Long ago, I confessed an irrational distaste for shipping charges from online purchases.

My attitude seems more justified in light of the business practices of Web photo service Shutterfly. The company relies on its shipping cost structure to make money:

Which gets us back to [outgoing Shutterfly chairman Jim] Clark’s departure and his “manufacturing” comments and why they may be relevant: A hefty and increasing chunk of Shutterfly’s revenue doesn’t come from products, but instead from the amount Shutterfly charges for shipping. If you are like me, you probably assumed that when you buy something online the cost of shipping is merely a pass-through from FedEx Corp., United Parcel Service Inc., DHL International Ltd. or the U.S. Postal Service.

But at Shutterfly, those shipping fees also are a profit center; the company is currently only profitable in its fourth quarter. “We do make money on it,” says Judith McGarry, director of investor relations. While not disclosing just how profitable it is, Shutterfly does acknowledge that shipping is a “significant” revenue generator that for the first nine months of 2006 generated 23% of sales before ending the year at 20%, up from 19% the year before. That compares with 5.3% at Amazon.com Inc., which unlike Shutterfly also discloses shipping costs.

Call it what it is: A ripoff. Shutterfly pays a fixed cost to carriers to send out the prints, so anything they charge over that amount is an artificial markup.

Actually, I don’t know why this article uses a blanket statement like “shipping fees”. For decades, mail order businesses have used the “shipping and handling” as the standard catch-all. I’d always assumed that the “shipping” part was the inflexible cost, and the “handling” was whatever the vendor felt like extracting from the customer (above the minimal stocking, packaging and other work actually needed to get the purchase ready for shipping). It sounds like Shutterfly is taking massive liberties with that handling charge.