I’ve bought stuff from Overstock.com, small stuff like jewelry and other things, which they shipped for just $3. I’ve also bought BIG stuff, like mattresses and armchairs, and the shipping was still only $3.
There’s an IKEA just a few miles from me that charges $50+ to deliver stuff.
How does Overstock afford it?
They get a bulk rate from UPS, they average the cost out over a huge number of items, and they absorb more than half the cost. IKEA sells for much closer to the cost of goods, and third-party delivery services make their entire profit from the consumer.
They lose a little bit on each deal, but make up for it with volume.
i think that they have so much money the spend it on the shipping so its just 3$ 
They look at the bottom line shipping rather than line items.
(Numbers pulled out of air.)
They sell 1000 small items. Jewelry, and other small stuff and it only costs them $1.50 to ship. Net surplus shipping, $1500.
They sell a sofa, shipping price $200. Net shipping loss is $197.
Combine the numbers and they’re still $1303 ahead. If they were operating in the red on shipping then the shipping charges would change.
I actually work in a shipping room at the moment, and I can tell you that nothing actually costs $1.50 to ship. Even the little bitty pocket calendars that only weigh two ounces cost us $1.73 in postage (first class; bulk rate is actually more expensive for small items). And postage is just the start; the mailing envelopes, packing and padding materials, rental on the postage machine*, printing and cutting up invoices and addresses, getting everything I just mentioned delivered to the shipping room, heating the aforementioned shipping room, and, you know, my wages. You can’t just slap that stuff in an envelope and have it come through undamaged; we’re not talking about the letter rate that you’re used to paying, or even the flat rate (That’s a sliding rate for flats, not a flat rate, as it would imply) but package rate, which is $1.56 for the lightest items. The girls downstairs who answer the phones hate it when people call in and tell us that we’re overcharging for shipping and handling-- the company actually takes a small loss on most items. Postage is only about half of our total shipping expense.
Overstock may actually be able to break even or turn a small profit on $3 shipping for small items. However, there’s no way that they’re making significant money on them, and certainly not enough to cover what they’re losing on large item shipping.
*I hate that thing. God, I hate it. “Envelope not detected.” Whiny, defective piece of crap.
Also, shipping is worlds different from delivery.
Tack a few dollars onto the price of everything they sell.
I’ve always figured it was this. I watch Woot.com and shipping there is always $5, for up to 3 of anything. I’ve paid $5 to ship a t-shirt, and I’ve paid $5 to ship a 42-inch TV. A perverse part of me wanted to order 3 TVs, just so I could pay $5 total to ship all 3. Well, that and to see what happened around the office when 3 were delivered here.
Yep, that’s it in a nutshell. They’re like insurance companies having actuaries who project future claims and losses in order to calculate their annual premium and still make a profit. Overstock simply adds the projected shipping cost into the overall projected sale price. Same theory applies to companies that always offer “free shipping”.
Some companies must do the averaging approach as well. I just checked an import site I frequent that offers free shipping everywhere, and the cheapest item I could find was $0.78. And they’re shipping from goddamn China. No way do they make a profit on that. They’re obviously depending on customers that order many items at once.