Amazon is well-known world’s largest online retailer and prominent cloud service provider organization. At the start, it was an online bookselling company, and over time it expanded and morphed into an internet-based enterprise focusing on e-commerce, digital streaming, cloud computing, and artificial intelligence services. The shipping costs of Amazon depend upon many factors like the speed of shipping, and whether or not a third-party seller is interested to sell products. Moreover, a hefty amount of money spent on advertisements and the charges of the whole shipping network drives the shipping prices. Let us see Why Is Amazon Shipping So Expensive?
Amazon Shipping Charges in 2022:
Amazon is spending a hefty amount to improve its shipping services and expand its shipping network. Due to this reason, the amount Amazon charges for shipping is higher than other retail sales providers, and a major chunk of this additional charge is met by higher revenues generated by subscriptions and advertisements. In the U.S. Amazon prime costs around $139 a year due to higher operating costs
Given are a few factors that determine the shipping costs of Amazon:
Third-Party Sellers Adjust Shipping Charges:
All the available products on Amazon online stores are not sold by the company itself, sometimes, Amazon provides a growth opportunity for third-party sellers to earn money by selling their goods on Amazon’s website. The third party has the right to charge for the shipping services for their products. The size, weight, and place where the order has to be delivered are the few factors that determine the shipping prices.
A Potential Marketing Strategy by Amazon:
Many products at Amazon have been kept cheap to attract more customers. The losses of profit by low price are compensated by charging higher delivery costs. This could be a marketing strategy to boost the online market.
The Number of Amazon Prime Members:
The majority of online products are shipped free to its prime members, this is another reason for higher shipping charges to its non-prime members. Delivery charges for prime members resulted in a significant portion of around $1.5 billion last year alone. In the last few years, the number of Amazon prime members has significantly risen so, to compensate for the massive loss in shipping, the charges for non-prime members are getting very high.
Amazon Is Making More Investments:
For the generation of more revenue Amazon has made significant investments in various businesses for example:
- Recently Amazon has financed a new streaming service IMDB TV
- Has expanded new features for its prime members
- Invested money in its fulfillment centers to meet rising customer demands
- So to offset the revenue for all these investments delivery costs have been raised.
Advertisement Expenses:
Another possible reason for the high shipping charges could be the enormous advertisement budget. Over the past decades, the number of Amazon’s prime members has risen, but still, the advertisement game of the company is very strong. The distinguished features of the organization such as environmental sustainability and upcoming projects are highlighted by the TV advertisement. higher shipping charges can be another reason to cover up the money spent on advertisement.
Involvement of Third-party Sellers:
In 2020, over half of 62% of Amazon’s total gross merchandise volume was generated by its third party. The third-party sellers are free to charge for their delivery items depending upon the location. Even the prime members have to pay the shipping charges to third-party sellers. As the number of third-party sellers increases on Amazon likewise the shipping charges of related products also increase.
Improved Shipping Network:
For the improvements in its shipping networks, Amazon is constantly striving to provide better and on-time services to its customers. Amazon is spending more money to improve its shipping network. So, for a better and more developed shipping network, Amazon is constantly spending money on
- More warehouses
- Employees
New Technology.
So firstly Amazon has to invest in the development of an efficient shipping network then it can reduce prices.
Destination-Based Shipping Cost:
The amount of shipping packages also depends upon the destination of an Amazon deal. If the area of destination lies in more remote places or it’s on the opposite side of the Amazon warehouse, ultimately the shipping cost will be much higher than close localities. At Amazon, they are trying their best to establish more warehouses so all the beloved customers have to pay the same amount.
Delivery Speed:
Amazon offers different delivery packages to its customers. Few products are delivered within five to seven working days, while some items are shipped on the same day if the address is eligible. If someone wants urgent delivery at their place, they have to pay more for it.
Conclusion:
The shipping cost of Amazon products depends upon several factors like where the address is located, shipping speed, and whether the customer is a prime member or not all these affect shipping costs. Additionally, the current investments of Amazon also drive up the shipping charges. For advertisement, improving its services, and expanding networks all affect the shipping network.
FAQs:
Q1: How much Amazon costs in the U.S. to prime members?
Ans: Amazon prime members will pay $139 a year in the U.S.
Q2: What is the shipping cost for its non-prime members?
Ans: Amazon shipping charges for non-prime members are around $25 per order.
Q3: How many sellers of Amazon pay for shipping?
Ans: The sellers pay a specific percentage of the total price on every item they buy.
