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The Myth of Free Shipping Hurts Small Sellers

It’s obvious to small sellers that they are at a disadvantage when it comes to shipping costs, but the Wall Street Journal quantified the issue for its readers this week in an article titled, “”Free” Shipping Crowds Out Small Retailers.”

A chart shows a striking difference in the cost of shipping a 3-pound, 10-inch square box from New York City to Atlanta (residential address) using ground shipping:

A mega-retailer pays $5.80;

A small-medium retailer pays $15.14;

And an ecommerce startup pays $18.22.

That’s because big shippers get volume discounts – “That helps to make the Internet a tougher marketplace for startups and small businesses.”

The newspaper also pointed to the huge advantage Amazon has in terms of volume: it shipped more than 1 billion packages in North America in 2015, 42% more than the next 10 shippers combined, the Wall Street Journal said.

It cited a Shipware survey that showed shippers who spent in the range of $100 million annually on shipping could qualify for discounts of more than 80% on overnight shipments, and up to 60% on residential delivery by ground.

Compounding the problem of higher shipping costs for small sellers is the demand for free shipping that large retailers have cultivated among online shoppers.

The shipping advantage large retailers have over small sellers is not news to EcommerceBytes readers, but the stark picture painted by the Wall Street Journal should be impetus for sellers to study ways to become more efficient around packaging and shipping.

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Ina Steiner
Ina Steiner
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com. See disclosure at EcommerceBytes.com/disclosure/.