I'd bet the short obvious answer is that it doesn't cost them anything to ship small, lightweight products like this.
The plane was already flying from China to wherever, filled with AliExpress merchandise. They may have paid for the whole plane instead of just by weight. So adding this product didn't add any tangible extra weight or cost.
Then the mail carrier or whoever is already going on that route. I doubt he gets paid per package, so adding another small package is no big deal and doesn't add extra time/cost.
Unless someone is ordering 1million buttons, then the weight starts to add up. But then so does the cost of the buttons, which at that point would cover the shipping.
I'm generalizing a bit since I don't know the specifics of the shipping industry. But this makes sense to me.
That works, until the plane really is full and you need a new one, or your letter carrier really is fully occupied and you need a second person.
It makes little sense to give nearly everyone free shipping, but charge every 100,000th person $50,000 because their item was the one that needed a new plane. So instead, they divide the cost across all the stuff that gets shipped so everyone pays a share. That per-item cost is typically more than what these sellers are charging, thus the questioning.
The chinese postal system offers extremely low government subsidized rates. This isn't just Alibaba, almost everybody shipping out of china offers free shipping.
China subsidizes shipping for domestic businesses either a) explicitly as a part of economic policy, or b) implicitly/de facto via corruption.
In other words, for the business selling you the item, shipping is free. It's the Chinese citizen/taxpayer that foots the bill. This shouldn't be surprising since China, eg, is notorious for devaluing their own currency as a means of boosting exports. This is effectively a tax on the greater populace for the benefit of their manufacturing sector.
I was under the impression that there is a yearly accounting process that occurs between countries that accept mail from each other. So, while the counterfeit postage would allow the mail to be delivered, questions would eventually be asked.
There is no yearly accounting. The treaty is that countries deliver first-class postage letters and packages for free, for each other.
The idea was that there is an equal amount of packages shipped each way, so the post office makes up the difference in packages sent. That used to be true, and now isn't, but the treaty stayed.
The secret is government subsidies. Not just from China to Chinese businesses either. Some driven by the UPU program through the UN[1], as well as individual receiving country's programs, like the "ePacket" program where US bound shipments from China get artificially low rates from the USPS.
Couldn't this just be a variation on the classic loss leader sales strategy? It also reminds me of what Amazon originally* did, get someone to sign up for an account, buy a widget at or around cost, ship for free, and then make the money back on the more expensive larger items as you become the "go to" for whatever someone needs.
*I say originally, as my experience with Amazon has been on a downward trend for at least the last two years.
Exactly. Loss leader, plus the fact that they now have a list of customers that are not only active and recurring but quite literally pay Amazon to buy from them. The avg yearly purchases of an Amazon Prime member is more than double the site avg.
I also think there's a sense of membership that if you are paying you might as well enjoy the benefits.
I personally enjoy Amazons packaging. I know my items will be well packaged, whereas there's always a surprise on Ebay or other store. I have chosen ship with Prime (Fulfilled by Amazon) on items that other Amazon sellers have cheaper.
It's just more consistent and efficient. And that's sort of a benefit.
It's a combination of subsidies in China [2] and really low Universal Postal Union rates for terminal delivery from China to the US.[1] Terminal delivery in the US is about $1/Kg. Market rate from Shentzen to Long Beach to ship a container is about $1200 right now.
In the Netherlands our postal service has already stopped delivering packages from China to your door ( very recently ). They just slip in a statement 'pick up here & here'.
What's A3? I went through a phase of ordering ridiculous amounts of stuff from AliExpress (sure, I'll buy 1000 resistors for $2!), but the postage times went from ~2.5 weeks to 4+ weeks (CN->AU)
It's a rewards program. A3 means you have earned more than 500 points in the last 365 days.
You earn 1 point per $1 spent (you only earn reward points for orders over $2), 1 point per feedback given and 5 points per day you buy stuff.
With A3 you get Fast refunds.
It has no effect on the speed of shipping.
I've found that Malaysia Post is the worst, they often take 60 days until a package is delivered.
After lots of "failed" delivery notes when there was always someone present, I asked the workers in the post office why they don't deliver packages anymore (thinking it might be related to country of origin and specific agreements between different postal services regarding fees).
They were adamant that delivery was attempted and it must be coincidence. In the end I suspect, in our case, it's more a case of silent protest from the postmen who are payed poorly, so they don't bother carrying the packages.
That sounds more like an exception than the rule. Everything I order from AliExpress of DHGate ends up at my door. We do have a very dedicated PostNL delivery guy here though.
>>Market rate from Shenzhen to Long Beach to ship a
>>container is about $1200 right now
Just so there's context, the actual cost is much, much higher than $1200. That's just the payment for the ocean journey. The other costs are factory to port (varies), insurance+docs (few hundred), destination port charges ($1k or so), customs bond, and then the actual duty for the imported items. Lastly, of course, getting the container from the dock to where you are to unload it.
My experience. We bring in 3 or 4 containers a year.
The costs above and beyond just the "ocean shipping" part for the most recent one was $1914. $830 of it was the customs duty, which will vary wildly depending on the HTS code of what's being imported, and how much you brought in.
Modern container ships travel at about 25 knots (unless they're doing fuel-saving slow cruise at 12 knots). http://www.sea-distances.org/ tells me that a 25-knot ship going from Hong Kong to Marseilles via the Suez Canal takes 13 days 7 hours to get there.
In practice, of course, there's loading and unloading on both ends (figure 2 days) and you're not traveling through the Suez at 25 knots; the traffic there goes at 8 knots according to https://en.wikipedia.org/wiki/Suez_Canal#Navigation. That said, the Suez transit takes 11-16 hours according to that link, so maybe add half a day to the estimate.
The upshot is that a 16-18 day travel time is not unreasonable there. I was a bit surprised it's that short, but being able to maintain 25 knots around the clock eats up distance faster than one expects.
Of course if you go from Shanghai instead of Hong Kong, you need to add a day and a half or so. And if you go to Brest instead of Marseilles, add two more days.
I urge you to just lookup the schedules using something like http://www.shipmentlink.com/ or http://www.linescape.com/. For one, 25 knots is a ridiculously high speed. At the same time, 12 knots is way too low. Any shipping line will sail a bit quicker on the main haul (=direction where most full containers go to). So China->Europe is usually quicker than the other way around.
But the huge mistake you're making is that a container vessel will make additional stops and it does not connect every possible port to every other possible port. If you have uncommon combinations, the container will usually be moved from one vessel to another. This adds additional time (days).
Why can't the postal treaties be something more sane like:
"Find the amount charged to domestic senders to go from the incoming drop-off point to the destination. Got it? Okay, if the foreign post drops it there, they get charged that amount."
Then, everyone gets charged the same, and you can't overcharge foreigners without also screwing your own people. Plus, foreigners get cheaper postage as they drop it closer to the final destination.
Because if I want to ship a birthday gift to my uncle in Indonesia, and I show up at the post office wanting to do that -- how are the people at the post office supposed to figure out how to much to charge me, where the 'incoming drop-off point' in Indonesia is, and how much it would cost at that moment in time to ship from the 'incoming drop-off point' to my uncle in Indonesia? For every possible location on the planet?
That's the idea of the treaty anyway, an idea that pre-dates internet and computers of course, which do make it at least theoretically possible for my local post office to figure this out.
The bulk of this problem is for online orders where they have to look up a shipping from some postal API anyway. Plus, each country is going to have some flat-fee option they can default to. It's not hard to come up with a better scheme than "foreigners pay nothing".
The Universal Postal Union was classically focused on international letter mail, back when that mattered. Until 1969, there were no terminal delivery charges, much like the early days of the Internet when there were no peering charges. Each country had to deliver within its own country for free. But because letter traffic tended to be roughly equal in both directions, this wasn't a problem.
When terminal delivery charges came in, countries were divided into classes based on economic criteria, basically gross national income per capita. Surface area of the country is also figured in.[2] Because there hasn't been a recalc of this in a few years, China gets a very good rate. This may change in 2016.
Sending something from China to Australia is far cheaper than sending stuff a few suburbs across. Wouldn't surprised me if Australia started refusing to deliver to the door as well. Our local parcels are subsidizing the Chinese imports.
Dell's Australian courier 'Startrak Express' practically does this already - they only knock once, if you miss it then you have to pick the parcel up at the warehouse.
They most likely buy shipments in bulk. Volume is predictable, so they ask postal office(s): approx y packages, approx x size, how about z dollars in total for a year?
> All this should be a reminder that any trade deal has winners and losers and unintended consequences.
Obviously, whoever you subsidize is a winner. If you're setting up barriers to trade (e.g. tariffs), foreign sellers/manufacturers lose. If you're subsidizing imports, domestic sellers/manufacturers lose.
Why can't we just not subsidize anyone?! Free trade is supposed to be just that, free. Instead, we have the TPP & TTIP, which will create yet new injustices and new sets of winners and losers.
Free trade requires both sides to be equally free. Tariffs are one of the defenses against another nation massively subsidizing an export. Getting all countries to play fair (in this case neither subsidizing or taxing) isn't going to happen. You also run into the interesting situation of what is a subsidy that impacts exports/imports?
For example, post great depression america started tax subsidy for farmers to ensure a stable food supply. That hurts imports of the same product. Another interesting example is minimum wage, it makes imports more attractive, as domestic labor costs go up. Not getting into what is right/wrong, simply that economic incentives are not uniform and may be defensive. Hence international trade tries to deal with that via accords, treaties, tariffs etc.
Not to mention to that tariffs are a source of revenue for the respective government.
The unilateral benefits of free trade does not require both sides to be equally free. When China allegedly subsidizes (a thing that happens much less frequently then claimed by industries seeking protection), that means China is sending us unusually cheap stuff. Yes, it's possible that this is a highly coordinated monopoly-building strategy, but much more likely is that China has internal reasons for doing this (such as building political stability, or internal regulatory capture by their industry) that don't have negative impacts on the US.
The purpose of these tariff-reducing trade treaties is much more about gathering political coalitions to break through public-choice failures resulting in (overall welfare reducing) protectionist policies taken by each side.
That is because Hong Kong makes a living primarily as a place where trades are executed, not as a significant trader itself. Hong Kong does not have large supplies of natural resources, huge manufacturing industries, or millions of acres producing agricultural exports. Pretty much the only economy they have is hosting relationships and taking a cut, so they have no economic reason to erect trade barriers.
Labor and environmental laws. They make manufacturing more expensive in the progressive countries that have them. Then they can't compete without tariffs or subsidies.
Right, but then you should set up specific restrictions for very specific circumstances. E.g. if a company in China is using coal power (that would be below EU/US standards of pollution), you apply extra "fair-market fees" to their imports. However, you also allow for "certification" - if a company proves they comply to the stricter laws, they don't need to pay the fee.
As an aside, I've been screwed several times by Prime's "guaranteed two-day" shipping. I had package which was very late December last year. When I went to the USPS tracking page to check the location, it turns out Amazon had requested the 8 day shipping option. After several angry calls I finally had the item cancelled and a new one on the way with Saturday shipping (the lower-tier rep said that it wasn't possible, so I elevated to the manager). Lo and behold, about a month later my original item showed up and I had to return it immediately. This was my worst experience, but not my first with late shipping. I've never had so much as a prime extension offered for my trouble.
You have to ask for the prime extension. I've ordered probably 100 items and the few times an item was late I just chatted with an amazon rep and a month of prime was added.
I can confirm this works. I only do it when I really needed the item on time and got screwed. I believe each account is limited to X requests, currently about 10 according to some folks on Slickdeals.
I paid for Prime and had my account cancelled for "too many returns," something that doesn't exist in any of their terms of service. Late and lost packages all the time, that goes without saying. Fuck Amazon.
The problem might be Amazon here in this specific case, but I'd hazard a guess that this is just a subset of the massive drop-off in service that Amazon is experiencing due to a major transition to using USPS instead of UPS.
Here in NYC Amazon delivery has gone from being amazing and magical to nearly worthless seemingly overnight with this change. UPS (and Fedex) didn't seem to have any trouble delivering even to challenging buildings without doormen, giving accurate tracking etc. Now every time I see USPS as the option I cringe knowing the package won't be delivered, there won't be a door tag left, and at some random arbitrary time the status will change to "attempted delivery" even if someone was sitting on the front porch waiting for it the entire time.
It's getting really bad, we'll see how long it takes Amazon to figure it out.
Twice in the last few months I've had a package change status to "delivered" -- while I was home, and suspiciously just a few minutes before 5pm. One of them was never delivered. The other one showed up 2 or 3 days later...
I'm losing faith in those 2-day guarantees, and the number of items available for Prime has been slowly dwindling. That, and their minimum spend for certain items went from $25 to $35. Starting to wonder whether renewing my Prime membership is actually a good idea.
My solution to this problem (and yes I've noticed the same) is to generally pay the price to change to one-day shipping which never (so far at least) goes USPS. Of course we are in one of the areas with Prime Now service, and I am willing to consider that this may be to make me think "Do I pay a driver a $5 tip if the item(s) are available or pay $5/item for one day delivery".
NYC's USPS is notoriously unreliable, especially for those of us without the luxury of doormen. Despite living in a nice neighborhood with a vestibule that would certainly house a package just fine - and then include that the postman has keys to get to just outside my apt door - USPS packages are routinely lost, yet "delivered".
Amazon at least mitigates this loss risk by unquestionably resending the package without additional charge. This exercise has grown tiresome.
> Amazon at least mitigates this loss risk by unquestionably resending the package without additional charge. This exercise has grown tiresome.
It's interesting that Amazon finds this to be cheaper than shipping it properly to begin with. Although it makes sense if packages sent through USPS are low-value and not just small.
In apartments in other U.S. cities I've had the opposite experience. USPS has been reliable, because the USPS mailbox array for the past two buildings I've lived in has included both the usual small boxes for everyone's mail, plus a few large boxes used to deliver packages. USPS sticks my package in one of the empty boxes, and slips the key into my mailbox. No problem at all for unattended delivery, at least for small- and mid-sized packages (obviously they can't deliver a TV there). But UPS and FedEx don't have any system like that installed, so they either leave you a "sorry we missed you" note, or just leave the package sitting somewhere unsecured.
USPS always delivers my packages. When I see USPS I know I'm going to get the item on time (along with 600 outdated emails regarding the tracking, but I digress). I'm in 11201. (This does not apply with packages shipped internationally. They will claim to deliver it, ignore your redelivery requests and signature releases, and then whine at you incessantly when you go to the post office to get the package. But you do get the package at the post office, so that's nice.)
UPS also does a great job. I don't know how they break into my building, but they do. Once in a while the normal delivery person takes the day off, and you get the door tag. Fill out the form online and the package appears tomorrow. Not perfect but reasonable.
FedEx is awful. FedEx means I'm not going to get the package unless I happen to be at home and they happen to actually ring my doorbell.
DHL is also awful (the delivery mechanism of choice from amazon.co.jp to the US). I order a $10 magazine and they won't just leave the package at the door. In fact, they call me to see if I'm at home, say things like "oh, you didn't answer before, I'm not on the way there anymore so I can't deliver it" and other such bullshit.
Finally there are the taskrabbit-like shipping services, A-1, Lasership, etc. If you see one of those you aren't going to get your package. Just re-order it and hope you don't lose the lottery again. They can't even successfully deliver to commercial addresses with dedicated courier receiving and fully-staffed mail rooms.
For items you can't afford to lose it might be worth checking if there's an Amazon Locker near your home or office. They're very easy and you don't have to deal with USPS.
I live in a dense part of NYC with no shortage of retail. If I am going to go to a separate building and deal with getting and carrying back the package I am just going to go to the store that sells the thing I want and buy it. The whole allure of Amazon is that I don't have to.
In Los Angeles the UPS vs USPS experience is exactly the opposite, although UPS has been improving (several years since I have received a destroyed package).
Interesting! Getting a package from USPS in Australia is much better than getting one from UPS.
USPS -> Australia Post means that I can get the parcel sent directly to my parcel locker [1] and get an SMS when the parcel arrives. I don't need to be present.
UPS -> ??? means I'm guessing whether it'll be a local courier who has the contract or whether it'll be one of the many Toll [2] subsidiaries. No couriers are accepted into parcel lockers (unless you get a Toll parcel dropped off at a news agent).
Those acronyms mean different things in the US.
USPS = United States Postal Service, the official one.
UPS = United Parcel Service, a different company
I think the parent meant USPS shipments always gets delivered by Australia Post (that's how USPS usually does deliveries in other countries: they use that country's official service), whereas UPS gets their packages delivered by an assortment of local carriers.
Yep, sorry if I was unclear. FedEx has local offices around Australia, USPS is handled by Australia Post, UPS is handled by whoever has the contract at the moment.
Entirely depends on how good your local post office are. Here in the UK, delivering to my parents out in the country Royal Mail is great. Delivering to my flat in the city, I'd rather have UPS.
For us they seem to delay the shipping the item yet still claim two day shipping. For example ordering around midday (Pacific timezone) on a Thursday often results in the item not shipping until later on Monday, which then arrives Wednesday but more often Thursday morning. Every step on the way can be contrived as "two day", but it really took a week and that is the number we care about. We likely won't be renewing Prime.
Amusingly there are also those orders of things you don't care about getting immediately. Those seem to come fast, often less than 24 hours from ordering. Amazon doesn't know which items fall in which category (their media $1 credit is not worth it). Nor do they seem to notice breaking their own promises and proactively doing something about.
To counter this anecdote with my own, I often get "2 day" shipping items delivered the day before they were supposed to arrive. Likewise, there's been multiple times where I've walked out the front door on the way to work at ~8AM and my package is already sitting there. Maybe it has something to do with location?
The items are all fulfilled by Amazon so they know at the time of order what to promise, and also that it is Prime "2 day" shipping. As mentioned sometimes items come really quick, but it seems the ones you want the most are the ones delayed the most. (Of course those are also what you are paying most attention to.)
My memory of prior years is that the vast majority of items arrived within time, and that it has been getting worse over the last year or so.
Jeff Bezos isn't going to come to your house and find the duplicate item, you have to send it back to Amazon (they'll give you a label and you already have the packaging it came in).
Amazon still pretty much never uses USPS to me in Wisconsin, unless you count SmartPost and the like if I select no hassle shipping.
I celebrate when Amazon misses its Prime 2-day shipping guarantees. That means I can complain and they promptly give me extra free months of Prime as compensation. Not sure why you don't get the same. They always offer it in my experience.
I always order stuff with at least a couple of extra days before I need the item so if you can't do that I could see why missing the 2 day target is bad.
Next day shipping for Amazon UK is pretty reliable, but I have to say I'm relived every time delivery is by someone other than "Amazon Logistics". Last time they delivered a parcel (value ~£100) I got an email saying it had been left in "my preferred safe space" (which I have never set) and had to go looking for it. Turn out they had left in my bin, at 9pm the night before the bins were due to be emptied.
I agree with the article, the term "free" is widely misused. Which is strange given the available options in the English language: bundled, included, prepaid, incorporated, et al.
If something costs $99 it isn't free. Free is no cost. $99 is not no cost, therefore $99 is not free. Just as text messaging isn't a "free" part of your $30/month cellphone plan, it is an included part however.
And furthermore, what you often find with "Prime" products is that there are alternate sellers shipping "like new" versions of the products that the same price as the Prime offer, but have shipping split out. For example:
The postal service is a networked delivery service, just like the Internet. The difference is that the data packets are physical envelopes.
Now, the cost of running the postal service is the cost of supporting the whole network of delivery vans, sorting offices, collections and so on, including all the staff.
The cost of supporting the network is the same whether it carries a very large number of packets or zero packets (up to the point where you have to add infrastructure to cope with extra traffic. Yes, like the Internet).
This economic structure means you can carry traffic at a marginal cost if you know the cost of supporting the whole network is covered.
All of which was worked out before Sir Rowland Hill launched the Uniform Penny Post in the UK in 1840. This disrupted the whole messenger business (where you paid for distance traveled) and was widely copied everywhere else. After that, nations formed a Universal Postal Union on the basis that "we'll deliver your letters if you deliver ours" (like the Internet).
In the early days of the public Internet (early 1980s), I used to explain how it worked by comparing it to the penny post. It's nice to be able to do the reverse ;-)
Ships, airplanes, trucks, and postal workers have substantial ongoing costs. The marginal cost of additional traffic is still pretty high, and indications are that these sellers are getting away with paying less than that actual marginal cost.
> Ships, airplanes, trucks, and postal workers have substantial ongoing costs.
Yes, those are the network costs, ie the cost of supporting the collection-and-delivery network. They're assumed to be (more or less) constant, regardless of traffic.
You don't make any money running a network with empty vans.
By "ongoing costs" (maybe the wrong term) I mean costs related to the amount of traffic.
The number of trucks or airplanes you need to run on any given day depends on how much traffic you carry. The amount of fuel you need to buy then depends on that. So does much of the maintenance you do, and how much you pay the workers. A postal network carrying zero traffic will be a lot cheaper to run than one carrying lots of traffic. The analogy to the internet is not very good. A network link with a 100Gbit capacity costs about the same to run for a day whether it carries a petabyte or nothing. A postal route with a million parcel/day capacity costs way more to run for a day if it actually carries a million parcels than if it carries nothing.
Once you need to send a truck to someone's house, have someone get out and drop off one letter then adding a second letter has a tiny extra marginal cost. Further, there are some fuel savings from sending an air craft 1/4 full vs. 3/4 full but again there minimal in comparison to keeping the aircraft flying in the first place.
Thus, from the post offices perspective they are much better off with a steady stream of traffic than random spikes. Which is a large part of why the post office is willing to deliver spam aka junk mail so cheaply.
Sure, but once the truck is full, sending one more letter needs an entire second truck. Average this across the system, and a route's costs per parcel are roughly equal to (cost of running one truck) / (number of parcels the truck carries).
The normal solution to that is just wait a day to deliver some mail. With some intelligent routing you basely never send a truck out that's not close to normal capacity.
Nagle's algorithm[0]. So long as you haven't recieved a "Where the hell is my mail" phone call, just keep adding stuff to the second truck until that second truck fills up, and send it later.
> The number of trucks or airplanes you need to run on any given day depends on how much traffic you carry.
That might be how a delivery service works, but it's not how the post office works in almost all the countries in the world. Including, I suspect, the USA.
Post office networks are actually run as networks. They have drivers who collect from post boxes at regular times, sorting offices that work round the clock, postmen who do regular delivery rounds, and so on. The cost of running the network is, over the short term, almost impervious to the amount of traffic.
(Over the long term, of course, you restructure the network to cater for things like population changes -- again, just like the Internet.)
What you should realize is that a lot of people used to think like you before 1840, which was why the Penny Post was such a big deal. Network thinking made mail dramatically cheaper and led to a massive expansion in communications, and the whole system went global in a very short time.
None of that would have happened under the old system.
Isn't that just because volumes are highly predictable in the short term? It's not that the marginal cost per item is near zero, it's simply that the number of items is just about the same each day. It's still meaningful to talk about the cost of delivering a single item, and the strangeness of having a price that's well below that cost.
Yes, volumes are predictable, and no, it's still not really meaningful to talk about the cost of delivering a single item. You have to switch to network thinking -- and I'm sure there's plenty of C19th analysis to support it.
The real cost is the cost of running the network, not the cost of delivering an individual item. Think like that and you'll fail to understand why it's the same price to deliver a letter from Manhattan to LA as it is from Manhattan to Manhattan.
In this case, the problem is not the cost of an individual item from China. The problem is that the pricing incentivizes the sending of large volumes of items from China (where postal prices are low) to the USA (where delivery costs are high).
Unfortunately those prices were negotiated before (I assume) anybody realized it was going to be a problem.
On the good side, the USPS charges high prices to send items to countries with low delivery costs, so it's swings and roundabouts. If the traffic flows between China and the USA were equal, it probably wouldn't be a major problem.
> Think like that and you'll fail to understand why it's the same price to deliver a letter from Manhattan to LA as it is from Manhattan to Manhattan.
Um, they're the same price because it's mandated to be such by law. Go ask a company whose prices aren't set by the government, like UPS or FedEx, and they'll quote you very different prices for those different services.
As for the rest, if the cost of additional items is near zero then why is it a prove that the pricing incentivizes large volumes sent to the USA?
Mail volume varies easily by a factor 3-4 between days.
The cause would be high volume things would be things like utility bills that usually go to everyone inside an area on the same day or within a few days.
>Over the long term, of course, you restructure the network
And this is definitely happening with the USPS: a few years ago some people I know leased a local post office building that had been decommissioned due to decreased mail volume.
I also guess registered mail is common or very cheap in China. I'll have $5 packages shipped registered, which must incur a dollar or two in direct costs by the mail carrier.
I don't buy this argument. This might explain free shipping to France (the country), but not free delivery to the OP (the physical address). There's not way you can make even a short 1km delivery profitable for 3 cents (except if you're delivering for a whole building at once, which seems very unlikely).
I'm reminded of the famous "discovery" that it costs $10 (or whatever) for a secretary to send a letter. Actually, the secretary costs $10 whether she sends a letter or not ;-)
The point is that transaction is not profitable but overall the system is.
They get soaked on the 3c button, but as most people dont do this, they can absorb that cost and subsidize it with the rest of their profits.
For the same reason some people might advocate basic income, because overall administering the cost is more expensive than just paying it, especially when it comes to customer satisfaction and buying choices.
That's the wrong way to think about it! You need to think about the system not the individual transactions ;-)
Do you pay more for web pages from China than you do from the USA because they travel further? Why not?
The problem is that the whole accounting and tracking overhead would be far more than it's worth.
The only real issue is whether the total income from carrying traffic is bigger than the total cost of running the network.
Yes, there are anomalies with China because Chinese charges reflect Chinese costs (and government subsidies, if any). The fact that USPS has higher costs is not something the Chinese have to worry about -- or not until the US negotiates higher fees via the Universal Postal Union.
Otherwise, the USPS charges a lot for overseas mail, so it makes extra profits when that mail is delivered in low-cost countries such as China and India. On the whole, it probably breaks even or comes out ahead....
International postal agreements cap the cost to China Post for the final delivery of mail artificially low and USPS has to absorb the actual final delivery cost.
Because of that artificial cap and China Post's cost of mailing, the shipper bears a very low cost. Probably still losing money mind you but that loss is in effect heavily subsidized.
Airmail costs for a button would be 6 RMB or $0.91 per china post's web site for a letter in the 3rd group (US, Europe, Canada, OZ, NZ).
Surface mail cost for the same letter would be 4 RMB or $0.61.
That's cost if you walk up to the post office. I don't really have the patience to try and sort out the discounts that might apply to volume shippers. I assume they have the whole line of discounts for electronic stamps, large volume shippers and pre-sorted mail, amongst others.
> assuming it takes the mailman as little as 10 seconds to deliver the package, and given he is paid the minimal legal wage here, that would already cost… 3 cents already!
The marginal cost for delivering that button (even assuming the button itself was free) was more than 3 cents.
What if it's like airlines, where the full-fare and business class passengers subsidize the economy class? Maybe for every 3 cent button, someone is paying more than the marginal cost for their shipping, so it all evens out in the end?
That's what I'm figuring. AliExpres's bread and butter is dirt cheap computer components and wholesale chargers and stuff for gas stations and the like. Their margin on that $100 android tablet is big enough to cover the shipping loss on hundreds of $0.03 buttons.
Is there really any vendor loyalty on a site like AliExpress though? It just doesn't seem that likely to pay off. On the other hand, I assume the amount the vendor is losing on a transaction like this is also minuscule, so maybe it would.
I feel like I'm subconsciously much more loyal to services I have used than I would otherwise like to think. There is so much other stuff going on and I just can't be bothered going through the (probably easy) task of understanding a new service. So I just go back to the service that I've already used, know works, and does amazing things like ship 3 cent buttons for nothing.
But it's not the service you need to be loyal to in order for this to pay off, it's the specific vendor selling that 3 cent button, since they're the one losing money on the transaction.
Most vendors on AliExpress only sell such low-cost items in lots, so you could, for example, only buy these buttons by the dozen. Although that still means you end up with a margin that is ridiculously instead of ludicrously small.
And besides that, the commercial airlines do courier postal packages & letters for high priority stuff.
all the major courier services offer same day delivery across the US. I learned this when I flew from NC to CA and left my car keys in NC. I could have gotten them on the next plane to CA for about $300. It wasn't worth it.
I suspect the vendor screwed up and lost money on sending that button. I don't generally see free shipping on anything much under a dollar on AliExpress which presumably says something about how much it costs to ship stuff. (Even then, some of them might be losing money. AliExpress doesn't have a good way of combining shipping costs for multiple items so if you want to offer competitive prices for customers who want to buy a bunch of different small items from you...)
So I don't know much about how mailmen are employed, but there are a few scenarios in which it could turn out that the mailman would have been paid those 3 cents regardless.
The simplest: he's salaried. However, I don't think mailmen generally are.
Alternatively, the mailman is paid hourly but is expected to put in 40 (or some other constant) hours of work per week. His primary role is to deliver mail, but any extra time he has after doing his route he fills by sorting packages, filling out paperwork, etc. If he had a longer route that morning, he'll try to work through the sorting faster. If it was a shorter route, he might pace himself more casually.
You might say - in response to either of these - "but this doesn't scale! If there were fewer packages, the company wouldn't have hired as many mailmen and would have saved money!" Again, I don't know much about this industry, but in some (e.g. rural) areas, staffing might be done based more upon geographical coverage than the expected number of packages to be delivered per day. Furthermore, the company may be choosing to deliver such a package in order to secure its branding. Does offering to deliver this unprofitable (on its own) package lead to a promise of further, profitable delivery contracts? In the case of Alibaba & its courier, it probably did have some weight. Maybe the extra cost of having the deliveryman out on his route longer is offset by the advertising painted onto the delivery van.
It's difficult to measure the value of one very small piece of a big system because its the system as a whole which generates revenue, rather than each individual component.
Letter carriers were customarily paid to run their route. In the old days, that meant you could find the mailman in the pub after his rounds.
Nowadays they audit them very aggressively. Also the migration away from letters to packages has led to the decline of the route and an increase in other mechanisms.
I was a mailman in Sweden for about 3 years in the early 2000s. One year full time, temping while doing uni for another two.
Full time employees were salaried, with 8h work day averaged over a month. When work was done, you went home. If you worked 6h one day, 10h the next you would not get overtime. Overall, I would guess I worked about 80% of the monthly hours, and I never hit overtime. Longest day I worked was 13h, shortest day was 3.5h.
Temps were hourly.
The extra time cost of adding a piece of mail to a route is mostly negligible. There are a few exceptions.
The first piece of mail that will take you inside an apartment complex adds a good bit of time (since you have to get off your bike and go into the building). I may have occasionally have forgotten to deliver something that was going to the 4th floor if that was the only thing in that apartment complex on a given day, and delivered it the next day instead.
The first piece of mail to a house doesn't matter - 95% of the time delivering to houses is the transport time between houses, not the delivery.
For us, routes were typically limited by physical effort and in-between transportation time, not the volume.
Houses were limited by the time of going from house to house, to about 2.5h time total. Apartments were limited by the effort of going up and down stairs to about the same time.
A usual route would be ~600 houses, or ~80 4-story apartment entrances. High rises were more limited by volume (and were typically mixed with 4-stories for that reason) so that a normal route would be maybe 8 high rises and 70ish apartment entrances.
Were you delivering mail or packages? Because apartment complexes around here usually have a set of letterboxes just inside or even outside the building, so the mailman doesn't have to climb to the 4th floor.
Mail. In the area I worked there was one apartment area with letterboxes at the door and about 20 areas with the mailbox in the doors of the apartments.
Sweden built a ton of housing (the goal was a million apartments in 10 years or so) back in the 50s and 60s. Those buildings didn't have letterboxes inside, all with letter gaps in the doors (at least where I worked). Newer places typically have them downstairs now.
The internet example for starters is incorrect. See AWS for some idea on real costings. It's just most internet plans are a all you can eat style system.
The real answer is subsidies and trade agreements.
PS The penny post would be around one pound in today's figures, more than current letters costs.
First class post in the UK is 62p, so in real terms around 3 times as expensive as in 1840. (and the service in the 1840's had multiple collections and deliveries per day).
on a tangential note about free shipping, aside from this China mystery, there is no such thing as free shipping. free shipping is a marketing ploy which makes you feel like you are getting some value where you actually lose it. when you add the shipping component of an online purchase into the item price, it removes the ability for you to save when you purchase multiple items. each one is priced as if it were being shipped on it's own.
Yes and it works well because it means that I can more easily see what I will be paying for the goods. As far as I am concerned the price of the goods is the cost to me of getting it to me, I'm not interested in who gets what slice of the pie.
As for multiple items, the same applies, I am only interested in the total cost to me, the supplier and the computer should do the arithmetic for me.
This is essentially the same argument as the stupid business of quoting ex-tax prices in shops; I'm glad this no longer happens in European shops and online stores, it annoys me every time I go into a dollar store in the US and hand over a dollar bill only to be asked for another seven cents or whatever it happens to be in that state.
That's a very narrow view. Each item is priced as part of the overall cost of shipping, and supply+demand factors. Amazon knows the average bundle size.
In that same respect, you're paying for that same shipping when you buy from a brick and mortar store. Whatever overhead it cost to get the item from point A to point B, you'll end up paying for somehow.
It is simply opportunistic shipment. In 1980s and 1990s British Airways had a service which allowed for the packages to be shipped between international airports serviced by direct BA flights when those flights were underutilized.
I thought the mystery was that China Post created something called "ePacket" to subsidize post to international destinations for online only shipments.
Amazon does not like this at all and are currently lobbying the US Govt to stop it.
This article[1] linked somewhere in this thread explains part of the problem. But why not just the US, but many other countries, including Brazil, the most international shipping unfriendly country in the world [2], are getting free shipping on DX and AliExpress packages.
This thread is full of good ideas and information about $1-$3 products and int'l shipping agreements, but the "$.03 button" mystery is almost certainly simply an edge case that no one cares about. It's a rare purchase that is subsidized by the massively larger volume of people buying 1000-button batches or what-have-you.
AliExpress is losing money on such sales. But why bother, then?
It has to be this. I work at an E-commerce company. We often do the math on just exactly which items make a profit for us vs which don't. It's not always obvious until you really dig into the exact costs of handling the items. I believe Alibaba has a lot of 3rd party resellers, it's possible they haven't done the math themselves.
Same reason chip manufacturers offer free samples.
Some portion of the people who buy one 3-cent button are going to come back in a couple weeks and order forty thousand 3-cent buttons. Free, fast shipping on the first button is to entice you to use that button for your design instead of someone else's.
This also surprised me: I ordered stuff on AliExpress that I wouldn't ship back to China for € 0,70, even if the item was free (which electronics aren't).
I asked around and it turns out that postal services in rich (EU) countries have a special, heavily sponsored rate for 3th world nations. This wasn't a problem with the occasional letter from Afrika, but the post services didn't really saw this coming: Mass free shipping from china. Apparently the EU wanted to get out of this, but china refuses (and seems to be able to, for now).
I've ordered lot's of packages from AliExpress, mainly low value items (<10$) and shipping ranges between 0 and 2$. We're not in the EU (Serbia) and not too rich either. Maybe there's an old agreement we inherited from Yugoslavia but I doubt it.
In fact, I ordered a USB lamp worth 2$ with free shipping just to verify it was possible. It arrived 3 weeks later (btw 3 weeks is the travel time China-Serbia for all packages so far, give or take a couple of days). It boggled my mind that someone is building these things (the connector, wires, led's, plastic and metal alone is worth that money surely), packaging them and sending for such a small amount (not as crazy as the example in the article, but pretty crazy for me).
>I received my package around 10 days later, in perfect condition.
That's amazingly fast - I don't understand why it's faster to send things from Hong Kong/China to the US than from the same to Australia. I've had things from AliExpress take upwards of 35 days to get to me (in a "metro" area of SE Australia)
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[ 3.5 ms ] story [ 243 ms ] threadChina must simply have cheaper shipping rates, obviously not 3 cents, but probably a fraction of what you are used to spending.
The plane was already flying from China to wherever, filled with AliExpress merchandise. They may have paid for the whole plane instead of just by weight. So adding this product didn't add any tangible extra weight or cost.
Then the mail carrier or whoever is already going on that route. I doubt he gets paid per package, so adding another small package is no big deal and doesn't add extra time/cost.
Unless someone is ordering 1million buttons, then the weight starts to add up. But then so does the cost of the buttons, which at that point would cover the shipping.
I'm generalizing a bit since I don't know the specifics of the shipping industry. But this makes sense to me.
It makes little sense to give nearly everyone free shipping, but charge every 100,000th person $50,000 because their item was the one that needed a new plane. So instead, they divide the cost across all the stuff that gets shipped so everyone pays a share. That per-item cost is typically more than what these sellers are charging, thus the questioning.
http://www.ems.com.cn/mainservice/ems/e_guo_ji_e_you_bao.htm...
for reference 6RMB=0.91 USD
Larger parties are able to obtain even lower rates.
In other words, for the business selling you the item, shipping is free. It's the Chinese citizen/taxpayer that foots the bill. This shouldn't be surprising since China, eg, is notorious for devaluing their own currency as a means of boosting exports. This is effectively a tax on the greater populace for the benefit of their manufacturing sector.
The idea was that there is an equal amount of packages shipped each way, so the post office makes up the difference in packages sent. That used to be true, and now isn't, but the treaty stayed.
Even if an entry scan isn't made, it still gets scanned along the way.
Most of this stuff is shipped untracked though.
[1]http://fortune.com/2015/03/11/united-nations-subsidy-chinese...
*I say originally, as my experience with Amazon has been on a downward trend for at least the last two years.
I also think there's a sense of membership that if you are paying you might as well enjoy the benefits.
I personally enjoy Amazons packaging. I know my items will be well packaged, whereas there's always a surprise on Ebay or other store. I have chosen ship with Prime (Fulfilled by Amazon) on items that other Amazon sellers have cheaper.
It's just more consistent and efficient. And that's sort of a benefit.
[1] http://fortune.com/2015/03/11/united-nations-subsidy-chinese... [2] http://cep.lse.ac.uk/pubs/download/cp396.pdf
I guess they thought it was too much work too.
I've found that Malaysia Post is the worst, they often take 60 days until a package is delivered.
After lots of "failed" delivery notes when there was always someone present, I asked the workers in the post office why they don't deliver packages anymore (thinking it might be related to country of origin and specific agreements between different postal services regarding fees).
They were adamant that delivery was attempted and it must be coincidence. In the end I suspect, in our case, it's more a case of silent protest from the postmen who are payed poorly, so they don't bother carrying the packages.
Just so there's context, the actual cost is much, much higher than $1200. That's just the payment for the ocean journey. The other costs are factory to port (varies), insurance+docs (few hundred), destination port charges ($1k or so), customs bond, and then the actual duty for the imported items. Lastly, of course, getting the container from the dock to where you are to unload it.
The costs above and beyond just the "ocean shipping" part for the most recent one was $1914. $830 of it was the customs duty, which will vary wildly depending on the HTS code of what's being imported, and how much you brought in.
Modern container ships travel at about 25 knots (unless they're doing fuel-saving slow cruise at 12 knots). http://www.sea-distances.org/ tells me that a 25-knot ship going from Hong Kong to Marseilles via the Suez Canal takes 13 days 7 hours to get there.
In practice, of course, there's loading and unloading on both ends (figure 2 days) and you're not traveling through the Suez at 25 knots; the traffic there goes at 8 knots according to https://en.wikipedia.org/wiki/Suez_Canal#Navigation. That said, the Suez transit takes 11-16 hours according to that link, so maybe add half a day to the estimate.
The upshot is that a 16-18 day travel time is not unreasonable there. I was a bit surprised it's that short, but being able to maintain 25 knots around the clock eats up distance faster than one expects.
Of course if you go from Shanghai instead of Hong Kong, you need to add a day and a half or so. And if you go to Brest instead of Marseilles, add two more days.
But the huge mistake you're making is that a container vessel will make additional stops and it does not connect every possible port to every other possible port. If you have uncommon combinations, the container will usually be moved from one vessel to another. This adds additional time (days).
Hong Kong -> Fos Sur Mer is like 31+ days.
"Find the amount charged to domestic senders to go from the incoming drop-off point to the destination. Got it? Okay, if the foreign post drops it there, they get charged that amount."
Then, everyone gets charged the same, and you can't overcharge foreigners without also screwing your own people. Plus, foreigners get cheaper postage as they drop it closer to the final destination.
That's the idea of the treaty anyway, an idea that pre-dates internet and computers of course, which do make it at least theoretically possible for my local post office to figure this out.
When terminal delivery charges came in, countries were divided into classes based on economic criteria, basically gross national income per capita. Surface area of the country is also figured in.[2] Because there hasn't been a recalc of this in a few years, China gets a very good rate. This may change in 2016.
[1] http://www.upu.int/uploads/tx_sbdownloader/reportStrategyCon... [2] http://www.upu.int/uploads/tx_sbdownloader/resolutionClassif...
One time they knocked zero times.
> All this should be a reminder that any trade deal has winners and losers and unintended consequences.
Obviously, whoever you subsidize is a winner. If you're setting up barriers to trade (e.g. tariffs), foreign sellers/manufacturers lose. If you're subsidizing imports, domestic sellers/manufacturers lose.
Why can't we just not subsidize anyone?! Free trade is supposed to be just that, free. Instead, we have the TPP & TTIP, which will create yet new injustices and new sets of winners and losers.
For example, post great depression america started tax subsidy for farmers to ensure a stable food supply. That hurts imports of the same product. Another interesting example is minimum wage, it makes imports more attractive, as domestic labor costs go up. Not getting into what is right/wrong, simply that economic incentives are not uniform and may be defensive. Hence international trade tries to deal with that via accords, treaties, tariffs etc.
Not to mention to that tariffs are a source of revenue for the respective government.
The purpose of these tariff-reducing trade treaties is much more about gathering political coalitions to break through public-choice failures resulting in (overall welfare reducing) protectionist policies taken by each side.
Markets => competition => lower price.
Here in NYC Amazon delivery has gone from being amazing and magical to nearly worthless seemingly overnight with this change. UPS (and Fedex) didn't seem to have any trouble delivering even to challenging buildings without doormen, giving accurate tracking etc. Now every time I see USPS as the option I cringe knowing the package won't be delivered, there won't be a door tag left, and at some random arbitrary time the status will change to "attempted delivery" even if someone was sitting on the front porch waiting for it the entire time.
It's getting really bad, we'll see how long it takes Amazon to figure it out.
I'm losing faith in those 2-day guarantees, and the number of items available for Prime has been slowly dwindling. That, and their minimum spend for certain items went from $25 to $35. Starting to wonder whether renewing my Prime membership is actually a good idea.
Amazon at least mitigates this loss risk by unquestionably resending the package without additional charge. This exercise has grown tiresome.
It's interesting that Amazon finds this to be cheaper than shipping it properly to begin with. Although it makes sense if packages sent through USPS are low-value and not just small.
UPS also does a great job. I don't know how they break into my building, but they do. Once in a while the normal delivery person takes the day off, and you get the door tag. Fill out the form online and the package appears tomorrow. Not perfect but reasonable.
FedEx is awful. FedEx means I'm not going to get the package unless I happen to be at home and they happen to actually ring my doorbell.
DHL is also awful (the delivery mechanism of choice from amazon.co.jp to the US). I order a $10 magazine and they won't just leave the package at the door. In fact, they call me to see if I'm at home, say things like "oh, you didn't answer before, I'm not on the way there anymore so I can't deliver it" and other such bullshit.
Finally there are the taskrabbit-like shipping services, A-1, Lasership, etc. If you see one of those you aren't going to get your package. Just re-order it and hope you don't lose the lottery again. They can't even successfully deliver to commercial addresses with dedicated courier receiving and fully-staffed mail rooms.
USPS -> Australia Post means that I can get the parcel sent directly to my parcel locker [1] and get an SMS when the parcel arrives. I don't need to be present.
UPS -> ??? means I'm guessing whether it'll be a local courier who has the contract or whether it'll be one of the many Toll [2] subsidiaries. No couriers are accepted into parcel lockers (unless you get a Toll parcel dropped off at a news agent).
Amusingly there are also those orders of things you don't care about getting immediately. Those seem to come fast, often less than 24 hours from ordering. Amazon doesn't know which items fall in which category (their media $1 credit is not worth it). Nor do they seem to notice breaking their own promises and proactively doing something about.
My memory of prior years is that the vast majority of items arrived within time, and that it has been getting worse over the last year or so.
I celebrate when Amazon misses its Prime 2-day shipping guarantees. That means I can complain and they promptly give me extra free months of Prime as compensation. Not sure why you don't get the same. They always offer it in my experience.
I always order stuff with at least a couple of extra days before I need the item so if you can't do that I could see why missing the 2 day target is bad.
If something costs $99 it isn't free. Free is no cost. $99 is not no cost, therefore $99 is not free. Just as text messaging isn't a "free" part of your $30/month cellphone plan, it is an included part however.
$14.99 prime item
$10.99 + $4 like new used item
Now, the cost of running the postal service is the cost of supporting the whole network of delivery vans, sorting offices, collections and so on, including all the staff.
The cost of supporting the network is the same whether it carries a very large number of packets or zero packets (up to the point where you have to add infrastructure to cope with extra traffic. Yes, like the Internet).
This economic structure means you can carry traffic at a marginal cost if you know the cost of supporting the whole network is covered.
All of which was worked out before Sir Rowland Hill launched the Uniform Penny Post in the UK in 1840. This disrupted the whole messenger business (where you paid for distance traveled) and was widely copied everywhere else. After that, nations formed a Universal Postal Union on the basis that "we'll deliver your letters if you deliver ours" (like the Internet).
In the early days of the public Internet (early 1980s), I used to explain how it worked by comparing it to the penny post. It's nice to be able to do the reverse ;-)
Yes, those are the network costs, ie the cost of supporting the collection-and-delivery network. They're assumed to be (more or less) constant, regardless of traffic.
You don't make any money running a network with empty vans.
The number of trucks or airplanes you need to run on any given day depends on how much traffic you carry. The amount of fuel you need to buy then depends on that. So does much of the maintenance you do, and how much you pay the workers. A postal network carrying zero traffic will be a lot cheaper to run than one carrying lots of traffic. The analogy to the internet is not very good. A network link with a 100Gbit capacity costs about the same to run for a day whether it carries a petabyte or nothing. A postal route with a million parcel/day capacity costs way more to run for a day if it actually carries a million parcels than if it carries nothing.
Thus, from the post offices perspective they are much better off with a steady stream of traffic than random spikes. Which is a large part of why the post office is willing to deliver spam aka junk mail so cheaply.
[0]: https://en.wikipedia.org/wiki/Nagle%27s_algorithm
That might be how a delivery service works, but it's not how the post office works in almost all the countries in the world. Including, I suspect, the USA.
Post office networks are actually run as networks. They have drivers who collect from post boxes at regular times, sorting offices that work round the clock, postmen who do regular delivery rounds, and so on. The cost of running the network is, over the short term, almost impervious to the amount of traffic.
(Over the long term, of course, you restructure the network to cater for things like population changes -- again, just like the Internet.)
What you should realize is that a lot of people used to think like you before 1840, which was why the Penny Post was such a big deal. Network thinking made mail dramatically cheaper and led to a massive expansion in communications, and the whole system went global in a very short time.
None of that would have happened under the old system.
The real cost is the cost of running the network, not the cost of delivering an individual item. Think like that and you'll fail to understand why it's the same price to deliver a letter from Manhattan to LA as it is from Manhattan to Manhattan.
In this case, the problem is not the cost of an individual item from China. The problem is that the pricing incentivizes the sending of large volumes of items from China (where postal prices are low) to the USA (where delivery costs are high).
Unfortunately those prices were negotiated before (I assume) anybody realized it was going to be a problem.
On the good side, the USPS charges high prices to send items to countries with low delivery costs, so it's swings and roundabouts. If the traffic flows between China and the USA were equal, it probably wouldn't be a major problem.
Um, they're the same price because it's mandated to be such by law. Go ask a company whose prices aren't set by the government, like UPS or FedEx, and they'll quote you very different prices for those different services.
As for the rest, if the cost of additional items is near zero then why is it a prove that the pricing incentivizes large volumes sent to the USA?
Mail volume varies easily by a factor 3-4 between days.
The cause would be high volume things would be things like utility bills that usually go to everyone inside an area on the same day or within a few days.
And this is definitely happening with the USPS: a few years ago some people I know leased a local post office building that had been decommissioned due to decreased mail volume.
Do you pay more for web pages from China than you do from the USA because they travel further? Why not?
The problem is that the whole accounting and tracking overhead would be far more than it's worth.
The only real issue is whether the total income from carrying traffic is bigger than the total cost of running the network.
Yes, there are anomalies with China because Chinese charges reflect Chinese costs (and government subsidies, if any). The fact that USPS has higher costs is not something the Chinese have to worry about -- or not until the US negotiates higher fees via the Universal Postal Union.
Otherwise, the USPS charges a lot for overseas mail, so it makes extra profits when that mail is delivered in low-cost countries such as China and India. On the whole, it probably breaks even or comes out ahead....
Because of that artificial cap and China Post's cost of mailing, the shipper bears a very low cost. Probably still losing money mind you but that loss is in effect heavily subsidized.
Airmail costs for a button would be 6 RMB or $0.91 per china post's web site for a letter in the 3rd group (US, Europe, Canada, OZ, NZ).
Surface mail cost for the same letter would be 4 RMB or $0.61.
That's cost if you walk up to the post office. I don't really have the patience to try and sort out the discounts that might apply to volume shippers. I assume they have the whole line of discounts for electronic stamps, large volume shippers and pre-sorted mail, amongst others.
> assuming it takes the mailman as little as 10 seconds to deliver the package, and given he is paid the minimal legal wage here, that would already cost… 3 cents already!
The marginal cost for delivering that button (even assuming the button itself was free) was more than 3 cents.
all the major courier services offer same day delivery across the US. I learned this when I flew from NC to CA and left my car keys in NC. I could have gotten them on the next plane to CA for about $300. It wasn't worth it.
The simplest: he's salaried. However, I don't think mailmen generally are.
Alternatively, the mailman is paid hourly but is expected to put in 40 (or some other constant) hours of work per week. His primary role is to deliver mail, but any extra time he has after doing his route he fills by sorting packages, filling out paperwork, etc. If he had a longer route that morning, he'll try to work through the sorting faster. If it was a shorter route, he might pace himself more casually.
You might say - in response to either of these - "but this doesn't scale! If there were fewer packages, the company wouldn't have hired as many mailmen and would have saved money!" Again, I don't know much about this industry, but in some (e.g. rural) areas, staffing might be done based more upon geographical coverage than the expected number of packages to be delivered per day. Furthermore, the company may be choosing to deliver such a package in order to secure its branding. Does offering to deliver this unprofitable (on its own) package lead to a promise of further, profitable delivery contracts? In the case of Alibaba & its courier, it probably did have some weight. Maybe the extra cost of having the deliveryman out on his route longer is offset by the advertising painted onto the delivery van.
It's difficult to measure the value of one very small piece of a big system because its the system as a whole which generates revenue, rather than each individual component.
Nowadays they audit them very aggressively. Also the migration away from letters to packages has led to the decline of the route and an increase in other mechanisms.
Full time employees were salaried, with 8h work day averaged over a month. When work was done, you went home. If you worked 6h one day, 10h the next you would not get overtime. Overall, I would guess I worked about 80% of the monthly hours, and I never hit overtime. Longest day I worked was 13h, shortest day was 3.5h.
Temps were hourly.
The extra time cost of adding a piece of mail to a route is mostly negligible. There are a few exceptions.
The first piece of mail that will take you inside an apartment complex adds a good bit of time (since you have to get off your bike and go into the building). I may have occasionally have forgotten to deliver something that was going to the 4th floor if that was the only thing in that apartment complex on a given day, and delivered it the next day instead.
The first piece of mail to a house doesn't matter - 95% of the time delivering to houses is the transport time between houses, not the delivery.
For us, routes were typically limited by physical effort and in-between transportation time, not the volume.
Houses were limited by the time of going from house to house, to about 2.5h time total. Apartments were limited by the effort of going up and down stairs to about the same time.
A usual route would be ~600 houses, or ~80 4-story apartment entrances. High rises were more limited by volume (and were typically mixed with 4-stories for that reason) so that a normal route would be maybe 8 high rises and 70ish apartment entrances.
Sweden built a ton of housing (the goal was a million apartments in 10 years or so) back in the 50s and 60s. Those buildings didn't have letterboxes inside, all with letter gaps in the doors (at least where I worked). Newer places typically have them downstairs now.
The houses themselves are pretty good actually, but sadly due to where they are and the amount of them many have become undesirable neighbourhoods.
I Googled about it yesterday and found this insightful article instead.
The internet example for starters is incorrect. See AWS for some idea on real costings. It's just most internet plans are a all you can eat style system.
The real answer is subsidies and trade agreements.
PS The penny post would be around one pound in today's figures, more than current letters costs.
First class post in the UK is 62p, so in real terms around 3 times as expensive as in 1840. (and the service in the 1840's had multiple collections and deliveries per day).
As for multiple items, the same applies, I am only interested in the total cost to me, the supplier and the computer should do the arithmetic for me.
This is essentially the same argument as the stupid business of quoting ex-tax prices in shops; I'm glad this no longer happens in European shops and online stores, it annoys me every time I go into a dollar store in the US and hand over a dollar bill only to be asked for another seven cents or whatever it happens to be in that state.
Amazon does not like this at all and are currently lobbying the US Govt to stop it.
[1]: https://www.washingtonpost.com/news/storyline/wp/2014/09/12/...
[2]: https://community.ebay.com/t5/Archive-International-Trading/...
It has to be this. I work at an E-commerce company. We often do the math on just exactly which items make a profit for us vs which don't. It's not always obvious until you really dig into the exact costs of handling the items. I believe Alibaba has a lot of 3rd party resellers, it's possible they haven't done the math themselves.
Some portion of the people who buy one 3-cent button are going to come back in a couple weeks and order forty thousand 3-cent buttons. Free, fast shipping on the first button is to entice you to use that button for your design instead of someone else's.
I asked around and it turns out that postal services in rich (EU) countries have a special, heavily sponsored rate for 3th world nations. This wasn't a problem with the occasional letter from Afrika, but the post services didn't really saw this coming: Mass free shipping from china. Apparently the EU wanted to get out of this, but china refuses (and seems to be able to, for now).
Enjoy it while it lasts :)
In fact, I ordered a USB lamp worth 2$ with free shipping just to verify it was possible. It arrived 3 weeks later (btw 3 weeks is the travel time China-Serbia for all packages so far, give or take a couple of days). It boggled my mind that someone is building these things (the connector, wires, led's, plastic and metal alone is worth that money surely), packaging them and sending for such a small amount (not as crazy as the example in the article, but pretty crazy for me).
No idea how it is possible. The bubble wrapping protecting it from shipping is worth more than what I paid.
That's amazingly fast - I don't understand why it's faster to send things from Hong Kong/China to the US than from the same to Australia. I've had things from AliExpress take upwards of 35 days to get to me (in a "metro" area of SE Australia)