I've been following the "shipping wars" with some interest over time.
Amazon has started doing quite a bit of its own shipping, even the "last mile" part (these days when I order something from Amazon it usually arrives in an Amazon van rather than via USPS, UPS or FedEx). They recently upped their game by giving Prime members "free" one-day, rather than two-day, shipping on a bunch of stuff. They're running their own vans. They're running their own planes. They're even building their own airports. Not to mention working on delivery by drone.
They also recently "broke up" with FedEx, which responded by offering merchants 2-day air shipping at their previous ground shipping rate. Walmart and Target are trying to compete on "free" and "quick" shipping, too.
As mentioned in a previous post, I ordered a refurbished Chromebook via Newegg (but fulfilled by another merchant) on Tuesday. It's arriving today. That Chromebook was on clearance, $50 off its regular $129 price. It's arriving today. No shipping charge added. How much is two-day shipping on an eight-pound package taking out of that merchant's hide?
At what point does getting stuff to customers in one or two days with no shipping charge added turn out to be unprofitable without very noticeable price increases on the products themselves?