ship free or not your still paying for it.
I dont think its so much the word free tricking people as mush as it is people anxiously waiting to see how much their total cost is going to go up as they are currently happy with the price and hoping they will be happy with the post shipping price. It takes out some stress if you know there is free shipping ahead of time. If not then there is relief and happiness at the surprise of your purchase not getting more expensive.
Free shipping and handling tends to cost more to the consumer because sellers have to build it into the price, even though their marginal costs fall as your quantity increases (economies of scale).
This is a good piece
I always get three estimates for a job and then take the highest estimate, because I'm a very virtuous person.
😂😂😂 "Virtuous" is not the word I'd use😂😂😂
CNBC really has it out for Amazon.
Were i buy my cloth in Denmark there is FREE SHIPPING.
No matter how little you buy for like $5 dollar socks it comes for free + theres a sticker in every package so you can send it back for free as well if it doesn't fit.
They know they lose money on small things but they have gained a ton of costumers by having this service.
I don't understand why they always say it's a bad thing that Amazon workers or contractors have to work. It's a job. Why don't you feel sorry for the fast food worker, the teacher, the construction worker, the nurses, the grocery store worker...Everyone works.
I used to work for Amazon. this is nothing new to me. I turned down their 10,000 because it had a huge number of strings attached. in reality, it was a high-interest lown.
Amazon treats their sellers horribly. The company steals inventory and refuses to return false over charges.
Not entirely true on the consumer. Many websites will offer free shipping on items that remain MSRP even at checkout. If there’s a pair of sneakers for $300 across multiple websites on drop day, many websites will still have free shipping on that $300. In the end the “free shipping” is referring to the consumer’s cost which really is free in those situations.
This is about simplicity and oth if I buy a $1 dollar item in ie. Amazon I'm paying close to zero for shipping -if any.
These Amazon 'shipping centers' are basically the physical equivalent of Content Delivery Networks.
As they say, nothing is free.
Modern day goods mail order has been severely distorted by Amazon Prime. In the old days, you really did not save money on mail ordering products compared to retail shopping. You mail ordered something when non of the retailers in your city will sell you the item or they take weeks to get around to special order that item you requested. In the old days, you paid at minimum, shipping and handling. If it was an international order, you would have been required to pay for the item in that countries native cash, paid for dollar exchange before having your bank print out a money order for you to mail away to that country where that item originates. The item in question may be held at the post office or courier depot until you paid for any customs taxes, and import taxes. Then if the item was over 20 lbs, you would also be charged a freight collect charge. Shipping was never cheap, especially international shipping. Amazon is using free shipping as a loss leader. I remember the days when you could spend as much money on shipping and customs related costs as the price of the item. It got very expensive in the old days.
So what if free shipping is added into the cost? I can show you many examples of an item in a store being the exact same price on line with free shipping. So you wind up paying the same price no matter if you drove to the store or bought it on line. Sometimes you spend more money on gas to go get the item.
Customers don't give a rip about this. they just want the product. People do not grasp "cost price" (or refuse to because the company is "making thousands") when they're just a buyer.
There shipping involved even if you purchase from brick and mortar shop. Product just doesn't appear out of thin air in shelfs
Amazon didnt help when saying next day u get it from time u order it so it twice the rush to get the buyer their stuff cause they want it so fast. it used to be a week or 2 and u got ur stuff and now it ls like over nite or 2 days and u get it if no one steals after it dropped off any. if ever i rather go to place if can and get what want at time but now places have discover that stores are more a showroom and traffic just use a cell to order so not gotta hassles try get it home at time. its like plan ahead and if u know u got space to get then place had gear to take to car at time if need. but ordering to rush ship any it just harder to make anyone rush and not get hurt at time.
Zappos founder Tony Hsieh was a pioneer for free shipping that inspired Amazon.
The free shipping will mean you actually pay more.. well in the US anyway.
Sales tax rules vary in different states, but many will say that if shipping cost is not separately identified on the invoice then sales tax will be charged on it.
So if the cost of the good is now including shipping then you the consumer will pay more further driving up inflation and leaving you out of pocket.
If I was a business in the US I'd offer a discount code for the shipping so that prices aren't inflated to help the consumer pay less sales tax.
For a company like Amazon that could potentially save their customer millions of dollars in sales taxes
this is just plain obvious to anyone with a brain
Yeah
Me paying for shipping and import fee that are about the same amount of the thing I buy overseas: yeah that's definitely a better experience than free shipping
Another hit piece on corporations that are simply catering to the demands of the consumer. A consumer that demands junk to make themselves "happy."
Aon the green house, imagine if Amazon did not build the warehouse, and use DHL, UPS, etc to all the delivery.Would DHL, UPS contribute more pullution?