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 ;-)
> 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.
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.
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.
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.
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...)
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.
> 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.
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).
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 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.
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.
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).
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.
> 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.
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.
>>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.
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'.
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.
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.
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.
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 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.
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".
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).
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.
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.
The chinese postal system offers extremely low government subsidized rates. This isn't just Alibaba, almost everybody shipping out of china offers free shipping.
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.
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.
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.
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.
> 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.
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.
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).
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.
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.
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".
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).
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.
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.
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 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.
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.
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).
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).
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.ht...).
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.
> 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.
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.
Some users want that specialization, many users don't. Does the Amazon search interface not allow you to filter by shipping time? That seems like the correct way to solve your problem.
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.
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.
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.
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.
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.
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:
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.
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.
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.
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.
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.
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.
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.
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!
> 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!
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.
Someone posted this on an earlier thread about the article:
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.
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?
>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)
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.
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.
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)?
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.
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!
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.
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?
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.
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.
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.
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.
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.
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 ;-)