Let's Make Robots!

Worldwide Free Shipping. Why Does That Work?

Wether you order one chip, two microcontrollers, ten servos, hundred toys or thousand LEDs - you can
order them Worldwide Free Shipping from China.

When I think about that and all the hands my order go through from the online shop through local post through customs through harbor through another harbor through customs through trucks through local post to my mailbox. Shure there are even more steps and hands the order goes through.

It's obvious that  the shipping costs are a part of the product end price. But with this small amounts - and I mean we talk here from $0.50 up to $20.00 - it's simply not obvious how to ship that around the world and not make a heavy loss on this deal.

 

Why does that work for so little money?

Why can a company survive with this business model?

Does anyone have information about that?

 

 

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I'm not sure about the politics of all this.  And I doubt that if the Chinese govt. is subsidizing shipping out of the goodness of their hearts.  I figure there's got to be an agenda somewhere, and probably it's going to bite me (us) in the end.  If it hasn't already.

That being said, the prices for the parts I pay that I get from China are SO low compared to just about anywhere else, it's just impossible to resist.

I don't really mind waiting.  I remember the days when anything you ordered took "4-6 weeks for shipping."

I'm waiting for a couple things from Ebay right now.  One of them has been an incredibly long wait, and still not over. (But I knew it would be when I ordered.)  The other. . .well, ebay's tracking followed it over the course of roughly the week that it took to get to a postal sorting facility in New York.  (My state.  It's within driving distance of me.  Probably about an hour.)  It's been sitting there for two over two weeks.  Go figure.

Edit:

HA!  I just checked.  It's in my local post office right now. (Tho NOT "out for delivery.") I might get it today.  Ironically, today is the last day of the estimated shipping window.  It arrived at the sorting facility a few days BEFORE the start of the shipping window.

Again.  Go figure.

Shipping costs are always included. I ship my items from my Online Shop with China Post. This is the cheapest carrier but also the slowest. However, I got a service to pick up my packages and sending them via China Post to my customers. 

The service can give me up to 60% lower price than the China Post, probably because they get a mass discount. But to ship a 0.50US$ item to my customers I still have to charge them minimum 2US$ in total. I got lost packages but not that many. China Post has a tracking system but only in Chinese and not very reliable. 

More lucky are you when you live near (300km) Hong Kong, then the shipping costs are even up to 50% less than from mainland China since all those shipping services will bring your goods to Hong Kong first and ship them from there.

Since the shipping costs to my main customers countries (geman speaking countries) are all the same, it's easy to calculate and need less or no maintenence in the shop.

I am not sure how others see this but for myself I can say that I like this model. You see a price of a desired item and want to order it...after looking at the excluded shipping costs sometimes you are slapped into the face. (I wanted to order a book from Amazon.com and send it to Germany but saw in the end of the ordering process the 56.00 Euro shipping costs - almost did not believe that but it was true). I like more to pay the price I see in the first place and not add here some shipping costs and there some additional express fees and some something...

I have learned more about this than I ever wanted to :-)

The Chinese government supposedly breaks even on the postal system. They have integrated the famous HongKongPost with ChinaPost.  And they have made it easy for both English and Chinese speaking people to use all the available shipping methods.

See http://sendfromchina.com/  Where you can see what the costs are for the various methods  to your country.

A small package (like a couple of Arduino boards) costs me $3.25 to ship to USA WITH tracking. 100Grams is $4.25 200 grams is $6. 

China has lower labor costs but also very efficient web-based systems, and a world class airport and shipping complex on Hong Kong that puts those containers you see rolling around outside your airplane window on the cheapest flight to USA etc.

The delivering country DOES get a fee. I don't know how much it is, though. 

It's amazingly reliable. I've only had two lost orders out of 1400+ (some DHL, some ChinaPost) 

I did a lot of looking at low prices on Ebay.  If you dig you will see the same item for $1.50 one place, (you pay shipping of $4) and $4.50 another place FREE SHIPPING. Often from the SAME supplier, if you track it down.

So you ARE paying for shipping. There is no Free Lunch, even shipped from a Chinese Restaurant in Shenzhen.

My Chinese friend and I decided this was too stupid a game to play, so we charge shipping at our cost and don't make any money on it.  Still, I can't beat a few of the Ebay guys on bottom line and make any money. Some of them must be running very low profit margins, or the products are from some very low-cost source I don't know about.

Regards, Terry King ...On the Mediterranean in Italy

terry@yourduino.com

 

I think they exploit the asymmetrical postage system, where the postage is paid at the sender end, for international packages, in the local country.

They send bulk and it only costs a little to ship a whole container to Europe, all the labor intensive work will be in the receiver country, where they do not see a single cent for all their work.

The international postage system is old and from a time where it were expected to be fairly symmetrical, approx the same amount of mails entering and leaving a country.

Here we have to elaborate more. If the shipping cost has to cover the transit from the online shop to the customs of our country and not further then the costs that arise from our customs to our mailbox is not included in the shipping costs.

Here in my country the income of a postman walking from his cart to my housdoor, ringing, waiting for me to get a subscription and then go back to the cart may already be higher than the embedded shipping fee in the product end prize.

Does anyone have more information about that?

Since most postal services are run by the govt, they can bear a certain amount of loss and still not be in damage. US postmen are paid by the US mail which is funded by the govt (I may be wrong here). The govt charges tax to fulfill its needs, a small part is paid to US mail out of which a major part goes in salaries. Here in India, the charge of posy is less again due to tax that we pay. The cost that we finally pay is used in transport and shipping. After the post arrives in US, the Indian mail has no responsibility. The US taxpayers pay for transport and delivery through the taxes as mentioned above. So indirectly, you are paying for the items you are consuming.
I didn't consider this when I was writing my comment but now on thinking it over, it certainly seems a viable reason.

I just checked the shipping prices from my home country to India with the Belgian National Post (a government / subsidised company) A letter/package with a weight less then 100 grams costs 3,87€. This is the cheapest tariff, if you want the registered/signed option the price rises to 9,97€. For 1 kilo the price goes up to 25€.

For many years I worked as a consultant for a multinational company, they employed over 20000 people worldwide. About 15000 of them in China and India, I've visited both countries many times. My conclusion is if you want Western levels of productivity the cost  will be almost the same as in the West... In the West we complain that all our factory jobs go to the east, but what they don't say is how much high tech equipment / services we sell to those big eastern companies. Today I visited a company that is building a large production line for the food industry, the end user is in China. They need to deliver 14 more by the end of the year. Total price of the contract is a large 8 figure sum.

If unregistered post is for €3.87, thats for sending things from there to here. The reverse process is going to be cheaper still. As to level of productivity, you have to increase the use of machines to increase productivity but if people in India and China go for that, the only result will be increase in unemployment which as it is is very large here. Plus the cost of production will also increase (as you mention). To avoid both of these, the govt forces companies to keep a healthy amount of workforce. Factory owners don't say anything because they reduce their cost of making the goods (the main reason why they shifted to India and China in the first place.

So the reverse costs are a lot cheaper. But it's the same distance and maybe the same carriers in the end. Does this support mogul's thesis about the exploit of the asymmetical postage system