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A free shipping mystery

410 points by Immortalin 11y ago

randomgyatwork 11y ago
I sent a letter from Japan to Canada for 70 cents. Sending the same letter from Canada to Japan would cost at least $2.50 China must simply have cheaper shipping rates, obviously not 3 cents, but probably a fraction of what you are used to spending.
boxidea 11y ago
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.
- mikeash 11y ago
  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.
  - gohrt 11y ago
    There is no single optimal way to divide the cost among all the passengers. See also: airlines, and capitalist vs socialist economies.
throwaway2048 11y ago
The chinese postal system offers extremely low government subsidized rates. This isn't just Alibaba, almost everybody shipping out of china offers free shipping. http://www.ems.com.cn/mainservice/ems/e_guo_ji_e_you_bao.html 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.
bkeroack 11y ago
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.
shiftpgdn 11y ago
I am 90% certain that a majority of international dealing Chinese vendors simply use counterfeit postage.
- andyana 11y ago
  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.
  - ars 11y ago
    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.
- mikeash 11y ago
  Wouldn't that fail when trying to use a tracking number along with it?
  - Scoundreller 11y ago
    Just like gift cards, it might depend on who manages to use the number first ;) Even if an entry scan isn't made, it still gets scanned along the way. Most of this stuff is shipped untracked though.
tyingq 11y ago
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. [1]http://fortune.com/2015/03/11/united-nations-subsidy-chinese-shipping/ http://fortune.com/2015/03/11/united-nations-subsidy-chinese...
AcerbicZero 11y ago
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.
- franciscojgo 11y ago
  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.
Animats 11y ago
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. [1] http://fortune.com/2015/03/11/united-nations-subsidy-chinese-shipping/ http://fortune.com/2015/03/11/united-nations-subsidy-chinese... [2] http://cep.lse.ac.uk/pubs/download/cp396.pdf http://cep.lse.ac.uk/pubs/download/cp396.pdf
- the-dude 11y ago
  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'. I guess they thought it was too much work too.
  - jpenninkhof 11y ago
    Still getting my sub-dollar stuff from China delivered at my doorstep in the Netherlands. Then again, I'm A3 at Ali ;)
    - voltagex_ 11y ago
      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)
      - Tepix 11y ago
        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.
  - PanMan 11y ago
atirip 11y ago
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?
franciscojgo 11y ago
Here's an article from 2014 that explains this "loophole" https://www.washingtonpost.com/news/storyline/wp/2014/09/12/the-postal-service-is-losing-millions-a-year-to-help-you-buy-cheap-stuff-from-china/ https://www.washingtonpost.com/news/storyline/wp/2014/09/12/...
- scholia 11y ago
  Good piece. Thanks for the link.
- tomp 11y ago
  From the article: > 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.
  - mey 11y ago
    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.
    - jessriedel 11y ago
      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.
vdnkh 11y ago
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.
- stordoff 11y ago
  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.
- dsmithn 11y ago
  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.
  - degenerate 11y ago
    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.
- joesmo 11y ago
  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.
- 11y ago
Someone1234 11y ago
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.
- secstate 11y ago
  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: $14.99 prime item $10.99 + $4 like new used item
  - mod 11y ago
    You can also often just find the item at a lower price from a non-prime seller, with no strings attached. Just don't have free 2-day shipping.
deleted 11y ago
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scholia 11y ago
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 ;-)
- mikeash 11y ago
  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.
  - scholia 11y ago
    > 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.
    - mikeash 11y ago
      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.
dsugarman 11y ago
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.
- kwhitefoot 11y ago
  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.
- gohrt 11y ago
  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.
- ben174 11y ago
  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.
sre_ops 11y ago
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.
chippy 11y ago
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.
fiatjaf 11y ago
Of course there are subsidies and complex discount + partnership relations involved, but in the end the question is simply: WHO is paying for this?
- fiatjaf 11y ago
  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. [1]: https://www.washingtonpost.com/news/storyline/wp/2014/09/12/the-postal-service-is-losing-millions-a-year-to-help-you-buy-cheap-stuff-from-china/ https://www.washingtonpost.com/news/storyline/wp/2014/09/12/... [2]: https://community.ebay.com/t5/Archive-International-Trading/Problems-shipping-to-Brazil/qaq-p/3128783 https://community.ebay.com/t5/Archive-International-Trading/...
gohrt 11y ago
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.
krschultz 11y ago
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.
- chippy 11y ago
  I imagine they are hoping to get some business from Amazon. A loss leader.
randrews 11y ago
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.
voltagex_ 11y ago
>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)
PanMan 11y ago
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). Enjoy it while it lasts :)
- 3princip 11y ago
  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).
- deleted 11y ago
  [deleted]
kerv 11y ago
I once bought a iPhone charge cable from ebay, free shipping from china for $0.01. I won the auction a couple hours later. 6 weeks later it arrived! No idea how it is possible. The bubble wrapping protecting it from shipping is worth more than what I paid.
tarikjn 11y ago
This is mostly do to the Universal Postal Union Convention, it was discussed in details on this thread: https://news.ycombinator.com/item?id=9795017 https://news.ycombinator.com/item?id=9795017
mickelsen 11y ago
Many of these 30 cents button / iPhone cable sellers are usually users with less feedback as well, and they need a cheap way to gain more reputation in Aliexpress or eBay. This is a way to do it and as you get more completed transactions, your seller account gets upgraded and gets better rates. I Won't touch the shipping part which I think is already well covered in the comments.
cha5m 11y ago
A possible explanation to this could be that AliExpress is simply trying to attract people to their platform by any means possible. This means subsidizing purchases to draw users in. I just considered buying that 3c button just because of how cheap it was, and this would have required me to register with them, and enter my cc number. This means that purchasing stuff from them in the future would be easier and I would be more likely to do it. This could explain the free shipping on the China leg, and then as was mentioned there is a treaty that allows for nearly free shipping in the US by Chinese companies.
mesozoic 11y ago
Yeah honestly it's amazing. I've ordered some stuff from there and at that cost I can't believe it makes it to me. Though the post office does require a signature on a lot of these and then holds it hostage and it's not worth me making a trip to the post office to retrieve my $1 item.
applecore 11y ago
If you discover a product that sells for ten times more on Amazon than AliExpress, your first instinct should be to arbitrage the opportunity by ordering the product and selling it on Amazon (and letting Amazon handle the fulfillment: http://services.amazon.com/fulfillment-by-amazon/benefits.htm http://services.amazon.com/fulfillment-by-amazon/benefits.ht...).
- q3k 11y ago
  No, don't. When I go to Amazon, it's not for goods dropshipped from China. It's for things I want delivered quick and from reputable manufacturers and sellers. We already have this problem in Poland with Allegro (local eBay equivalent), where people automate this at a large scale. You and up scrolling past tons of these items, because a) you don't want to wait 20 or so days for it to arrive from China b) you know you can get it cheaper from Aliexpress anyway. Different sites, different targets.
  - xur17 11y ago
    I think the op was referencing buying a bunch, shipping them to Amazon, and then selling them via FBA, so people can buy it with prime shipping.
    - Pxtl 11y ago
      Ali has already beat you to that and has Amazon fulfill some of their larger items.
  - robryan 11y ago
    You would be surprised though how fast thing can arrive, assuming they are aiming for fast delivery. Amazon also allows you not to specify a shipping location, for things being forwarded into USPS the customer often won't even notice it originated on the other side of the world.
  - monksy 11y ago
    > No, don't. When I go to Amazon, it's not for goods dropshipped from China. It's for things I want delivered quick and from reputable manufacturers and sellers. Which they do that anyways. Last few items that I got from amazon... now shipping from China. Even an American flag.
nissehulth 11y ago
I'm in Sweden and I've ordered stuff like a single USB cable from China at a price less than USD 1. Still, free shipping, and $1 wouldn't even buy me domestic letter postage. If the item is small enough, it usually arrive in a padded envelope in my mailbox. Bigger items I may have to pickup at the post office. Most often, it arrives within 2 weeks. I suspect that postal services in different countries have some kind of peering agreement. That they simply assume that the amount of mail would be pretty much the same in both directions and because of that, they don't really charge each other.
jeena 11y ago
The Story of Stuff: Externalized Costs and the $4.99 Radio http://www.huffingtonpost.com/annie-leonard/the-story-of-stuff-extern_b_490351.html http://www.huffingtonpost.com/annie-leonard/the-story-of-stu...
- shoo 11y ago
  > Who paid for that $4.99 radio? Some people paid with the loss of their natural resources. Some paid with the loss of clean air, with increased asthma and cancer rates. Some workers paid by having to cover their own health insurance. Kids in Africa paid with their future: a third of the school-age children in parts of the Congo now drop out to mine metals for electronics. the Stafford Beer quote "the purpose of a system is what it does" springs to mind. what's the purpose of our economic system? to extract physical wealth from the environment and distribute it selfishly and unequally. can we imagine other ways of running things? yep. one old idea is a centrally-planned globally optimized economy. e.g. model the USSRs economy as one giant optimisation problem, solve for the things you need to get people to do, then encourage them to do it one way or another. perhaps a more modern spin on things is china's "citizen score" system. if that was deployed and working tolerably, you might not need currency any more. citizen points might do fine. it'd sure have other very unpleasant problems, but it might be an improvement over the capitalist system in some respects. are the alternative systems reachable from the current system? that's more of a challenge!
dTal 11y ago
I have often wondered this when ordering sub-$1 model helicopter parts among other things from BangGood.com. It's so much cheaper than any local source (2x-5x cheaper) on almost any item, even consumer electronics, it boggles the mind. How can this work economically? Or from another perspective, what's so broken locally? Is it just that Chinese labour costs less, and if the local supplier is buying in then it's also cheaper to just buy direct?
saosebastiao 11y ago
My background is supply chain and logistics, currently working for Amazon. The simple answer here is that they are losing money. I'm not familiar with Ali expresses rules, costs, inventory practices, or shipping arrangements, but I can absolutely guarantee you that there is no way that there was any profit made on this item. The price is just too low. Now to answer the more important questions: 1) Why? Because large marketplaces are monumental beasts to manage, so they come up with a variety of rules that simplify operations. Amazon does this with FBA: if your item is above a certain size/weight threshold it costs one price, otherwise it costs another. Those thresholds don't make sense from a rational optimization perspective, because costs for storage and shipping are only loosely coupled to those sizes and weights but can vary wildly based on any number of other factors including distance, shipping speed, inbound and outbound processing costs, etc.. In many cases, the combination of factors is just right and Amazon loses money. But they keep it a 2-tier structure because it makes it easier to manage the business, and makes it easier for FBA sellers to understand it. 2) How? Their costs probably are monumentally lower than most people think, so that mitigates the damage from people buying items like this. They have special import arrangements (and seeing as it is china, they probably have export subsidies as well), pre-negotiated rates with carriers, and likely do a significant amount of pre-sorting and aggregation themselves which gives significant leverage in negotiation of those rates. Amazon does this with their sort centers: Instead of dumping 20k packages on a UPS truck with 15k different zip codes, they will sort them off of the outbound line into pallets with small geographic clusters of destinations. These go to sort centers which aggregate similar pallets from other areas. Then we drop those pallets off right on the doorstep of the local post office. When they do this, they get massive discounts on delivery, and often delivered the same day that it gets dropped off. Furthermore, sometimes money-losing items have a way of lowering the barrier to future purchases. While there is some truth to this notion (If you can get someone to buy once, their subsequent conversion rates skyrocket), some companies take it overboard...literally trying to buy new customers that will someday be suckered into buying from you at a higher but more profitable price point. In reality, the loyalty of penny pinchers (the target market for this strategy) is near zilch. You lose money on them, and they might buy from you again, but you still have to work at being the low cost choice. Jet.com is currently pursuing the strategy of selling dollars for 90 cents, but hoping that it encourages loyalty and hoping their cost structure will magically (hehe) lower itself towards a level of profitability someday. Here is for those betting for or against their future: Cost structures don't magically lower with size. Some costs do, some costs get worse. You have to work very hard and very intelligently to ensure that costs stay in check as you grow, and work even harder to make them go down. IMO, with assumptions like that they are well on their way to a fast bankruptcy.
la6470 11y ago
They have a volume agreement with the postal services. So for example every month they pay 100$ for shipping 100 items. However if some month they have only shipped 90 items they still have room to include another 10 items no matter what they sale it for. The real story is that they are giving things for free and no one can beat them. How do I know this? Just through some rational thinking.
krisgenre 11y ago
An excellent article. Something I have myself been trying to figure out ever since I got a $0.4 iPhone 4S case shipped for free to India.
tikwidd 11y ago
Looking at the same single 13mm button on AliExpress from New Zealand, I also get the free shipping offer, 15-34 days via China Post Air Mail (I can also choose the DHL Express 3-6 day shipping for a mere $157.45 USD!) I've noticed how common free shipping on AliExpress is and wondered the same thing as OP. Typically shipping to New Zealand is very costly due to remoteness. We do have a free trade agreement with China, not sure that would make a difference.
- lucaspiller 11y ago
  AliExpress is basically eBay-for-China so it's not quite the same comparison as to Amazon. It's up to the seller, but yes pretty much all products I've bought have free shipping.
teekert 11y ago
I have often bought stuff from deal-extreme, miniinthebox, lightinthebox, banggood, etc. They always ship for free to the Netherlands. It does often take more than a month to arrive though. I always assumed they just throw everything in a big container that goes out on a ship and that the whole operation is sponsored by the Chinese Government. Edit: Pro-tip: Don't buy phone chargers, naively I left a Raspberry Pi running on a small chinese one and found it the next day burned black on the inside with the cable blown out. By the way, the discuss on HN link at the bottom of the article links here: https://news.ycombinator.com/item?id=10331114 https://news.ycombinator.com/item?id=10331114
- robocat 11y ago
  > Don't buy phone chargers Agreed. I had a cheap USB charger that was working fine suddenly explode on my desk with droplets of molten metal ending up welded to my phone screen. Never again!
deleted 11y ago
[deleted]
Cthulhu_ 11y ago
I think companies like AliExpress and such use the free shipping as bait; what they really aim for (I think) is having people thinking "Hey, I could resell this button for 25 cents!" and order a million of them. Then you get the bulk sales which is what the chinese webshops can make a profit off of.
azevedomarti 11y ago
I just had a lesson about e-commerce in the last semester. My professor said it would be much better if the price includes the shipping fee (if the fee has no big variation) since customers hate calculating the total price by themselves. They would also feel paying less if they do not see the extra cost.
- kbart 11y ago
  A bad advise I'd say. What if costumer compared prices online without taking much notice if price included shipping or not (I often assume it does not, as for not living in a big country I often have to pay extra anyway)? You'd end up somewhere in the bottom of the list. Also, what happens when you buy 10x of the same item (sure, you can advertise "buy 3, get 1 for free!", but that's even more obscure)?
bedspax 11y ago
0.03 cents is a very low CAC.
childintime 11y ago
I'd like to have my business mail printed as a service in China and have it sent to the US, or Europe.
rndstr 11y ago
I occasionally order things from AliExpress and I recently managed to exceed the pickup deadline at my local post office by one day on a $3 item. They notified me on the day of arrival by email but somehow couldn't remind me towards the deadline. Anyway, they just sent it back!
zeroblue 11y ago
Someone posted this on an earlier thread about the article: https://en.wikipedia.org/wiki/Free_trade_zone https://en.wikipedia.org/wiki/Free_trade_zone China uses free trade zones extensively. This means that some items a moved in bulk to domestic staging areas, so not everything is leaving from China, I believe that there are requirements that they be postmarked from China due to import export rules. Second, China's postal system is heavily subsidized and therefore much of the costs are hidden in the system.
rargulati 11y ago
Stems from the USPS/China Post ePacket agreement: http://www.ecommercebytes.com/cab/abn/y15/m10/i09/s02 http://www.ecommercebytes.com/cab/abn/y15/m10/i09/s02 It's actually cheaper in many cases to ship from China-->US than US-->US Newgistics handles AliExpress's inbound here in the USA. AliExpress-->China Post-->Newgistics-->USPS: https://newgistics.com/news-archive/aliexpress-selects-newgistics-for-u-s-deliveries/ https://newgistics.com/news-archive/aliexpress-selects-newgi... Source for the above: Matthew Hertz from Shyp
prirun 11y ago
It's the same way BackBlaze makes money yet sells unlimited backup for $5/mo. If everyone had 1TB backups, it wouldn't work, just like it wouldn't work if Ali only sold 3 cent buttons.

410 points by Immortalin 11y ago

I sent a letter from Japan to Canada for 70 cents. Sending the same letter from Canada to Japan would cost at least $2.50 China must simply have cheaper shipping rates, obviously not 3 cents, but probably a fraction of what you are used to spending.

boxidea 11y ago

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.

mikeash 11y ago
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.
- gohrt 11y ago
  There is no single optimal way to divide the cost among all the passengers. See also: airlines, and capitalist vs socialist economies.

throwaway2048 11y ago

The chinese postal system offers extremely low government subsidized rates. This isn't just Alibaba, almost everybody shipping out of china offers free shipping. http://www.ems.com.cn/mainservice/ems/e_guo_ji_e_you_bao.html 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.

bkeroack 11y ago

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.

shiftpgdn 11y ago

I am 90% certain that a majority of international dealing Chinese vendors simply use counterfeit postage.

andyana 11y ago
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.
- ars 11y ago
  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.
mikeash 11y ago
Wouldn't that fail when trying to use a tracking number along with it?
- Scoundreller 11y ago
  Just like gift cards, it might depend on who manages to use the number first ;) Even if an entry scan isn't made, it still gets scanned along the way. Most of this stuff is shipped untracked though.

tyingq 11y ago

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. [1]http://fortune.com/2015/03/11/united-nations-subsidy-chinese-shipping/ http://fortune.com/2015/03/11/united-nations-subsidy-chinese...

AcerbicZero 11y ago

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.

franciscojgo 11y ago
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.

Animats 11y ago

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. [1] http://fortune.com/2015/03/11/united-nations-subsidy-chinese-shipping/ http://fortune.com/2015/03/11/united-nations-subsidy-chinese... [2] http://cep.lse.ac.uk/pubs/download/cp396.pdf http://cep.lse.ac.uk/pubs/download/cp396.pdf

the-dude 11y ago
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'. I guess they thought it was too much work too.
- jpenninkhof 11y ago
  Still getting my sub-dollar stuff from China delivered at my doorstep in the Netherlands. Then again, I'm A3 at Ali ;)
  - voltagex_ 11y ago
    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)
    - Tepix 11y ago
      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.
- PanMan 11y ago

atirip 11y ago

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?

franciscojgo 11y ago

Here's an article from 2014 that explains this "loophole" https://www.washingtonpost.com/news/storyline/wp/2014/09/12/the-postal-service-is-losing-millions-a-year-to-help-you-buy-cheap-stuff-from-china/ https://www.washingtonpost.com/news/storyline/wp/2014/09/12/...

scholia 11y ago
Good piece. Thanks for the link.
tomp 11y ago
From the article: > 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.
- mey 11y ago
  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.
  - jessriedel 11y ago
    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.

vdnkh 11y ago

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.

stordoff 11y ago
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.
dsmithn 11y ago
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.
- degenerate 11y ago
  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.
joesmo 11y ago
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.
11y ago

Someone1234 11y ago

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.

secstate 11y ago
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: $14.99 prime item $10.99 + $4 like new used item
- mod 11y ago
  You can also often just find the item at a lower price from a non-prime seller, with no strings attached. Just don't have free 2-day shipping.

deleted 11y ago

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scholia 11y ago

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 ;-)

mikeash 11y ago
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.
- scholia 11y ago
  > 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.
  - mikeash 11y ago
    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.

dsugarman 11y ago

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.

kwhitefoot 11y ago
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.
gohrt 11y ago
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.
ben174 11y ago
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.

sre_ops 11y ago

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.

chippy 11y ago

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.

fiatjaf 11y ago

Of course there are subsidies and complex discount + partnership relations involved, but in the end the question is simply: WHO is paying for this?

fiatjaf 11y ago
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. [1]: https://www.washingtonpost.com/news/storyline/wp/2014/09/12/the-postal-service-is-losing-millions-a-year-to-help-you-buy-cheap-stuff-from-china/ https://www.washingtonpost.com/news/storyline/wp/2014/09/12/... [2]: https://community.ebay.com/t5/Archive-International-Trading/Problems-shipping-to-Brazil/qaq-p/3128783 https://community.ebay.com/t5/Archive-International-Trading/...

gohrt 11y ago

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.

krschultz 11y ago

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.

chippy 11y ago
I imagine they are hoping to get some business from Amazon. A loss leader.

randrews 11y ago

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.

voltagex_ 11y ago

>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)

PanMan 11y ago

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). Enjoy it while it lasts :)

3princip 11y ago
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).
deleted 11y ago
[deleted]

kerv 11y ago

I once bought a iPhone charge cable from ebay, free shipping from china for $0.01. I won the auction a couple hours later. 6 weeks later it arrived! No idea how it is possible. The bubble wrapping protecting it from shipping is worth more than what I paid.

tarikjn 11y ago

This is mostly do to the Universal Postal Union Convention, it was discussed in details on this thread: https://news.ycombinator.com/item?id=9795017 https://news.ycombinator.com/item?id=9795017

mickelsen 11y ago

Many of these 30 cents button / iPhone cable sellers are usually users with less feedback as well, and they need a cheap way to gain more reputation in Aliexpress or eBay. This is a way to do it and as you get more completed transactions, your seller account gets upgraded and gets better rates. I Won't touch the shipping part which I think is already well covered in the comments.

cha5m 11y ago

A possible explanation to this could be that AliExpress is simply trying to attract people to their platform by any means possible. This means subsidizing purchases to draw users in. I just considered buying that 3c button just because of how cheap it was, and this would have required me to register with them, and enter my cc number. This means that purchasing stuff from them in the future would be easier and I would be more likely to do it. This could explain the free shipping on the China leg, and then as was mentioned there is a treaty that allows for nearly free shipping in the US by Chinese companies.

mesozoic 11y ago

Yeah honestly it's amazing. I've ordered some stuff from there and at that cost I can't believe it makes it to me. Though the post office does require a signature on a lot of these and then holds it hostage and it's not worth me making a trip to the post office to retrieve my $1 item.

applecore 11y ago

If you discover a product that sells for ten times more on Amazon than AliExpress, your first instinct should be to arbitrage the opportunity by ordering the product and selling it on Amazon (and letting Amazon handle the fulfillment: http://services.amazon.com/fulfillment-by-amazon/benefits.htm http://services.amazon.com/fulfillment-by-amazon/benefits.ht...).

q3k 11y ago
No, don't. When I go to Amazon, it's not for goods dropshipped from China. It's for things I want delivered quick and from reputable manufacturers and sellers. We already have this problem in Poland with Allegro (local eBay equivalent), where people automate this at a large scale. You and up scrolling past tons of these items, because a) you don't want to wait 20 or so days for it to arrive from China b) you know you can get it cheaper from Aliexpress anyway. Different sites, different targets.
- xur17 11y ago
  I think the op was referencing buying a bunch, shipping them to Amazon, and then selling them via FBA, so people can buy it with prime shipping.
  - Pxtl 11y ago
    Ali has already beat you to that and has Amazon fulfill some of their larger items.
- robryan 11y ago
  You would be surprised though how fast thing can arrive, assuming they are aiming for fast delivery. Amazon also allows you not to specify a shipping location, for things being forwarded into USPS the customer often won't even notice it originated on the other side of the world.
- monksy 11y ago
  > No, don't. When I go to Amazon, it's not for goods dropshipped from China. It's for things I want delivered quick and from reputable manufacturers and sellers. Which they do that anyways. Last few items that I got from amazon... now shipping from China. Even an American flag.

nissehulth 11y ago

I'm in Sweden and I've ordered stuff like a single USB cable from China at a price less than USD 1. Still, free shipping, and $1 wouldn't even buy me domestic letter postage. If the item is small enough, it usually arrive in a padded envelope in my mailbox. Bigger items I may have to pickup at the post office. Most often, it arrives within 2 weeks. I suspect that postal services in different countries have some kind of peering agreement. That they simply assume that the amount of mail would be pretty much the same in both directions and because of that, they don't really charge each other.

jeena 11y ago

The Story of Stuff: Externalized Costs and the $4.99 Radio http://www.huffingtonpost.com/annie-leonard/the-story-of-stuff-extern_b_490351.html http://www.huffingtonpost.com/annie-leonard/the-story-of-stu...

shoo 11y ago
> Who paid for that $4.99 radio? Some people paid with the loss of their natural resources. Some paid with the loss of clean air, with increased asthma and cancer rates. Some workers paid by having to cover their own health insurance. Kids in Africa paid with their future: a third of the school-age children in parts of the Congo now drop out to mine metals for electronics. the Stafford Beer quote "the purpose of a system is what it does" springs to mind. what's the purpose of our economic system? to extract physical wealth from the environment and distribute it selfishly and unequally. can we imagine other ways of running things? yep. one old idea is a centrally-planned globally optimized economy. e.g. model the USSRs economy as one giant optimisation problem, solve for the things you need to get people to do, then encourage them to do it one way or another. perhaps a more modern spin on things is china's "citizen score" system. if that was deployed and working tolerably, you might not need currency any more. citizen points might do fine. it'd sure have other very unpleasant problems, but it might be an improvement over the capitalist system in some respects. are the alternative systems reachable from the current system? that's more of a challenge!

dTal 11y ago

I have often wondered this when ordering sub-$1 model helicopter parts among other things from BangGood.com. It's so much cheaper than any local source (2x-5x cheaper) on almost any item, even consumer electronics, it boggles the mind. How can this work economically? Or from another perspective, what's so broken locally? Is it just that Chinese labour costs less, and if the local supplier is buying in then it's also cheaper to just buy direct?

saosebastiao 11y ago

My background is supply chain and logistics, currently working for Amazon. The simple answer here is that they are losing money. I'm not familiar with Ali expresses rules, costs, inventory practices, or shipping arrangements, but I can absolutely guarantee you that there is no way that there was any profit made on this item. The price is just too low. Now to answer the more important questions: 1) Why? Because large marketplaces are monumental beasts to manage, so they come up with a variety of rules that simplify operations. Amazon does this with FBA: if your item is above a certain size/weight threshold it costs one price, otherwise it costs another. Those thresholds don't make sense from a rational optimization perspective, because costs for storage and shipping are only loosely coupled to those sizes and weights but can vary wildly based on any number of other factors including distance, shipping speed, inbound and outbound processing costs, etc.. In many cases, the combination of factors is just right and Amazon loses money. But they keep it a 2-tier structure because it makes it easier to manage the business, and makes it easier for FBA sellers to understand it. 2) How? Their costs probably are monumentally lower than most people think, so that mitigates the damage from people buying items like this. They have special import arrangements (and seeing as it is china, they probably have export subsidies as well), pre-negotiated rates with carriers, and likely do a significant amount of pre-sorting and aggregation themselves which gives significant leverage in negotiation of those rates. Amazon does this with their sort centers: Instead of dumping 20k packages on a UPS truck with 15k different zip codes, they will sort them off of the outbound line into pallets with small geographic clusters of destinations. These go to sort centers which aggregate similar pallets from other areas. Then we drop those pallets off right on the doorstep of the local post office. When they do this, they get massive discounts on delivery, and often delivered the same day that it gets dropped off. Furthermore, sometimes money-losing items have a way of lowering the barrier to future purchases. While there is some truth to this notion (If you can get someone to buy once, their subsequent conversion rates skyrocket), some companies take it overboard...literally trying to buy new customers that will someday be suckered into buying from you at a higher but more profitable price point. In reality, the loyalty of penny pinchers (the target market for this strategy) is near zilch. You lose money on them, and they might buy from you again, but you still have to work at being the low cost choice. Jet.com is currently pursuing the strategy of selling dollars for 90 cents, but hoping that it encourages loyalty and hoping their cost structure will magically (hehe) lower itself towards a level of profitability someday. Here is for those betting for or against their future: Cost structures don't magically lower with size. Some costs do, some costs get worse. You have to work very hard and very intelligently to ensure that costs stay in check as you grow, and work even harder to make them go down. IMO, with assumptions like that they are well on their way to a fast bankruptcy.

la6470 11y ago

They have a volume agreement with the postal services. So for example every month they pay 100$ for shipping 100 items. However if some month they have only shipped 90 items they still have room to include another 10 items no matter what they sale it for. The real story is that they are giving things for free and no one can beat them. How do I know this? Just through some rational thinking.

krisgenre 11y ago

An excellent article. Something I have myself been trying to figure out ever since I got a $0.4 iPhone 4S case shipped for free to India.

tikwidd 11y ago

Looking at the same single 13mm button on AliExpress from New Zealand, I also get the free shipping offer, 15-34 days via China Post Air Mail (I can also choose the DHL Express 3-6 day shipping for a mere $157.45 USD!) I've noticed how common free shipping on AliExpress is and wondered the same thing as OP. Typically shipping to New Zealand is very costly due to remoteness. We do have a free trade agreement with China, not sure that would make a difference.

lucaspiller 11y ago
AliExpress is basically eBay-for-China so it's not quite the same comparison as to Amazon. It's up to the seller, but yes pretty much all products I've bought have free shipping.

teekert 11y ago

I have often bought stuff from deal-extreme, miniinthebox, lightinthebox, banggood, etc. They always ship for free to the Netherlands. It does often take more than a month to arrive though. I always assumed they just throw everything in a big container that goes out on a ship and that the whole operation is sponsored by the Chinese Government. Edit: Pro-tip: Don't buy phone chargers, naively I left a Raspberry Pi running on a small chinese one and found it the next day burned black on the inside with the cable blown out. By the way, the discuss on HN link at the bottom of the article links here: https://news.ycombinator.com/item?id=10331114 https://news.ycombinator.com/item?id=10331114

robocat 11y ago
> Don't buy phone chargers Agreed. I had a cheap USB charger that was working fine suddenly explode on my desk with droplets of molten metal ending up welded to my phone screen. Never again!

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Cthulhu_ 11y ago

I think companies like AliExpress and such use the free shipping as bait; what they really aim for (I think) is having people thinking "Hey, I could resell this button for 25 cents!" and order a million of them. Then you get the bulk sales which is what the chinese webshops can make a profit off of.

azevedomarti 11y ago

I just had a lesson about e-commerce in the last semester. My professor said it would be much better if the price includes the shipping fee (if the fee has no big variation) since customers hate calculating the total price by themselves. They would also feel paying less if they do not see the extra cost.

kbart 11y ago
A bad advise I'd say. What if costumer compared prices online without taking much notice if price included shipping or not (I often assume it does not, as for not living in a big country I often have to pay extra anyway)? You'd end up somewhere in the bottom of the list. Also, what happens when you buy 10x of the same item (sure, you can advertise "buy 3, get 1 for free!", but that's even more obscure)?

bedspax 11y ago

0.03 cents is a very low CAC.

childintime 11y ago

I'd like to have my business mail printed as a service in China and have it sent to the US, or Europe.

rndstr 11y ago

I occasionally order things from AliExpress and I recently managed to exceed the pickup deadline at my local post office by one day on a $3 item. They notified me on the day of arrival by email but somehow couldn't remind me towards the deadline. Anyway, they just sent it back!

zeroblue 11y ago

Someone posted this on an earlier thread about the article: https://en.wikipedia.org/wiki/Free_trade_zone https://en.wikipedia.org/wiki/Free_trade_zone China uses free trade zones extensively. This means that some items a moved in bulk to domestic staging areas, so not everything is leaving from China, I believe that there are requirements that they be postmarked from China due to import export rules. Second, China's postal system is heavily subsidized and therefore much of the costs are hidden in the system.

rargulati 11y ago

Stems from the USPS/China Post ePacket agreement: http://www.ecommercebytes.com/cab/abn/y15/m10/i09/s02 http://www.ecommercebytes.com/cab/abn/y15/m10/i09/s02 It's actually cheaper in many cases to ship from China-->US than US-->US Newgistics handles AliExpress's inbound here in the USA. AliExpress-->China Post-->Newgistics-->USPS: https://newgistics.com/news-archive/aliexpress-selects-newgistics-for-u-s-deliveries/ https://newgistics.com/news-archive/aliexpress-selects-newgi... Source for the above: Matthew Hertz from Shyp

prirun 11y ago

It's the same way BackBlaze makes money yet sells unlimited backup for $5/mo. If everyone had 1TB backups, it wouldn't work, just like it wouldn't work if Ali only sold 3 cent buttons.