Shipping/fulfillment costs are simply far more expensive than most people assume. If you buy a $15 item on Amazon, Amazon keeps about half of that. The seller still has to pay for the entire process of getting it to an Amazon warehouse.
Air freight China to US is very roughly $3/KG. Assume T-shirts (as a light weight good that is going to trend lower price), at an ASP of $5 and weight of 150g. A $30 order (Shein minimum for free shipping) is going to be 6 shirts at 900g for a cost of $2.70. Surepost/Smartpost tier delivery is $5 or lower; even retail-available services would be $7. In comparison, Amazon FBA for 2 shirts at $15 each would charge $7.16 for fulfillment. At December rates, they would also have charged $5.1 in platform fees, which was reduced to as low as $1.5 now due to this competition. That's $12.26 in fulfillment cost for the Amazon order of 2 T-shirts, compared to 6 T-shirts shipped China to US door for $8.70 est.
The above is generous to Amazon. 6 shirts for $5 each on Amazon would cost $22.98-26.58 to sell, and they have an array of additional fees.
It also ignores FBA freight costs - sea freight and duties/tariffs that D2C air avoids due to de minimis. On the other side, I'm ignoring fixed/semi-fixed platform costs and pick/pack costs; I have no idea what that costs in China, but it has to be a tiny fraction of the cost in the US.
Air freight China to US is very roughly $3/KG. Assume T-shirts (as a light weight good that is going to trend lower price), at an ASP of $5 and weight of 150g. A $30 order (Shein minimum for free shipping) is going to be 6 shirts at 900g for a cost of $2.70. Surepost/Smartpost tier delivery is $5 or lower; even retail-available services would be $7. In comparison, Amazon FBA for 2 shirts at $15 each would charge $7.16 for fulfillment. At December rates, they would also have charged $5.1 in platform fees, which was reduced to as low as $1.5 now due to this competition. That's $12.26 in fulfillment cost for the Amazon order of 2 T-shirts, compared to 6 T-shirts shipped China to US door for $8.70 est.
The above is generous to Amazon. 6 shirts for $5 each on Amazon would cost $22.98-26.58 to sell, and they have an array of additional fees.
It also ignores FBA freight costs - sea freight and duties/tariffs that D2C air avoids due to de minimis. On the other side, I'm ignoring fixed/semi-fixed platform costs and pick/pack costs; I have no idea what that costs in China, but it has to be a tiny fraction of the cost in the US.