How do big retailers work the incredible deals?

[Monkeyleg]

Yesterday I ordered four electronic speed controls for my quad copter. Total order $76. Free shipping. But it wasn't just free shipping, it was free next day UPS shipping.

I had my doubts, and called customer service. The guy there confirmed that shipping was next day.

When I ship something next day UPS, even with Next Day Saver, it's still about $60.  How can they ship a $76 next day for free? The $76 is the usual price anywhere else for the ESC's.

[MikeB]

Economies of scale. Good chance they are shipping a lot of stuff everyday and have negotiated better pricing with UPS or other shipper/s. Most every company even small ones I've worked for have negotiated pricing with shipping companies.

It is also possible they are doing like Amazon and shipping from regional warehouses so they would be paying for more local shipping prices and that also helps with the time required for delivery as well as cost.

[Ben]

Economies of scale. Good chance they are shipping a lot of stuff everyday and have negotiated better pricing with UPS or other shipper/s. Most every company even small ones I've worked for have negotiated pricing with shipping companies.

Yup. When I used to ship stuff with the gov, both fedex and ups would always show the standard rate next to our negotiated rate. The negotiated rate was ridiculously cheap. I used to ship my dive gear ahead so I wouldn't have to lug it on a plane when on travel. Around 60lbs of gear would overnight for 20 bucks negotiated. Regular rate would be something ridiculous like $100+. The small fedex boxes would overnight for $3 with whatever I could stuff in them.

[lupinus]

Because big retailers can work the big deals to lower the cost of the item itself.

With enough volume they likely get a volume discount on the part itself. Economy of scale and such. Then Depending on their logistics the way they receive deliveries they can get a discount from the vendor for meeting certain conditions. With certain vendors we get a nice discount on a deliveries freight for having the truck gone within a certain window. Lower cost on the part means they don't need as much to cover the handling.

Then there is the actual shipping discounts. A big retailer often doesn't pay close to standard rate.


Sent from my iPhone. Freaking autocorrect.

[Scout26]

When I worked for Airborne Express standard rate for someone coming in off the street to ship a single envelope overnight was $18.   Phonak (hearing aid company) received and shipped out about 2400 (1200 inbound and 1200 outbound) small packages a day.  I recall seeing their standard rate as $.85 per shipment.

[Brad Johnson]

Contracted size-weight volume rates. They commit to X shipping volume of packages not to exceed a certain size & weight (or averaging a specified ratio of S&W), figuring in average shipping distance and mode. Carrier bills accordingly, either by a combination of fee plus item count or by flat-rate-per-item.

Brad

[Perd Hapley]

White privilege.

[MillCreek]

#WhitePackagesMatter

[roo_ster]

Weight privilege.

[Perd Hapley]

The real question is, why do they make the 99% pay so much more?

Answer: Volume-shaming.

[Monkeyleg]

I realize that it's economies of scale, but I had no idea that there was such a disparity in that scale.

I can't compete with that.

[mtnbkr]

I can't compete with that.

Sure you can: Service and selection (carrying stuff too esoteric for the big boys).

Chris

[HankB]

Yesterday right after breakfast I contacted Dell via their customer service form and informed them that my Alienware TactX mouse was malfunctioning.

Today shortly before noon FedEx delivered a replacement at no cost to me. (It came out of Ohio.)

Not a bad deal from a major retailer at all. 

[Monkeyleg]

Sure you can: Service and selection (carrying stuff too esoteric for the big boys).

Chris

Dunno if that's possible. I had a call today from a guy looking to buy an ACOG. He was also interested in a Killflash. I gave him my price ($43.57 plus shipping). He looked at Optics Planet and they were a couple of bucks cheaper with free shipping. Ditto for a Scopecoat for the ACOG. Also for a lens cover. My price on the ACOG was much less, and Optics Planet was showing a MAP price for the ACOG, but my guess is that they'll price match if they want to. I didn't hear from the guy again.

One place where I can compete on a lot of items is product knowledge. I know ACOG's, EOTech's and other products very well. Anyone answering the phone at Optics Planet or such wouldn't know any more than the SKU. That's good and bad, though. I'll get guys calling to pick my brain about one of those items for an hour, and then they'll go look for someplace cheaper.

[RevDisk]

I realize that it's economies of scale, but I had no idea that there was such a disparity in that scale.

I can't compete with that.

Oh yeah. Every place I worked that did a lot of shipments had huge breaks. But it's not always perfect. We have a killer rate here on freight charges. But small 'normal' packages are nearly retail pricing. We can ship a couple tons of stuff to Sweden cheaper than I can mail half a dozen couple pound packages to California next day. Reverse situation back when I worked at a textbook company as a contractor. Small packages, we got a ridiculous discount, maybe a buck or two per book sized pouch. Freight was nose bleeding expensive. 

They only give discounts if you're making the numbers attractive. Otherwise, they don't. Corporate accounts still get a better discount than retail, though.

It's a tough thing to beat. I use Amazon for virtually everything because of the free 2 day shipping. $4-6 next day delivery is an insane advantage as well. Smaller businesses have to change $20-60 for next delivery. Even on a couple hundred dollar item, that's a huge advantage. Yeah, Amazon has pretty good customer service, but it's the cheap fast delivery that is the biggest advantage to me.

[Northwoods]

Amazon gets, no *expletive deleted*it, a 90% discount from UPS, et al.