Amazon Accused of Cheating Customers Through Shipping Costs(gma.yahoo.com)
gma.yahoo.com
Amazon Accused of Cheating Customers Through Shipping Costs
http://gma.yahoo.com/amazon-accused-cheating-customers-shipping-costs-210708580--abc-news-personal-finance.html
60 comments
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.
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.
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.
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.)
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.
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).
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.
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.
I caught amazon pulling this a while back and it was disappointing. Screenshots: http://imgur.com/a/fiPnD
Notice it's the same exact item#
Notice it's the same exact item#
Not logged in : $19.23 + 6.99 shipping
When Logged in: $27.85 + free shippingHowever, you should also note that the cheaper item is sold by an affiliate, and not by Amazon itself. When you are logged into your prime account, it defaults to showing prime-eligible items by default. Your screenshot does not show Amazon adjusting their prices based on whether you are logged in or not.
And as a Prime member, that's what I want. In fact, I will often pay more for a Prime-eligible item than I could get a non-Prime item, because I know it will arrive quickly, packed well, etc. When I buy items from third party sellers they can take a week or more to arrive. Unless the price difference is huge, it's not worth it to me.
In other words, this is EXACTLY the behavior I want as a customer.
In other words, this is EXACTLY the behavior I want as a customer.
I realize this is the media playing out this story as well as possible, but this article focuses entirely on "free shipping" and never bothers to mention the fact that prime is "free 2-day shipping." The distinction is pretty major.
eg - The example used in the article is $10 + $3.99 shipping, vs $13.99 on prime. What they fail to mention is that $10 + $3.99 for 5-8 day shipping is not equivalent to $13.99 for 2 day shipping.
I'm not saying I love it, but I never once believed I was paying upfront for free shipping when I bought prime. I was paying for an upgrade to 2-day shipping. The 2-day upgrade may not seem like much now, because items ordered on Amazon often still show up in 2-3 days without it, but that was not the case a few years ago when items normally took 5+ days to show up on my doorstep.
eg - The example used in the article is $10 + $3.99 shipping, vs $13.99 on prime. What they fail to mention is that $10 + $3.99 for 5-8 day shipping is not equivalent to $13.99 for 2 day shipping.
I'm not saying I love it, but I never once believed I was paying upfront for free shipping when I bought prime. I was paying for an upgrade to 2-day shipping. The 2-day upgrade may not seem like much now, because items ordered on Amazon often still show up in 2-3 days without it, but that was not the case a few years ago when items normally took 5+ days to show up on my doorstep.
Ugh, I hate lawsuits. Amazon often clearly states under the price "Note: This item may be available at a lower price from other sellers that are not eligible for Amazon Prime."
No this is about it being available from the same seller for a lower price not on Amazon Prime. This means that Amazon Prime is getting you no benefit on this purchase. Amazon are saying it gives you free shipping and charging you money for the that service therefore IF true Amazon is defrauding customers.
So are you saying that there are cases where you have a choice like this?
1. Buy the item from Vendor X for $19.99 with Prime "free" shipping (fulfilled by Amazon) 2. Buy the item from Vendor X for $14.99 with $4.99 shipping (not fulfilled by Amazon)
If so, then I would still choose the Prime option. Items that are fulfilled by Amazon fall under Amazon's support and return policies, which are excellent. Third-party sellers not selling under those terms tend to have much less favorable customer protections.
Obviously those protections (and the integrated shipping) come at a cost, but my point is that there is more to it than just "free" vs. non-free shipping.
1. Buy the item from Vendor X for $19.99 with Prime "free" shipping (fulfilled by Amazon) 2. Buy the item from Vendor X for $14.99 with $4.99 shipping (not fulfilled by Amazon)
If so, then I would still choose the Prime option. Items that are fulfilled by Amazon fall under Amazon's support and return policies, which are excellent. Third-party sellers not selling under those terms tend to have much less favorable customer protections.
Obviously those protections (and the integrated shipping) come at a cost, but my point is that there is more to it than just "free" vs. non-free shipping.
Great points about customer service and return policies. Also that third party probably isn't shipping is 2 Day either.
Amazon is offering 2 day shipping at no additional cost. You can purchase an item for cheaper through a third party, who will probably charge you for shipping which more than likely will bring the total in line with what you would pay if purchasing using Prime through Amazon. Except, they'll probably ship it standard 3-5 business day (possibly taking 7-14 days to arrive) where Amazon is going to ship it 2 day DELIVERY. (Yes, I realize it doesn't always arrive in 2 days. Blame the weather or carriers. I can't remember a prime order that wasn't picked and shipped the same or next business day).
The issue is that they are encouraging vendors to artificially inflate the prices of products to cover shipping costs. Essentially, the shipping cost is hidden in the price of the product. The losses Amazon would normally incur as a result of Prime usage are reduced as a result of this.
Lawsuit and legality aside, for those of us that use Prime primarily for the shipping this reduces the value of the service while reducing the cost to Amazon of providing the service.
Lawsuit and legality aside, for those of us that use Prime primarily for the shipping this reduces the value of the service while reducing the cost to Amazon of providing the service.
note: we may be scamming you right now. dont sue us.
They do that NOW. They did not for a long time. At one point it was bad enough that I could look at an item as a prime user, and see the lowest listed price. Then open the same product page in an incognito browser, and the lowest listed price has changed, to one approximately lower by the price of shipping.
Further, the new notice (and it really is new, it came sometime in the last 4 months) does not in any way absolve Amazon from cheating its customers.
They promised me that I could pay an upfront fee of ~59 dollars, and get free shipping on a wide variety of items for a year. Instead they took the 59 dollars, raised the prices of the items by approximately what shipping would have cost, and called the shipping free.
They deserve the lawsuit.
Further, the new notice (and it really is new, it came sometime in the last 4 months) does not in any way absolve Amazon from cheating its customers.
They promised me that I could pay an upfront fee of ~59 dollars, and get free shipping on a wide variety of items for a year. Instead they took the 59 dollars, raised the prices of the items by approximately what shipping would have cost, and called the shipping free.
They deserve the lawsuit.
Unless I'm crazy this lawsuit seems pretty idiotic.
> “The bottom line is the free shipping that Amazon offered to its Prime members wasn’t free,” said Kim Stephens, attorney for one of the plaintiffs, adding that he was “shocked” by Amazon’s alleged pricing practices.
No kidding it isn't free, it costs $79/year (now $99).
> "For example, if the price of an item is advertised for $10 with $3.99 shipping and the [vendor] wishes to match or top their price, the [vendor] would charge $13.99 or higher," Burke alleges in the suit.
Exactly.
If you are selling something for $5 as a non Prime seller, and Amazon charges $3.99 for you to ship it (which they reimburse you for BTW), then why would I as a Prime seller not list my product for $8.99 due to the fact that I will be maximizing my profit, and have the benefit of having my merch sent to the customer in 2 days? I could just list it for $5 to be sure I can sell the item by undercutting, but I'd like to barely undercut the current highest price.
Also I see others complaining about shipping, it seems you all must live in the worst cities for mail carriers. I've had Prime for the last 3 years, and have been ordering from Amazon since 1999. This year I have 31 orders placed, 2013 I placed 86 orders, 39 orders in 2012. I can only remember one item in all this time which missed a delivery date (by a day).
> “The bottom line is the free shipping that Amazon offered to its Prime members wasn’t free,” said Kim Stephens, attorney for one of the plaintiffs, adding that he was “shocked” by Amazon’s alleged pricing practices.
No kidding it isn't free, it costs $79/year (now $99).
> "For example, if the price of an item is advertised for $10 with $3.99 shipping and the [vendor] wishes to match or top their price, the [vendor] would charge $13.99 or higher," Burke alleges in the suit.
Exactly.
If you are selling something for $5 as a non Prime seller, and Amazon charges $3.99 for you to ship it (which they reimburse you for BTW), then why would I as a Prime seller not list my product for $8.99 due to the fact that I will be maximizing my profit, and have the benefit of having my merch sent to the customer in 2 days? I could just list it for $5 to be sure I can sell the item by undercutting, but I'd like to barely undercut the current highest price.
Also I see others complaining about shipping, it seems you all must live in the worst cities for mail carriers. I've had Prime for the last 3 years, and have been ordering from Amazon since 1999. This year I have 31 orders placed, 2013 I placed 86 orders, 39 orders in 2012. I can only remember one item in all this time which missed a delivery date (by a day).
That $79/year was intended to REPLACE the price of shipping on individual items.
If the price of those items increases by the cost of shipping, after you've payed the $79, Prime is now a sunk cost of $79 that has ZERO returns.
This is the basis of the lawsuit, this is very easy to understand.
Amazon should be covering the shipping cost associated with Prime items, Instead they collude with sellers to make them "Prime eligible" and those sellers increase prices by the cost of shipping. That's a scam.
I've had prime since it's inception, I have 500+ orders on my amazon account. It used to be a great deal, it's basically just a scam to get you to use their video service now.
If the price of those items increases by the cost of shipping, after you've payed the $79, Prime is now a sunk cost of $79 that has ZERO returns.
This is the basis of the lawsuit, this is very easy to understand.
Amazon should be covering the shipping cost associated with Prime items, Instead they collude with sellers to make them "Prime eligible" and those sellers increase prices by the cost of shipping. That's a scam.
I've had prime since it's inception, I have 500+ orders on my amazon account. It used to be a great deal, it's basically just a scam to get you to use their video service now.
Anecdotal, but lately, I've noticed that items I purchase do not ship immediately from Amazon, so while the shipping time itself may be 2 days, I get the product several days later which kinda defeats the purpose of Prime.
Not to mention that several of the items that I purchase are 'add-on' items, which means that I need to accumulate $25 worth of items to ship them (which is pretty much what every non-prime member does too)
Not to mention that several of the items that I purchase are 'add-on' items, which means that I need to accumulate $25 worth of items to ship them (which is pretty much what every non-prime member does too)
I have a friend who works as an area manager in one of the bigger fulfillment centers and he offered a good reason for the processing slowdown after Christmas (although it doesn't explain how the issue is still alive).
Staffing a warehouse requires a lot of foresight. Overhead has to be kept lean and demand is very seasonal. Amazon forecasted their largest holiday season ever and staffed accordingly but the information they used to forecast the post-holiday slowdown assumed trends would be roughly similar to previous years. It turns out that this holiday season was a sort of tipping point for consumers acceptance of online purchasing and post-holiday demand barely dropped. All that seasonal labor had been let go but they needed to bring on a large number of permanent employees which takes time.
I don't think it takes ~3 months to find the necessary workforce but I think it explains some of the issues Amazon has been experiencing lately.
Staffing a warehouse requires a lot of foresight. Overhead has to be kept lean and demand is very seasonal. Amazon forecasted their largest holiday season ever and staffed accordingly but the information they used to forecast the post-holiday slowdown assumed trends would be roughly similar to previous years. It turns out that this holiday season was a sort of tipping point for consumers acceptance of online purchasing and post-holiday demand barely dropped. All that seasonal labor had been let go but they needed to bring on a large number of permanent employees which takes time.
I don't think it takes ~3 months to find the necessary workforce but I think it explains some of the issues Amazon has been experiencing lately.
Ah ha! I was wondering why one item I ordered Prime 2 day was shipped 1 day UPS. A warehouse bottleneck would explain it.
As for permanently bulking up, I can think of at least several factors:
First Amazon has to realize there's been a permanent change in behavior, vs. e.g. more people doing late holiday shopping.
Then they have to figure out how to address this.
And there are no doubt classes of temp employees who wouldn't be interested in permanent jobs; I'm particularly thinking of the ones who travel around in RVs and stop by an Amazon warehouse for the Christmas season for that sort of work. Many if not most are probably gone by now.
As for permanently bulking up, I can think of at least several factors:
First Amazon has to realize there's been a permanent change in behavior, vs. e.g. more people doing late holiday shopping.
Then they have to figure out how to address this.
And there are no doubt classes of temp employees who wouldn't be interested in permanent jobs; I'm particularly thinking of the ones who travel around in RVs and stop by an Amazon warehouse for the Christmas season for that sort of work. Many if not most are probably gone by now.
If you are a prime customer, you get a delivery date promised to you when you add the item to your cart, and it is confirmed when you check out. If Amazon takes longer to ship, they upgrade your shipping to Next Day so that it will arrive on time. And if they miss the promised delivery, you can call up their customer support. I don't know if it is official policy, but I've heard people claim that they got a month of free prime membership.
Also anecdotal, but I've noticed that when I pay for shipping, the time it takes for items to leave the warehouse appears to be less compared to selecting "free" super saver for order totals > $X.
Yes, your order is assigned lower priority when using free super saver shipping.
Is it really "lower priority", or are they artificially holding it back as a way to bring value to their paid shipping options?
BTW, they upped the $25 minimum to $35 minimum (for free super saver shipping, still standard 3-5 day shipping mind you).
I'm cancelling my Prime membership when it's up but not because of the price. Over the last six months I've received exactly ZERO orders within 2 days. Start calling it 'free 5-14 day shipping'.
Did you complain to Amazon? They are pretty good at making it up to you, given that it is guaranteed 2-day shipping, and them not delivering on that is essentially fraud.
Well, no...It's "2-day" shipping not "guaranteed 2-day" shipping -- the theoretically maximum time in transit, assuming no issues, is 2days.
OTOH, if they are choosing to use services that are regularly not meeting the 2-day shipping goal, then it's false advertising to call that "2-day" shipping.
No it isn't. They're buying 2-day shipping from UPS or FedEx, both these companies make a "best effort" to deliver the package within 2 business days. That's not always possible without greater expenditure than the companies consider 'reasonable' (and their terms speak to), that's why there are guaranteed next-day and 2-day air freight options from both.
The complaints are generally not about UPS or FedEx. They are about when Amazon thinks the shipping distance is close enough that they can use any service at all to meet the 2-day goal, but the services end up being terrible and unprofessional. Like LazerShip which is just a dude with a car.
If their "2-day shipping" service doesn't result in the package being delivered within 2 business days a vast majority of the time, they shouldn't be advertising it as "2-day shipping".
File a case with customer service when a package is late. Youre right that youve paid for two day shipping. And customer supports SOP is to extend your prime term for one month when an item is late.
Besides that do you live in a rural area far from an airport or something? Im wuite surprised that fedex/ups regularly cant reach you in two days.
Besides that do you live in a rural area far from an airport or something? Im wuite surprised that fedex/ups regularly cant reach you in two days.
I got a full refund on a $100-ish purchase last year that took too long to show up (I think they issued it on the 7th day and the package showed up the next day).
This is interesting. I'd like to hear what HN's take is on this. I noticed that about 30% of the time products take 3 days, not the advertised 2 to get to me. I live in SF so they really have no excuse. Didn't bother me to much but never the less annoying when paying for the feature.
Another slightly off-topic gripe about prime I haven't seen much flak regarding is shipping things like a roll of duck tape in a 12x16" box full of packaging bags. I'm guessing they shipped from a different warehouse from the rest of my order but still wasteful, what can you do though?
Another slightly off-topic gripe about prime I haven't seen much flak regarding is shipping things like a roll of duck tape in a 12x16" box full of packaging bags. I'm guessing they shipped from a different warehouse from the rest of my order but still wasteful, what can you do though?
I live in NYC and recently noticed 2 day prime deliveries are becoming more unreliable. I've had two shipments in the last 2 months take 3 days. It seems they're switching to using USPS in place of UPS for many shipments, and those are the ones I'm seeing problems with.
These USPS shipments often show tracking information that refer to handing the package off to a "shipping partner". They don't say who they're using, and then things go dark on the tracking information until it gets to a post office.
These USPS shipments often show tracking information that refer to handing the package off to a "shipping partner". They don't say who they're using, and then things go dark on the tracking information until it gets to a post office.
I currently live in Ohio and it really is 1-2 day shipping here. When I lived in Seattle, 2 day shipping was 3 day shipping for anything shipped from east of the Rocky Mountains.
I don't know if there's a lot Amazon can do about that. There's big mountains in the way. You're looking at quite a few extras hours in transit compared to a place closer to the warehouse. (Even with using planes)
I don't know if there's a lot Amazon can do about that. There's big mountains in the way. You're looking at quite a few extras hours in transit compared to a place closer to the warehouse. (Even with using planes)
I live in Ohio too. I was paying for Prime until I realized from friends that everyone in Ohio gets their packages in 1-2 days from Amazon.
If their delivery time is off from their stated delivery time (what you get in your email), you can get an extra month of Prime out of that[1].
[1] https://www.amazon.com/gp/help/customer/display.html?nodeId=...
[1] https://www.amazon.com/gp/help/customer/display.html?nodeId=...
Oh man, now its time to dig through all my emails for tracking info. Thanks for that!
Thanks, I didn't realize they had this policy in writing, as opposed to just being something the customer service could give out when you complain.
So it appears the real benefit of Prime isn't FREE SHIPPING, it's 2-day shipping (rather than standard shipping) at no additional cost.
Pretty much, except for the whole $79 additional cost of prime membership. =)
Yes. I forgot the upfront premium you pay for the opportunity to buy things and get 2 day over standard shipping at no additional cost (at the time of purchase).
The other thing we all are forgetting is that prime membership is more than just "free" 2 day shipping, it includes Instant Prime Video streaming. something many people don't seem to care about. Perhaps Amazon needs to break the two offerings out? Prime Shipping ~ $59 / year, Prime Videos ~ $59 / year, Prime Both ~ $99 / year?
The other thing we all are forgetting is that prime membership is more than just "free" 2 day shipping, it includes Instant Prime Video streaming. something many people don't seem to care about. Perhaps Amazon needs to break the two offerings out? Prime Shipping ~ $59 / year, Prime Videos ~ $59 / year, Prime Both ~ $99 / year?
There's also the Kindle Owners' Lending Library, which even less people remember. I borrow a book every month.
Hm I haven't noticed prices being higher when I'm logged in with my Premium account so far on Amazon.de. Also the delivery is super fast. Sunday night I ordered a camera and it arrived monday evening. I'm pretty satisfied with Amazon Prime.
I don't understand the complaint and the article's description is wanting.
I've actually noticed this myself. Kinda defeats the purpose
I've had it happen as well.
My wife and I were comparison shopping around and she saw something on amazon (she wasnt logged in) but when I loaded that item on my computer (I was logged in) the price jumped up $10 and was available with prime shipping
It was still the cheapest we found, so we bought it anyways. But now we comparison shop more.
Such a PITA of a dance to compare Amazon, Costco, and local grocery/big box
My wife and I were comparison shopping around and she saw something on amazon (she wasnt logged in) but when I loaded that item on my computer (I was logged in) the price jumped up $10 and was available with prime shipping
It was still the cheapest we found, so we bought it anyways. But now we comparison shop more.
Such a PITA of a dance to compare Amazon, Costco, and local grocery/big box
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.