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How is it possible that Chinese vendors are able to ship a small / light $3 part to a doorstep in the US for free? When shipping items the opposite way via USPS it is often greater than the cost of the part making it cost infeasible to return. Is shipping somehow subsidized?

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The major reasons that I understand are that:

  • the Chinese government subsidizes shipping.

  • the US Postal Service, eBay China, and Hong Kong Post office have a trilateral agreement called the ePacket service which roughly speaking, allows shipping of small packages to the US at bulk pricing (instead of at the price for individual sales).

I don't think it's common for there to be "free" shipping though.

I'm retracting the part about China subsidizing exporters.

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  • $\begingroup$ "Chinese government subsidizes shipping" Any source for this? $\endgroup$
    – Giskard
    Mar 13, 2017 at 19:09
  • $\begingroup$ Also is it not possible that arrival to the US (perhaps even to individual states) is in bulk, and delivery to specific addresses is negotiated with the Postal service? This would greatly decrease transport costs. $\endgroup$
    – Giskard
    Mar 13, 2017 at 19:10
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    $\begingroup$ I do recall that the Chinese government DID subsidize places like the China Post to make exports cheaper, but since then China's government has dropped a lot of export subsidies. So I'll retract that part. ft.com/content/4f4d1240-024a-11e6-99cb-83242733f755 $\endgroup$
    – Kitsune Cavalry
    Mar 13, 2017 at 19:43
  • $\begingroup$ As for the exact nature of the ePackets agreement, I am not sure of the minutia, but I don't think it quite works as you describe. There's supposedly a 2kg limit for small sellers. Of course international agreements are not my strong suit in econ, so, I'm free to hear from someone more qualified on this topic. $\endgroup$
    – Kitsune Cavalry
    Mar 13, 2017 at 19:50
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    $\begingroup$ I don't think small sellers sell the $3 lights. I think it is a giant factory with a retailer who owns warehouse in the US. Shipping to the warehouse is in bulk, shipping from the warehouse uses the postal service. $\endgroup$
    – Giskard
    Mar 13, 2017 at 19:53

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