The high cost of shipping

gdazegodgdazegod Lostralia
edited January 24 in Everyone

We've all seen the creep of business and administration costs across nearly every industry. The only exception to this are digital products (streaming music, ebooks, software, etc) and remote working (working from home). Every time a physical product is manufactured it needs to go somewhere across the globe.

Somehow over the last two decades, the cost of product distribution/delivery (especially internationally) has skyrocketed. People are complaining that sometimes the cost of delivery is more than the product itself.

There are definitely choke points along the supply chain. This includes international air flights, middlemen at either end (first leg pickup, middle-leg customs and postal clearance, last leg delivery) but this is not where the true costs seem to be escalating.

  1. Aircraft maintenance and fuel costs to fly the planes are factored into the pricing mechanism model.
  2. Cross-industry financing between Airlines, Postal and delivery agents (UPS for example), Government Customs and Postal Services, plus Courier Agencies are all factored into the final cost.

It's a complex arrangement, and one that can't be resolved by individuals complaining they are being ripped off.

The only exception where the cost is controlled is through Amazon. They have their own planes, international warehouses and distribution centers and as a result can keep their costs to well below average. Without a doubt, it is a very slick operation. There are caveats though, including whether to sign up for Prime Services (discounts) or not, plus not everything that you might specifically require isn't sold through Amazon. But mostly, a fair proportion of retail product is made available.

Other large scale retail portals like Alibaba (a network of individual sellers) has wide Asian coverage, but delivery costs charged by the seller is not subsidized by a central body like it is with Amazon. They are charged the full rate of delivery and pass that on to the customer. It's the same for eBay.

Very few sellers are hiking the rate for delivery. It is what it is. You can't blame them, if they charge you less on delivery costs than what it costs them, their margins are cut and soon they'll be out of business. Right now it's just very expensive to be in the online retail game.

Here are some brickbats and bouquets in my observation of other online costs in business.

Brickbats
1. Why do companies apply a handling or admin fee for online transactions? This is especially apparent in the ticketing industry. Personally, I think it's a ripoff, as technology is doing all the legwork, not some mundane human.
2. This also includes processing fees. WTF?
3. Same applies to the banking industry. Unnecessary fees go some way towards generating Bank profits.
4. Surcharges? What's that all about?

Bouquets
1. Haven't found one yet. Lol.
2. Actually, maybe robust drone technology could be deployed as a cheaper last leg delivery service. It's too early to tell.

The upshot of it all is that small retailers are now very expensive. Unless they've struck a deal to minimize their delivery costs you shouldn't even be considering them - sorry to say. Until a new, better and cheaper business model comes along we'll all just have to keep waiting and hoping.

Comments

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    Agree with all of that but we're now close to a point where one or two outlets control absolutely everything.

    I've resolved myself to buy less and be prepared to pay a little more for whatever it may be in the hope of keeping independent retailers alive in some shape or form. I must admit that I'm now actively avoiding Amazon where and when possible, because they simply exercise tax avoidance at every opportunity - not they are alone in this.

    It was reported that if Jeff Bezos had given every single one of Amazon's employees $150,000 at the start of the global pandemic (let's not get into that), that he would still have more money now than he did then. Of course, he didn't. And, of course, why should he? Other than it would be a good thing to do and great example to other big business, but then that's not what it's about, is it?

    Sorry, I'll put my soapbox away.... again! :)
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    gdazegodgdazegod Lostralia
    Yes, totally agree about Amazon. All valid points. In this case, its better the devil you know.
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    gdazegodgdazegod Lostralia
    FedEx also have their own planes, but they are merely a transport link, not a complete supply chain operator like Amazon.
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