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Comment by solson | Hacker News Reader

I think the obvious answer is that this isn't FREE shipping. Nothing is FREE. "Free" shipping is nothing but marketing speak, and if this is illegal so is "Buy one get one Free" or "Buy one get one half price" since the discount is built into the business model.

My wife is an Amazon seller and yes when she ships prime she must pay for shipping which would force her to lose money on each shipment so she builds the cost of shipping into the cost of the item. The cost of her taxes are in the item. The cost of her employees are in her item. The cost of software licenses are built into the item.

The only thing you get with FREE shipping is a receipt that doesn't include shipping as a line item. Someone has to pay the driver, buy the truck, and put fuel in it, pay for the insurance, etc, etc, etc. It can't possibly be free.

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I don't think anyone doubts that the shipping costs money to someone, but the assumption many people might have is that Amazon themselves would be the ones paying the shipping costs to your wife behind the scenes because the customer already paid Amazon in advance when they paid for a Prime membership.

It is news to me that this is not the way things work.

eBay is doing the same thing. They are pushing sellers to offer free shipping which simply means don't line item your shipping costs. The sellers still need to pay for shipping. Amazon still needs to pay for shipping too. It is built into their model.

I mean really people, I hate to sound condescending, but... when you do a "buy one get one free" do you really think you got something for free?

Maybe one day we'll all get free healthcare and free schools and freeways too. Don't kid yourself, you're paying for them.

eBay and Amazon is different. Pushing shipping fees into the item cost is a profit driver for them. When you pay shipping explicitly, those costs usually aren't driving profits.

Remember the classic EBay scam back in the old days? You'd sell some widget for $5, with $25 shipping. Commissions were calculated on the item cost and excluded shipping.

Also, Amazon is making rule/practice changes that are eroding the benefit of Prime. In 2010, they would send products to me that weren't in east cost warehouses via 2nd Day air. These days, they usually just deliver it late.

Yeah, this. The other thing the $.99 item with $5.99 shipping does is allow refund scams - you would of course be able to return this item, but only if you paid return shipping costs and then you only get refunded the $.99 item price meaning you would generally lose money on a refund.

Building shipping into the cost like Prime however, might do the reverse and expose a seller to over-refund issues where they would lose more on a refund if it must include the total item price without shipping. (When shipping is "free" and built in to the item price.)

One other thing most people don't know about this: Free shipping actually costs the buyer more than actual shipping costs. The seller has to guesstimate what actual shipping costs are and add that to the margin. Most estimates will be higher than actual costs since estimating under costs will put you out of business fairly quickly. If they aren't over actual costs initially they will be adjusted to higher than actual costs over time.

> I mean really people, I hate to sound condescending, but... when you do a "buy one get one free" do you really think you got something for free?

To reiterate the parent comment: No, but we are paying a non-trivial fee for Prime membership every year. Is it unreasonable to have thought that part of that fee would go to offsetting shipping fees to the original seller?

I found your post informative in that, no, in fact it does not. That was definitely news to me. But no need to be condescending about it.

Yep, you're condescending. Because "buy 1 get free" may be temporary in which case the buyer is certainly benefitting by the timing of a purchase. I don't really get the Amazon complaint but when I pay $79 per year I get free 2 day shipping that I would not otherwise get. On Ebay, "free shipping" incents sellers into minimizing shipping & handling costs (and buyers strongly prefer it).

Of course nothing is free. That is why prime members are paying $79 a year for the upgrade from free supersaver to free 2 day shipping.

The real issue here is that amazon is accepting the $79 fee, but not passing any of it to their third party retailers, whose offers are still labelled as "prime" (when they are not).

Regardless of whether a customer should credulously take the offer at face value, it does strike me as a clearly deceptive practice to charge an annual fee up front for free shipping, and then to instead of offering free shipping, roll it into the item price specifically for customers of the "free shipping" service. If it were advertised as a "complete price summary" service or something that conveyed how the service actually worked, then it would not be deceptive, but who would pay $80 per year for that service? So Amazon apparently have only been able to sell the Prime service in such high numbers due to the deceptive presentation of the service in advertising.

> The only thing you get with FREE shipping is a receipt that doesn't include shipping as a line item

In practice, though, it does appear to be more than that. The vast majority of the time, the difference between the total cost if I buy from someplace without free shipping, and the total cost if I buy from Amazon with free shipping, is very close to the amount on the "shipping" line item at the first place.

It is just an illusion, as you say, but they made the illusion so good that I cannot usually tell the difference from reality when I'm comparison shopping for something.

I think the assumption by most customers would be that the cost of Amazon prime offsets these costs, ensuring these price rises do not occur.

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