What's the deal with free shipping?

**Benny Profane** · 07-14-2016, 10:08 PM

How is this possible? Ordered a bunch of stuff from B&H over the past month, and it all gets to me tomorrow, free. Who's eating that cost? I can't imagine it's UPS. Sure is convenient, though. Eazy.

**stfu&gbtw** · 07-14-2016, 10:12 PM

Beards and Hats ftw!

The seller and shipper split the cost, recognizing that both do a lot more business that way. I'd imagine B&H get's the short end of that stick with UPS. Walmart and Amazon, not so much.

**adrenalated** · 07-14-2016, 10:20 PM

Eh, that's not exactly true.

The big retailers get a volume discount with the shipping company. The vendor eats the cost.

**stfu&gbtw** · 07-14-2016, 10:23 PM

Originally Posted by adrenalated

Eh, that's not exactly true.

The big retailers get a volume discount with the shipping company. The vendor eats the cost.

And you're figuring that discount doesn't entirely correlate to the shipper eating part of the cost? Seriously? UPS gives Walmart X% off, and Walmart pays the remainder.

**adrenalated** · 07-14-2016, 10:27 PM

Originally Posted by stfu&gbtw

And you're figuring that discount doesn't entirely correlate to the shipper eating part of the cost? Seriously? UPS gives Walmart X% off, and Walmart pays the remainder.

Correct. "Eating the cost" means operating at a loss that is made up elsewhere. What is the shipping company's incentive to provide shipping services below their cost? They are still making money on shipping. The vendor, however, is not making any money on shipping, not even breaking even. They are absorbing that cost into their profit margin on the sale.

**stfu&gbtw** · 07-14-2016, 10:32 PM

Originally Posted by adrenalated

Correct. "Eating the cost" means operating at a loss that is made up elsewhere. What is the shipping company's incentive to provide shipping services below their cost? They are still making money on shipping. The vendor, however, is not making any money on shipping, not even breaking even. They are absorbing that cost into their profit margin on the sale.

The retailer wouldn't normally turn a significant profit on shipping anyway. The retailer absolutely builds those costs in elsewhere, just as they do with other operating expenses. No one takes a loss. Everyone is moving the fixed costs into other variables, often beyond the context of an individual transaction, and possibly taking a slightly reduced per-transaction profit in exchange for offering the highly marketable "free shipping".

**WTF is dat** · 07-14-2016, 10:53 PM

Wow Benny another one of your daily pointless ass threads asking a stupid ass question!!!

Tomorrow:

Benny has corn in his poop. What's the deal with that ???

**Kenny Satch** · 07-14-2016, 11:28 PM

The cost of industrial warehousing vs retail space is huge. If the overwhelming amount of product is directly shipped from a warehouse then perhaps their not losing too much
Even if their loosing money now as online keeps growing and retail floor space for most major players will go down....significantly.
I see it as investing in the future

**Harry** · 07-14-2016, 11:55 PM

Originally Posted by WTF is dat

Benny has corn in his poop. What's the deal with that ???

Benny hired a transvestite hooker to shove a corncob up his ass ???

NTTIAWWT

**Timberridge** · 07-15-2016, 04:40 AM

Benny got free floor mats when he bought his Subaru.

**Benny Profane** · 07-15-2016, 04:57 AM

Originally Posted by adrenalated

Correct. "Eating the cost" means operating at a loss that is made up elsewhere. What is the shipping company's incentive to provide shipping services below their cost? They are still making money on shipping. The vendor, however, is not making any money on shipping, not even breaking even. They are absorbing that cost into their profit margin on the sale.

Yeah, I guess B&h is taking this, because UPS hasn't suddenly cut down to the bone to compete. That driver (funny guy) is still union, the truck is still new, and the facility he parks it is new and modern. Thanks, moshe. Volume, volume.

**Skidog** · 07-15-2016, 06:05 AM

Originally Posted by Timberridge

Benny got free floor mats when he bought his Subaru.

But I heard they raped him on the simonizing. Win win for the subbie dealership

**MMP** · 07-15-2016, 06:27 AM

Originally Posted by WTF is dat

Wow Benny another one of your daily pointless ass threads asking a stupid ass question!!!

Tomorrow:

Benny has corn in his poop. What's the deal with that ???

existential crisis

**iceman** · 07-15-2016, 06:29 AM

The deal is, it's not free. You pay for it, it's just not posted as a line item on the invoice.

**Benny Profane** · 07-15-2016, 06:33 AM

Well, it's maybe not free, but it's certainly cheaper to use B&H over other retailers and even the manufacturers own online store. Those people charge shipping (a substantial percentage on the bottom line) and get it to me a day or two later.

**Timberridge** · 07-15-2016, 06:40 AM

July 15, 2016. Benny figures out how modern retailing works.

**Benny Profane** · 07-15-2016, 06:50 AM

Originally Posted by Timberridge

July 15, 2016. Benny figures out how modern retailing works.

Not yet. For instance, a 45 dollar order from manufacturer x in Arizona has a 12 dollar shipping fee added to that product cost. B&H sells the same item for 43 dollars, no shipping fee. UPS, I suppose, is still making their 12 dollars or so on shipping. How does B&H make a profit?

**iceman** · 07-15-2016, 06:57 AM

Well they lose a little bit on each item but they make it up with volume.

**concretejungle** · 07-15-2016, 07:16 AM

B&H negotiates a shipping contract with a shipper based on volume, type of shipping, etc. So they're both eating the cost of shipping but in the freight companies case they want the business. B&H's prices could be better with or without free shipping but Amazon Prime has made that such a key for the consumer that a lot of people buy things there for free shipping and never look at the price. Nothing is ever free except for Amazon but they don't or barely have made a profit.

The ski industry used to be grandfathered in for Fedex 3-Day shipping and it was cheaper than ground. In one case we pretty much paid nothing for our ground shipments because Fedex made enough money on our international shipments that it was worth it to keep the business (large ski apparel company).

**Bunion 2020** · 07-15-2016, 07:20 AM

As an example. It depends.

I needed trailer tires for my raft trailer. Found them on Amazon super cheap (36 bucks each W/ free shipping).

Took them in to be mounted and the shops all charge 20-25 bucks a tire to mount and balance unless you bought em there.

Could have bought them at the shop for 52-56 bucks w/free mounting.

Do the math.

**concretejungle** · 07-15-2016, 07:25 AM

Originally Posted by bunion

As an example. It depends.

I needed trailer tires for my raft trailer. Found them on Amazon super cheap (36 bucks each W/ free shipping).

Took them in to be mounted and the shops all charge 20-25 bucks a tire to mount and balance unless you bought em there.

Could have bought them at the shop for 52-56 bucks w/free mounting.

Do the math.

Exactly. In most cases free shipping is "The Twirl" to draw in the consumer.

Costco gets better or very close to the price my ex father in law could get Blizzaks for and he works for a tire distribution company. He stopped being able to get free tires a while ago so that perk of the marriage wasn't missed.

**babybear** · 07-15-2016, 07:38 AM

maybe it's been mentioned but once in awhile you see this as being a needle mover on the bottom line when a co reports their Q
they mostly try to mitigate the cost by keeping the inventory stocked at their dist ctrs but when a co under orders, then has a super hot product(s) that they have free shipping for- the freight can kill them

Thank goodness for free shipping though as I order so much stuff online - basics etc since I get sick of getting everything I own only from Kmart/Albertsons/Patagucci(outdoor shops)

**Tuckerman** · 07-15-2016, 08:06 AM

Originally Posted by Benny Profane

Not yet. For instance, a 45 dollar order from manufacturer x in Arizona has a 12 dollar shipping fee added to that product cost. B&H sells the same item for 43 dollars, no shipping fee. UPS, I suppose, is still making their 12 dollars or so on shipping. How does B&H make a profit?

The item cost $15 to be made. What you pay for it in this case $57 or $43 - $15 = $42 or $28 is profit. B&H is willing to use some of their profit on shipping, still making a profit.