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So, in the first week of April, I was browsing Amazon for a small bike part. I bought one for 1.99 EUR, no shipping costs. 1 day later I get an email that my ar

by lqet 7y ago

So, in the first week of April, I was browsing Amazon for a small bike part. I bought one for 1.99 EUR, no shipping costs. 1 day later I get an email that my article is now in transit via China Post, and I will receive it in 5-6 weeks. How can they possibly make money selling bike parts for 1.99 EUR from China?

dmortin 7y ago
There is some postal agreement between countries which makes it possible to deliver packages at a very low cost from China. But the US wants to end this: https://www.theatlantic.com/technology/archive/2018/10/trump-changes-terminal-dues-and-epacket-rates/573337/ https://www.theatlantic.com/technology/archive/2018/10/trump...
baybal2 7y ago
First, China is still a relatively cheap country Second, developed countries offer China subsidies as an undeveloped country on postage rates. Postage stamp for international mail is in between 50 to 90 cents. Prepaid envelopes go for 1 to 2 USD. Third, E-commerce companies are eligible for Chinese own postal subsidies on top of that, and they get some volume discounts. Subsidised price for prepaid envelopes was around 40 cents last time I checked, so it is probably closing on 20 cents in wholesale volumes. Fourth, China still has a lot of people in abject poverty. You may be surprised, but a lot of these 1 dollar goods sellers are working out of small towns or villages. For them, earning even 10 dollars a day selling abroad may look more attractive than trying to sell to Chinese domestic market where they have no chances. Edit: they actually got a website in English http://english.chinapost.com.cn/html1/report/1208/204-1.htm http://english.chinapost.com.cn/html1/report/1208/204-1.htm Interestingly, even small air parcels that are not considered postal correspondence get crazy low rates http://english.chinapost.com.cn/html1/report/1208/188-1.htm http://english.chinapost.com.cn/html1/report/1208/188-1.htm
rjf72 7y ago
Aside from what everybody else mentioned about the worldwide postal treaties (which strongly favor developing nations, including China) this could be done profitably. It all comes down to profit margin per pound or volume. If it's coming by sea, and with a 5 week delivery - I'd assume it would be, you are really only restrained by volume. Cargo ships can carry hundreds of thousands of tons so volume is often the bottleneck. As for volume, they're packed with 20x8x8 foot shipping containers - that's 1,360 cubic feet. And a cargo ship can hold thousands of these containers, the biggest cargo ships can hold tens of thousands of them. And the operating costs for these ships are not huge. You're looking at a ballpark of a million bucks. Convert that into $/cubic foot and you can see the point. They can make a very near $0 profit per foot, and still show substantial profit. So cheers for economies of scale! If you ever get a chance to see one of these ships in real life, I'd strongly recommend it. These words and numbers mean nothing compared to actually seeing one of these monsters.

by lqet 7y ago

dmortin 7y ago

There is some postal agreement between countries which makes it possible to deliver packages at a very low cost from China. But the US wants to end this: https://www.theatlantic.com/technology/archive/2018/10/trump-changes-terminal-dues-and-epacket-rates/573337/ https://www.theatlantic.com/technology/archive/2018/10/trump...

baybal2 7y ago

First, China is still a relatively cheap country Second, developed countries offer China subsidies as an undeveloped country on postage rates. Postage stamp for international mail is in between 50 to 90 cents. Prepaid envelopes go for 1 to 2 USD. Third, E-commerce companies are eligible for Chinese own postal subsidies on top of that, and they get some volume discounts. Subsidised price for prepaid envelopes was around 40 cents last time I checked, so it is probably closing on 20 cents in wholesale volumes. Fourth, China still has a lot of people in abject poverty. You may be surprised, but a lot of these 1 dollar goods sellers are working out of small towns or villages. For them, earning even 10 dollars a day selling abroad may look more attractive than trying to sell to Chinese domestic market where they have no chances. Edit: they actually got a website in English http://english.chinapost.com.cn/html1/report/1208/204-1.htm http://english.chinapost.com.cn/html1/report/1208/204-1.htm Interestingly, even small air parcels that are not considered postal correspondence get crazy low rates http://english.chinapost.com.cn/html1/report/1208/188-1.htm http://english.chinapost.com.cn/html1/report/1208/188-1.htm

rjf72 7y ago

Aside from what everybody else mentioned about the worldwide postal treaties (which strongly favor developing nations, including China) this could be done profitably. It all comes down to profit margin per pound or volume. If it's coming by sea, and with a 5 week delivery - I'd assume it would be, you are really only restrained by volume. Cargo ships can carry hundreds of thousands of tons so volume is often the bottleneck. As for volume, they're packed with 20x8x8 foot shipping containers - that's 1,360 cubic feet. And a cargo ship can hold thousands of these containers, the biggest cargo ships can hold tens of thousands of them. And the operating costs for these ships are not huge. You're looking at a ballpark of a million bucks. Convert that into $/cubic foot and you can see the point. They can make a very near $0 profit per foot, and still show substantial profit. So cheers for economies of scale! If you ever get a chance to see one of these ships in real life, I'd strongly recommend it. These words and numbers mean nothing compared to actually seeing one of these monsters.