Big carriers like FedEx, UPS and Amazon deliver a lot and none of these packages are shipped “free”.
“People like free shipping because the word free is very strong, even if people know it’s not really free because someone is paying for it,” Cara Buntin, owner of Cake to Remember at Etsy Shop, told CNBC.
More than 131 billion parcels were shipped worldwide by 2020, and parcel shipments are expected to double again in the next five years – possibly reaching 266 billion by 2026, according to Pitney Boyce.
“When consumers click on that ‘buy’ box, they often don’t see it [the] The labor that leads them to a box at the door, “Ellen Rees, a professor of sociology at UC Riverside and co-editor of” The Cost of Free Shipping: Amazon in the Global Economy, “told CNBC.
And those shipping costs are rising.
“Anyone can offer an Amazon Prime two-day shipping. It’s just the cost of … providing the service,” Dhruv Saxena, co-founder of third-party logistics company ShipBob, told CNBC. He estimates that this could cost a company anywhere from $ 25 to $ 35 for a typical two-day shipping rate.
Companies like Amazon, Walmart, Target and even Etsy benefit from scale economics because they generate massive online sales. According to the US Postal Service, this puts them at a disadvantage in achieving bulk discount rates.
When CNBC asked the postal service for information about how much money Amazon, Walmart, and Target provide services for sending packages, the department said there was no agreement, but “there could be an agreement with the negotiation rate to deliver the packages. However, we are sure the agreement exists.” Or I can’t deny it. “
This is due to dictating federal regulations Acknowledging the existence of a specific national service agreement “would be damaging and would result in confidential commercial information that would not be disclosed under good business practice,” the postal service said.
“A lot [small businesses] They’re under pressure, shutting down and shutting down because they can’t compete, “said Jack Alimahomed-Wilson, professor of sociology at California State University Long Beach and co-editor of” The Cost of Free Shipping: Amazon in the Global Economy. ” He told CNBC.
In a 2019 survey, three-quarters of independent retailers said Amazon’s dominance was a major threat to their survival, according to the local Self-Reliance Institute.
“It simply came to our notice then [carriers] Charge going or how much [packages] There are going to be costs when you run them, and that makes it difficult to offer free shipping because if you are not really careful you often end up with no profit, “Buntin said.
Watch the video above to learn why free shipping is a myth, what it costs companies to send parcels across the country, and how it affects consumer attitudes.