How do these people ship so cheap?

[McCoyH]

I was checking out Dollar Shave Club just to learn a little more on how their business model works... I went through their "checkout" process and noticed that they will ship a razor, box of blades and a tube of shaving cream for $2...

How?! I can't imagine their eating some of the shipping cost as my "total" for the checkout was online like $12...

Anyone have any ideas?

 

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[Vigilante]

We ship all our items for "free."

I could import everything you had on your list for probably $1.75.

Plus, they probably can ship it to you for not much more than $2 postage including USPS First Class Mail.

They're making a killing. $12 at a time.

 

[theag]

Probably volume discount and they are eating some of it. Maybe they arent profitable on the first buy and make it up on subscription LTV.

 

[theag]

We ship all our items for "free."

I charge $3 shipping for a $10 product.
Tested it. No difference in conversions. You should test it too .

IMO free shipping should be reserved for the me-too e-commerce stores who have nothing else to "offer" than discounts and free shipping. If you sell your own product thats not available anywhere else, maximise your profit by charging for shipping.

I only mention it on the last step of checkout though. By then, they are already hooked

 

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[McCoyH]

We ship all our items for "free."

I could import everything you had on your list for probably $1.75.

Plus, they probably can ship it to you for not much more than $2 postage including USPS First Class Mail.

They're making a killing. $12 at a time.

Didn't answer my question. How?

 

[theag]

Didn't answer my question. How?

I think there was a thread here a few weeks ago about those secret volume discount rates. Lets just say that you wont get their prices in the beginning. Ship a lot of small items and you will at some point get their rates.

 

[LiveTheWay]

Same way some book sellers on amazon can sell you a 2lb hardcover for .01 + 3.99 shipping, pay fees, shipping supplies, overhead and inventory. Bulk shipping rates based on volume. When the shipper can pull a semi-truck up to your dock every day and fill it, you'll get a deal on price

 

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[Vigilante]

You pay

$12.00 + $2.00 shipping = $14

I pay product cost $1.75 plus $2.25 shipping plus $1.00 packaging/handling. My total cost = $5.00

I net $9.00 gross profit before expenses.

 

[McCoyH]

You pay

$12.00 + $2.00 shipping = $14

I pay product cost $1.75 plus $2.25 shipping plus $1.00 packaging/handling. My total cost = $5.00

I net $9.00 gross profit before expenses.

How are you paying $2.75 shipping that's my question. The lowest quote i got for shipping an item the size and weight of an Ink Pen was $5.75 from USPS

 

[Mr.B]

How are you paying $2.75 shipping that's my question.

I believe this question has been answered three times in this thread already.

Volume discounts. The more you ship the cheaper it is.

 

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[Charnell]

How are you paying $2.75 shipping that's my question. The lowest quote i got for shipping an item the size and weight of an Ink Pen was $5.75 from USPS

See

Same way some book sellers on amazon can sell you a 2lb hardcover for .01 + 3.99 shipping, pay fees, shipping supplies, overhead and inventory. Bulk shipping rates based on volume. When the shipper can pull a semi-truck up to your dock every day and fill it, you'll get a deal on price

 

[Emanuel]

“Yeah,” said his competitor, “but you are selling BELOW the actual cost of the item!” “Ha!,” said the vendor, “I make it up in volume!”

 

[McCoyH]

Nevermind figured it out, USPS First Class Parcel $2.32 shipped up to 13oz.... thanks everyone, guess I needed volume lol

 

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[RBefort]

To help, I've asked USPS how they determine shipping rates on video games, because i've mailed one or two in cd sleeves (in a smaller manilla envelope) for .70, and then other times I'm charged $2.50. They said it depends on if it bends. If it is just a normal letter and light, it's .70, if it doesn't bend and same weight, it becomes a parcel and the min is $2.50ish or whatever. Really sucks for games when it is light, but you are stuck paying $2.50 shipping...blah. Why I try to stay away from anything that only sells for $1 on Amazon in regards to video games.

 

[RazorCut]

“Yeah,” said his competitor, “but you are selling BELOW the actual cost of the item!” “Ha!,” said the vendor, “I make it up in volume!”

Often the competitor thinks his direct competition is selling below the actual cost of the item based on what they pay (or what their sales rep has told them) but the real truth is the competition is a better negotiator or has managed to buy liquidated stock at a fraction of the true cost (in which case they will eventually run out of supply).

Seen it many, many times. The only way you know for sure what your competitor has paid is to see their invoice.

Nevermind figured it out, USPS First Class Parcel $2.32 shipped up to 13oz.... thanks everyone, guess I needed volume lol

Yeah, we were not a huge seller by any means when I had my e-commerce business but we have sent out up to 1000 packages in one day and seldom less than 200 a day with an average of substantially more, 5 days a week, every week. That gets you pretty good negotiating power with the courier companies as there is a lot of competition for volume business (at least in the UK). You do have to play one off against the other though to get the very best prices.

What concerns me more is the proliferation of Chinese sellers with their mega-cheap shipping. Just looked on Amazon now and find items for sale at $1.26 INCLUDING shipping from China. That has to be killing a lot of small US bedroom sellers (we have the same situation with Amazon.co.uk).