The Effect on Online Sellers of the May 2007 USPS Shipping Rate Changes

[mandy]

Seventy-seven percent of eBay and online sellers are concerned about higher shipping costs when new USPS rates go into effect in May, and 26 percent are concerned that postal tools they use may not be ready when the changes go into effect, according to a recent AuctionBytes survey.

Postal rates are going up in the United States on May 14, 2007, and will have a significant effect on online sellers (http://www.usps.com/ratecase). AuctionBytes surveyed readers to find out what they thought of the changes and how it would affect their business.

Most respondents reported they sell on eBay (98 percent); 21 percent sell on Amazon, 17 percent sell on Half.com, and 23 percent sell on their own ecommerce site or storefront. Other sites included Yahoo, other online auction sites, bookselling sites, classified sites, online antiques malls, and other...

full article: http://www.auctionbytes.com/cab/abu/y207...bu0189/s02
survey results: http://www.auctionbytes.com/cab/pages/survey_04152007

[mandy]

So, how does this all translate to the cost of doing business? With most fees going up, many online sellers are alarmed. In fact, one eBayer wrote in a forum: "I just came home from the post office, mailing off my latest set of videos that I sold and decided to check for the increases in Media Mail coming. I just about fell out of my chair! Yikes! I am thinking I will have to increase my shipping charges by .79 to 1.00 to cover the additional expenses. Because I sell items at a very low cost, and cater to that buyer, this will have a huge impact on my business."

Small online sellers of rare or obscure items who rely on foreign markets, such as specialty booksellers, are also going to feel the pinch of the new rate changes, as the Postal Service is no longer shipping individuals' parcels on cargo ships, called "surface-transported economy service."

In an eBay USPS International discussion forum, a representative outlined the following restructuring: "The USPS is eliminating surface-transported economy services. The USPS has experienced continuing volume decline for these economy services. Economy services that use surface transportation account for only 2.7 percent of total international volume. As a result, efficient international surface delivery networks have diminished and costs have dramatically increased."

Sellers who used "surface deliveries" for foreign buyers will sorely miss the service because the cost is about one-third of air mail...

full article: http://www.ecommerce-guide.com/news/news...hp/3676356

[mandy]

A related article - the short term effect on eBay's revenues of the USPS rate hike:

I think there will be a short term revenue drop for several reasons:

    1. Sellers have been holding off on listings until they get their new postal rates entered.
    2. Buyers may be temporarily scarred off by the sticker shock of the higher postage rates that they have to pay for the stuff they buy.
    3. Buyers may bid slightly less because they are factoring in the postal rates on their entire purchase.
    4. Sellers may hold off selling until they get the size and shape of their boxes and/or envelopes optimized for their products.

full article: http://internet.seekingalpha.com/article/35919