Free shipping, particularly fast free shipping, such as offered by Amazon during the Holiday season, is usually, perhaps always, done below cost. Substantial discounts, as much as 70%, are offered to online retailers with substantial volume such as WalMart and Amazon. This is based on an annual volume of $100 million or more in shipping costs.
Notes and references
- "Free delivery creates holiday boon for U.S. consumers at high cost" article by Deepa Seetharaman and Nathan Layne on Reuters.com Janurary 2, 2015
- "‘Free’ Shipping Crowds Out Small Retailers: Businesses scramble to keep up with e-commerce merchants that enjoy big discounts from carriers" article by Laura Stevens in The Wall Street Journal April 27, 2016