A free shipping mystery

10 days is a bit short indeed, but...

Modern container ships travel at about 25 knots (unless they're doing fuel-saving slow cruise at 12 knots). http://www.sea-distances.org/ tells me that a 25-knot ship going from Hong Kong to Marseilles via the Suez Canal takes 13 days 7 hours to get there.

In practice, of course, there's loading and unloading on both ends (figure 2 days) and you're not traveling through the Suez at 25 knots; the traffic there goes at 8 knots according to https://en.wikipedia.org/wiki/Suez_Canal#Navigation. That said, the Suez transit takes 11-16 hours according to that link, so maybe add half a day to the estimate.

The upshot is that a 16-18 day travel time is not unreasonable there. I was a bit surprised it's that short, but being able to maintain 25 knots around the clock eats up distance faster than one expects.

Of course if you go from Shanghai instead of Hong Kong, you need to add a day and a half or so. And if you go to Brest instead of Marseilles, add two more days.

This would seem to explain it. The shipping is subsidized, but not by the Chinese government, rather it is the recipient first world countries.

My background is supply chain and logistics, currently working for Amazon. The simple answer here is that they are losing money. I'm not familiar with Ali expresses rules, costs, inventory practices, or shipping arrangements, but I can absolutely guarantee you that there is no way that there was any profit made on this item. The price is just too low. Now to answer the more important questions:

1) Why? Because large marketplaces are monumental beasts to manage, so they come up with a variety of rules that simplify operations. Amazon does this with FBA: if your item is above a certain size/weight threshold it costs one price, otherwise it costs another. Those thresholds don't make sense from a rational optimization perspective, because costs for storage and shipping are only loosely coupled to those sizes and weights but can vary wildly based on any number of other factors including distance, shipping speed, inbound and outbound processing costs, etc.. In many cases, the combination of factors is just right and Amazon loses money. But they keep it a 2-tier structure because it makes it easier to manage the business, and makes it easier for FBA sellers to understand it.

2) How? Their costs probably are monumentally lower than most people think, so that mitigates the damage from people buying items like this. They have special import arrangements (and seeing as it is china, they probably have export subsidies as well), pre-negotiated rates with carriers, and likely do a significant amount of pre-sorting and aggregation themselves which gives significant leverage in negotiation of those rates. Amazon does this with their sort centers: Instead of dumping 20k packages on a UPS truck with 15k different zip codes, they will sort them off of the outbound line into pallets with small geographic clusters of destinations. These go to sort centers which aggregate similar pallets from other areas. Then we drop those pallets off right on the doorstep of the local post office. When they do this, they get massive discounts on delivery, and often delivered the same day that it gets dropped off.

Furthermore, sometimes money-losing items have a way of lowering the barrier to future purchases. While there is some truth to this notion (If you can get someone to buy once, their subsequent conversion rates skyrocket), some companies take it overboard...literally trying to buy new customers that will someday be suckered into buying from you at a higher but more profitable price point. In reality, the loyalty of penny pinchers (the target market for this strategy) is near zilch. You lose money on them, and they might buy from you again, but you still have to work at being the low cost choice.

Jet.com is currently pursuing the strategy of selling dollars for 90 cents, but hoping that it encourages loyalty and hoping their cost structure will magically (hehe) lower itself towards a level of profitability someday. Here is for those betting for or against their future: Cost structures don't magically lower with size. Some costs do, some costs get worse. You have to work very hard and very intelligently to ensure that costs stay in check as you grow, and work even harder to make them go down. IMO, with assumptions like that they are well on their way to a fast bankruptcy.

Aliexpress won't loss money, but vendors do.

They have a volume agreement with the postal services. So for example every month they pay 100$ for shipping 100 items. However if some month they have only shipped 90 items they still have room to include another 10 items no matter what they sale it for. The real story is that they are giving things for free and no one can beat them. How do I know this? Just through some rational thinking.