Everyone has to understand that there’s no free meal in this world, except in charity, it does exist. In e-commerce, often we saw such thing as free shipping, the truth is actually the shipping fees has already been built into the price of the product. So when you pay the product price, you are actually paying for the shipping fees also, even though the website says shipping fees as $0.00 .
So why paying a separate shipping fees will actually save you compared to the shipping fee built-in product price ? Well, to understand this, we have to understand how does the shipping company charge for a shipping. Usually when you pay a shipment to the shipping company such as DHL, UPS, USPS, Fedex, EMS, etc there’s is a base price that is charged no matter how heavy or lightweight is your item then plus the actual weight/volume of the item.
Example, when you try to ship an item from China to Canada that weight 0.5 kg, let’s say the price for each 0.1 kg (100g) is $1 and the base price is for the shipping is $3.
Hence the total price for this shipping will be $3 + $1 x 0.5 kg / 0.1 kg = $8
So usually the seller who provide free shipping built in this shipping fee $8 into the price, let’s say the price without shipping built in is $12, he/she will mark up to $20, then they sell this as $20 for the final price and offer “free” shipping.
You won’t notice the difference if you buy one item, what if you bought 3 items. The total that you pay will be $60, which already included the shipping cost of $24 dollar.
Now we take the scenario of separating the shipping cost from the product price in another seller. Say the other seller sell the product as $12 but with separate shipping fees for each 0.1 kg (100g) is $1 + the base price charge of $3.
If you buy 3 items, the total shipping cost will be 0.5 kg x 3 items / 0.1 kg x $1 + $3 base price = $18 , then plus the item price $36 ($12 x 3), total $54. Because you only need to pay 1 time of base price $3 in separated shipping fee. Compared with the built-in shipping price is $6 difference ($60 – $54).
The saving didn’t just end there, most item you bought from overseas can be subjected to GST/Import tax by the custom and border agency. When your purchase is eligible for tax and let’s say the tax is 10% , you will be charged $6 ($60 x 10%) in built-in shipping price and just $3.6 ($36 x 10%) for the separated-shipping price. That is because only the item price is taxable, the shipping cost is not taxable. So the difference in tax fees is $2.4 ($6 – $3.6)
In total it saves you $8.4 ($6 + $2.4)
Apart from this, if your country is nearer to the seller country, you should pay a cheaper price in the shipping than the country that is further away. Hence, you should pay a lower price than it should be. Because with shipping built-in price, the seller usually take the higher shipping cost and add into the product price, hence every country buyer pay the same shipping cost no matter how far or near they are.
Hence, shop wisely.
In Yoibo.com , we separate the shipping cost out and we also calculate the real shipping cost based on the rate for each country. Except some less popular country we generalize the cost, but you are still pay a separated-shipping cost from the item price.