Why Is Alibaba So Cheap – Page 3

A parcel postal arrived via China Post. The package was labeled "small packet by air", it contained only a set of needles. A few days later, a second package with the same courier arrived containing a USB to mini USB cable. It's amazing how those two items got to my address in another country. The first packet of needles cost less than $ 1, and the shipping cost was only $ 0.1. The second package containing USB cable also costs less than $ 1 with free shipping. The two packages came from China. The simple question many people have is why is alibaba so cheap. Logistics experts and business people say that cheap or free shipping is because the logistics costs have already been included in the price of the goods. As a result, consumers seem not to pay shipping costs. In addition, China usually cooperates with postal networks between countries for goods shipped across national borders. Postal companies have agreements, this can reduce postage costs. Cheap or even free shipping can also occur because these costs are borne by e-commerce companies. In comparison, there are similar items being sold in our own country. Through a local marketplace, there is an online merchant selling a set of identical needles I bought on alibaba, up to $ 4 more expensive. There are also online merchants selling a unit of USB-to-mini USB cable for $ 1. Unfortunately, this price does not include shipping cost. Through local e-commerce there are shipping costs starting at $ 1 for both items. Domestic shipping costs that are borne by consumers when purchasing via online shopping at home are not competitive with the shipping costs for goods from China. The two items purchased from China, over a thousand kilometers stretching between our country and China, are subject to a tariff of less than $ 0.2. In fact, they also don't hesitate to provide free shipping. By eliminating the long shipping time from China to another country, the goods sold by Chinese online merchants via alibaba are more friendly for consumers. From the above case, Chinese goods sold online have at least two advantages. Cheap and low cost and even free shipping cost. Why is Alibaba So Cheap? There are several reasons for "made in China" cheap goods. For one thing, in the 1990s China imported 60 percent of components to make goods "made in China". Now, component imports are only around 35 percent. Due to this reduction, China was able to reduce the price of their manufactured goods to a much cheaper price. In general, China is known for its low cost shipping. The average shipping cost in China is only Rmb13 (approx. $ 1.90). Meanwhile in the United States, the average shipping cost is $ 5 to $ 10. Since 2012 China has overtaken America to become the country with the largest logistics market in the world. Since 2011, the growth of China's logistics world has crept up to 50 percent each year. The low cost of shipping is clearly beneficial, especially for the e-commerce industry players. Jack Ma, founder of Alibaba, once said that the real magic of Chinese e-commerce lies in the efficient cost of logistics. There are 600 districts in China that have "same-day" and "next-day" shipping options. A thing that is rarely done in other countries. The strength of China's logistics world is supported by strengthening infrastructure. Today, China has 230 airports and high-speed trains. Strengthening this infrastructure allows China's e-commerce to run fast while capturing the hearts of customers. In 2016, China's Bereau State Post noted that 31.3 billion parcels were delivered successfully, 80 percent of which came from online shopping. Apart from the matter of infrastructure, China also has policies that favor the world of export trade so that their goods go global. The policy is a tax rebate. The policy, which began in April 1985, would simply reimburse those who imported goods from China. 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.

The Power of Free Shipping Service

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