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Calling all MBAs! Amazon Super Saver: **HOW** can Jeff Bezos afford to give away free shipping?

How does Amazon give away free shipping? Does that mean their margins really are large, generally? Is this practice a loss-leader; do they lose money every time someone orders product > 25 bucks? I don't want to know how fast the shipping is or if you've had good experience with it--also please don't guess.

Public Comments

1. Shipping cost have been quite competitive and of course the profit margins contribute to this. Also free shipping is very attractive to buyers and increases sales can move them to a better place on the cost curve due various efficiencies resulting from more volume.
2. Please follow this link and read the article titled : Free! Why $0.00 Is the Future of Business. It was what I think is an excellent article that answers your question, not specifically about Amazon, but about companies giving away ''free'' things and who think it is good business. Wired magazine - March 2009 - Free! Why 0.00 is the future of business http://www.wired.com/techbiz/it/magazine/16-03/ff_free