When I buy a product in a physical store the price of getting the product there is included. I don't pay the product + the shipping fee. It should be the same on the web.
It's a bit tougher online because shipping costs can vary a lot depending on where the customer lives and what they're buying.
For example, the cost of shipping me two boxes of cereal is barely higher than the cost of shipping me one box of cereal. The cost of shipping it to Alaska is much higher than the cost of shipping it to New York. In a store, the cost of getting two boxes of cereal to the store is, on average, about twice the cost of getting one box, and the cost is identical whether your customer is from New York or Alaska.
Your store scenario isn't true at all! It does not cost about twice as much to get two boxes of cereal into a store as one box. The same shipping economies are in play here. It actually costs less per box to get it into a store because they will bring in a pallet at a time. The real cost is the fact that you have a building and all of its costs with employees and all of their costs, etc. Shipping anything to Alaska is more expensive that to New York whether it is one box of cereal or a pallet. The difference is that the price for a box of cereal in Alaska will have that priced in vs the box in New York. The same can be done for online retail...except people won't understand it and get pissed and try to change their location reporting to try and get a lower price based on where they are located. You see, people don't view online shopping the same way as they view physical shopping. People will need to be reconditioned about online shopping now that we have the technology to do location based pricing thanks to geolocation reporting and other factors (like getting a zip code up front) that were not available when online shopping first came about.
It is only double if you are receiving cereal one at a time: but with distribution centers and things like that, it is rarely the case.
It is likely, if you are ordering one box of cereal, that it is packed in a box with other things and that you get the box with your normal delivery. Heck, with this model, even getting two lawn mowers along with the shipment doesn't change the pricing all that much.
You basically have the same shipping for all 8 boxes of cereal on your shelf.
It is much more true when you ship to consumers - the cost is nearly double if you are sending the 2 boxes to 2 customers. Gotta have separate boxes with 2 labels, because they are going to two houses.
I understand the desire for parity, but as an online seller, it's difficult to do that...for a number of reasons.
Returns obviously cost more for an online seller because the outbound shipping becomes a loss, and the return shipping as well, if they cover that.
If shipping is "free", customers closer to the shipping point end up subsidizing customers farther away.
Companies like Fedex and UPS raise their rates, every year, in amounts that far exceed anything logical (cost of living, fuel, etc). Typically, 4 to 5 percent bumps every year.
For online sellers of larger items, these issues can be very significant. Especially large, but lightweight items, as the shipping companies charge "dimensional weight" instead of actual weight. It's easily over $100 to ship a largish, empty box across the US.
Edit: Dealing with shipping damage is another factor. UPS/Fedex compensation for damage is far less than the actual cost to make things right.
This stuff is another way the whole economy is getting screwed by Amazon in a manner similar to Walmart in the 80's and 90's. Amazon is spending billions to kill everyone else so that they can put the screws to everyone in the future.
If you look at the rates that Amazon pays to replenish FBA warehouses, you see the difference. UPS Ground from Upstate NY to Kentucky for a small parcel costs < $6. Compare that you the UPS "Retail" -- $16-18, or USPS Priority, which is a minimum of $11, depending on rate. IMO, shipping rates are going up because big kahuna customers like Amazon are grabbing all of the capacity and have contracts that allow them to surge instantly.
That's an interesting theory, and I like how you mention Walmart because what are they doing now, in the "future" of the '80s and '90s? Getting killed by Amazon, who offers better product (distribution).
36" x 18" x 24", say with an actual weight of 20lbs.
Shipped from Los Angeles to NYC via UPS. The dimensional weight is 94 lbs.
Rack rates: Ground: $130, 2nd Day Air: $471, Overnight: $634
Even a discounted rate is $90 for Ground. And, I don't consider 36"x18"x24" to be crazy large. There are lots of online sellers that ship cardboard, packing peanuts, printed signs, home furnishing, cad routers, etc..that would have far larger packages.
Edit: No...most don't pay rack rates, but even with a discount, it's roughly $90 for ground. Also, if you're using a shipping tool, they often don't show the pricing with dimensional weights. Try the UPS website, and enter your account number + package dimensions (not just weight) to see accurate prices that show your discount. Bottom line is that large packages are expensive, discount or not. Also, the "UPS Store" isn't owned by UPS, they are franchises...they actually charge more than UPS rack rates.
Greyhound Package Express rates can be good for odd packages (large/heavy/irregular). They don't take it right to your door but that can be worth it depending on the savings.
I used to hear of it being used a lot to ship R/C airplanes cross country. You could disassemble them into a pair of wing assemblies and a fuselage and box them up. UPS/Fedex rates would suck because of the dimensional weight but Greyhound would usually beat them.
Does anyone other than people walking into the UPS store pay those rates? I've shipped things for work before, and our rates are nearly two orders of magnitude less than those rack rates. Maybe the actual price is not what's being shown to me though.
>, and our rates are nearly two orders of magnitude[1] less than those rack rates.
$130 / 10 / 10 = $1.30
Did your workplace really negotiate UPS pricing such than you can send a 20 pound large package that's 36x18x24 across 2700 miles to be almost as low as $1.30?
I'm well aware of what the term order of magnitude means.
I've shipped things twice, in the shipping-company provided boxes. An overnight "medium box" between NYC and LA is on the order of $10. (Hence my "not quite" remark, it was technically more than $6 and for a smaller box. But shockingly cheap nonetheless.)
Oh, I use it that way from time to time. But I like to say "order of bignitude" to disambiguate binary. Also occasionally useful is "order of wordnitude" for millions / billions, etc.
Are you counting the costs of shipping yourself to the store, and then shipping yourself plus the product back home?
There have been a lot of times that I've paid shipping and handling on something that would be far less than the costs in gasoline of driving to the store and back.
