questionshow much do retailers actually pay for shipping?

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vote-for9vote-against

Yes, to some degree.
DVDs, etc often go out "media mail" which is the cheapest method extant. It should be about $1 or so for most bulk shippers.
Otherwise, it's tough to determine because costs are shifted to/from shipping depending on how well either is received by the market. (see eBay for the $0.10 item with $10 shipping marketing strategy)

j5 j5
vote-for2vote-against

@j5: Not sure DVDs can go "media mail." The USPS has specific guidelines regarding what qualifies for media mail:

The material sent must be educational media. It can’t contain advertising, video games, computer drives, or digital drives of any kind.

Additional information regarding media mail can be found here:

http://pe.usps.com/text/dmm300/173.htm#1113509

vote-for13vote-against

Retailers like Amazon will get price breaks, but they also don't pay a set fee per shipment from what I understand. They will get a bill at the end of the month/quarter/whenever and then pay that. Amazon justifies it because not everyone is active on their prime subscription. Some people just want the free streaming for example and others don't order that much. Prime is $79/year (for now, expect this to go up soon) so Amazon does make about $6.60/month per subscriber.

Amazon makes up for the lost shipping money with repeat orders.

vote-for13vote-against

The agreements between the large shippers (Amazon, L.L. Bean, etc) and the shipping companies (UPS and Fedex) are considered propriatary business information, and they aren't sharing. It is safe to say they pay a fraction of what you do. It will cost me at least 10 bucks to send something to my sister in Las Vegas, and often much more. That is why I now buy via Amazon: free shipping for me (hooray prime!)

Part of this is due to the fact that large shippers integrate tightly with the shipping companies, so the costs are less. For example, there are UPS employees in Newegg's distribution centers: see this (slightly old, but still probably correct) story from 2008. See the 6th picture down.

http://www.anandtech.com/show/2531/7

vote-for13vote-against

Companies that hold large shipping contracts pay really low shipping rates. My husband has used his corporate account to ship a 50lb package overnight, early morning delivery - across 3 states, for about $10. If that gives you any indication. I'm sure Amazon's rates are even better.

vote-for8vote-against

@cengland0: DVDs qualify as media mail under provision 4.1e: "Sound recordings, including incidental announcements of recordings and guides or scripts prepared solely for use with such recordings. Video recordings and player piano rolls are classified as sound recordings."

vote-for10vote-against

I work for a large non-retail company; I just shipped a full desktop computer across the country 3 day ground to the other side of the country for $6.26 - so they have a sweet deal with UPS

It made me laugh because I just bought a pair of boots over the internet and I had to send them back. The cheapest shipping rate I could find still cost me over $13.00 and it was like 4th class, 9 day ground in the back of this guy's van.

vote-for4vote-against

Interesting question. I always wondered why it costs me so much to return an item that had little or no shipping.

vote-for6vote-against

I have a commercial shipping contract, low volume.
If I follow certain guide lines that optimize handling, I get rates 1/2 to 1.3 of retail.

I also have the option of using a "drop shipper" or "fulfillment center".
These are dedicated operations that have optimized for filling and shipping orders for certain items.
I take the order, electronically process it, their crew and equipment, pull it, label it and ship.

Considering my labor and handling, they cost as little as 10-15% of my total cost of handling, etc.

At those prices shipping & handling costs average out and become a cost built in to my pricing.

And the huge shippers?
There is something called marginal cost. Once you have a truck or plane headed someplace, sending it full, or half full is almost the same expense. Thus, every piece of freight above a certain threshold costs a tiny fraction of the first item(s).

vote-for2vote-against

Yup, big breaks -- my company spends a few million clams a year with FedEx, and their rates are a small fraction of what I pay when I ship through my personal account. Amazon probably pays next to nothing.

Regarding Prime membership - I'll bet the fee doesn't come close to covering all the shipping fees (if it's possible to break them down for a massively major account like AMZN), but the fact that I've plopped down $79 makes me a lot more likely to buy from Amazon than another retailer. So if they decide to price Prime out of my comfort zone (which would be just about any increase, actually, now that they've been adding extraneous stuff like streaming videos), they'll lose a big part of my business ($20-25k/year between my work and personal purchases). The same presumably goes for many, many other Prime members.