If you are an Amazon Prime member, several of the products on the website ship for free, which is just one of several perks Prime members have access to.
But if you are not an Amazon Prime member, shipping for some products can start to get pretty expensive. So you may be wondering what causes these high shipping prices.
Look no further! Here is everything there is to know about what drives up the shipping prices at Amazon!
Why Is Amazon Shipping So Expensive?
Factors that impact shipping costs at Amazon include the package’s destination, the speed of shipping, and whether or not a third-party seller sells a product. Additionally, Amazon’s recent investments in advertising and its shipping network also drive up shipping prices.
To learn more about the different factors that affect Amazon’s shipping costs, keep on reading!
1. Third-Party Sellers Adjust Shipping Charges
Not all products Amazon offers are sold by the company itself. With that, Amazon provides the option for third-party sellers to make money on their products by selling them on the Amazon website.
So third-party sellers have the freedom to set and adjust shipping charges for their products.
Depending on the item’s weight and size and where it ships from, shipping charges from third-party sellers can get rather expensive.
2. A Potential Marketing Strategy By Amazon
Some of Amazon’s products are priced very low to entice customers to make an impulse buy. Amazon then charges more for shipping to make up for the lost profits of the low product price.
So some people believe Amazon’s higher shipping costs are a marketing strategy to push more sales.
3. The Number Of Amazon Prime Members
Because Amazon Prime members have access to free shipping on a majority of products, it causes the shipping costs to rise for non-Prime members.
Amazon’s one-day delivery for Prime members results in a significant portion of its expenses (almost $1.5 billion last year alone).
Over the past few years, the number of Amazon Prime members has continued to rise.
So to make up for the massive loss in shipping expenses that Amazon Prime members avoid, Amazon has to mark up the cost of shipping for non-Prime customers shopping on the site.
4. Amazon Is Making More Investments
Over the past few years, Amazon has invested a lot of money in various business ventures to make more money.
For example, Amazon funded the new streaming service IMDbTV, expanded features for Prime members, and poured money into its fulfillment centers to meet customer demand.
Because Amazon invests so much money, shipping costs are a simple way to earn more revenue to offset the investments.
5. Spending More Money On Advertisements
Amazon’s advertising budget may also be a reason for higher shipping costs. Although the number of Prime members continues to grow each year, Amazon also dedicates a large portion of its budget to TV advertisements.
Amazon creates TV advertisements to inform current and potential customers about its environmental sustainability and features that set the company apart.
Some outside sources believe that Amazon increases its shipping costs to ensure it doesn’t lose too much money from its advertisements.
6. More Third-Party Sellers On Amazon
In 2020, third-party sellers accounted for over half (62%) of Amazon’s total gross merchandise volume.
Third-party sellers have the freedom to dictate the amount they charge for shipping, which can be pretty steep depending on where the item ships from.
Even if you’re an Amazon Prime member, you may still have to pay for shipping if a third-party seller offers the product.
So as the number of third-party sellers on Amazon increases, the number of products with higher shipping charges also increases.
7. Amazon Is Improving Its Shipping Network
One detail Amazon is constantly striving to get better at is its time to ship items to its customers. With that, Amazon spends a considerable amount of money to improve its shipping network constantly.
To develop the shipping network, Amazon invests money into more warehouses, employees, and new technology.
So before Amazon can decrease its shipping costs through an efficient network, it first has to invest the money to get there.
8. Certain Destinations Raise Amazon Shipping Costs
The destination of an Amazon package also plays a big role in the amount of shipping tacked onto the product’s price.
So if you live in a more remote location or in an area that is farther away from an Amazon warehouse, the shipping costs will be much higher than someone who lives in a city.
Amazon hopes that its growing supply chain will eventually lead to all its customers paying the same for shipping, no matter where they live.
9. Delivery Speed Affects Amazon’s Shipping Prices
Amazon allows you various selections regarding how fast you want your order delivered. For example, some products have standard shipping, which Amazon delivers to you within five to seven business days.
Additionally, certain items on Amazon even qualify for same-day shipping if the address is eligible.
So the quicker you would like your package delivered, the more expensive shipping will be.
Several factors play into the shipping costs at Amazon. Things like the shipping speed, where the address is located, and whether or not you’re an Amazon Prime member affect shipping costs.
Additionally, Amazon’s recent investments also drive up the cost of shipping. For example, Amazon has invested significant funds into advertising and bettering its shipping network.
So Amazon raises shipping costs to make up for its investments and expenses.