by RCModelReviews » Sat Sep 18, 2010 2:00 am
Actually, I think HK has a *very* clever business model and (at least in part) it relies on over-pricing the shipping.
Although there are occasions when the *actual* weight of the package matches the weight that appears on the checkout, more often than not, the "checkout weight" is quite a bit heavier than the actual.
Now you'll notice that there's never any indication of the true shipping cost on the boxes you receive from HK and HK's advertised EMS prices are a little higher than those the HKP site brings up.
I'm picking that HK actually makes a fair percentage of its profit from shipping.
I am aware that in quite a few cases, HK are selling products at (or very near) their cost price -- which would clearly make no business sense, unless they were able to generate profit from something other than product-margin. This adds further weight to the suggestion that it's actually the difference between the price they charge the customer for shipping and the price HKP charges them that makes up a goodly percentage of their profit.
This is a model that some eBay traders also use -- you've seen those auctions where something is *dirt* cheap (unbelievably cheap in fact) but the shipping is $30. When it arrives, it comes in a brown bubble-wrap envelope (worth $0.50) and carrying $2 worth of postage.
Now I'm not saying that (if this is the case) it's a bad thing -- but it's got to make you wonder, especially when companies like DealExtreme are able to be really competitive -- while offering *free* shipping.
I wonder if the Chinese government doesn't provide some kind of postage subsidy for many companies so as to help them compete in the marketplace. If HK were getting (say) a 50% discount on their postage then that represents a *huge* amount of money going into their pockets.
Just thinking....
RCModelReviews.com, just the facts.