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Why Is Alibaba So Cheap

The Power of Free Shipping Service

China’s Online shopping offers free shipping to attract customers. Walker Sands revealed that postage does have a big impact on the world of e-commerce. In a survey involving 1,622 online shopping consumers in the United States, 80 percent said that free shipping was the most attractive incentive for customers to shop online.

What Walker Sands revealed is in line with a report from comScore entitled “Online Shopping Customer Experience Study.” In the report, comScore said that 58 percent of 3,128 consumers surveyed wanted online merchants to provide postage subsidies.

Yingyu Yang, a researcher from the University of California at Davis, in his paper entitled “Free Shipping and Repeat Buying on the Internet: Theory and Evidence” (2005) reveals that free shipping is the most effective marketing strategy for online shopping.

In online shopping activities, high prices for goods are not a worrying matter like shopping at conventional places. The high price of goods will actually encourage traders to provide free shipping policies and then affect the psychological side of buyers. However, beyond that, China’s ability to create an efficient logistics chain is a lesson for other country.

Why is Alibaba so cheap? They have supported by good logistic infrastructure, postal companies agreement, “made in china” import tax rebate.


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