One thorn in the side of small-time online sellers is the yearly postal rate increase.
You’re forced to either eat the increase or pass it on to your customers. Either way, you end up paying eBay and PayPal a larger amount because they collect a percentage of the total that the buyer pays, including shipping. It’s a built-in fee hike without eBay having to announce an increase in fees.
Any postal increase is likely to cut into your eBay profits for a variety of reasons. If you use calculated shipping, buyers will see a higher total price on your items. You might need to lower your prices to remain competitive with other sellers.
If you offer free shipping, you can either absorb the extra shipping cost or increase your prices, risking the loss of some sales.
What to Expect in 2019
The U.S. Postal Service recently announced their proposed 2019 rate increases, which, if approved, would take effect on January 27, 2019.
Even if these rates fully take effect, you won’t pay these exact prices as an eBay seller provided you buy shipping through the site. Still, you’ll probably see some hefty increases, especially for First Class package service.
Some of the proposed shipping cost increases include:
|Small Flat Rate Box||$7.20||$7.90||8.9%|
|Medium Flat Rate Box||$13.65||$14.35||4.9%|
|Large Flat Rate Box||$18.90||$19.95||5.3%|
|Regular Flat Rate Envelope||$6.70||$7.35||8.9%|
|Legal Flat Rate Envelope||$7.00||$7.65||8.5%|
|Padded Flat Rate Envelope||$7.25||$8.00||9.4%|
Standard postage stamps would increase from 50 cents to 55 cents.
First Class Packages Become Zone-Based
When you ship using most USPS services like Priority Mail and Parcel Select, you pay based on the weight of the package and where it’s going – the zone. The closest zone to the shipper is zone 1, and the furthest away are zones 8 and 9.
First Class package shipment cost is based entirely on weight. I live on the east coast, and sending an 8-ounce package via First Class package service costs the same whether I send it to Pittsburgh, Miami or Seattle. Sellers on eBay use First Class package service extensively as a cheap and relatively quick way to ship small, light items.
The proposed postal rate changes would price First Class packages based on zone as well as weight in 2019. This could add up to about 40 cents to the cost of shipping a First Class package across the country.
The USPS also wants to lower the threshold for when a package costs more to ship based on its size. It’s called the DIM weight divisor, and it’ll move from 194 to 166. I don’t understand all the ins and outs of this type of thing, but the upshot is that package size will matter more than ever.
The size at which a large package costs a lot more to ship is likely to get smaller. You’ll want to use the smallest box possible that’ll fit both your item and any appropriate protective cushioning. You’re most likely to see this type of price increase for shipping items that are large and relatively light.
What Does This All Mean?
If you’re more than a casual seller on eBay, you’ve probably noticed many changes in the seller experience over the past year.
EBay provides seller notifications regularly, with major change announcements usually reserved for their quarterly seller updates. A common thread among these seller updates has been the site’s attempts to be more like Amazon.
Free Shipping and Free Returns
EBay has been pushing sellers to offer free shipping and free returns. In fact, for Top Rated Sellers to have the Top Rated Plus seal on their listings now, they must offer free 30-day returns. EBay’s search algorithm may also reward sellers who offer free shipping and free returns.
Someone has to pay for the free shipping and free returns, and customers will end up absorbing these costs, one way or the other.
Not even Amazon and Walmart.com offer free returns on most items unless there’s a problem with the order. Still, eBay claims that free returns are “industry standard” to justify their position.
Though Amazon isn’t really causing the USPS to lose money, small-volume eBay sellers still can’t hope to compete on many items when you have to pay a lot more for shipping.
Plus, sellers already have to deal with criminal buyers who game the system to steal money from them. Offering free shipping and free returns seems like it would attract more of these scam buyers.
If you research eBay selling strategies online, you’ll find scads of “experts” on both sides of the free shipping issue. Some say it’s a must-have and increases sales.
Others insist that they’ve tried it both ways and free shipping ends up costing them money without significantly increasing sales. Their reasoning makes sense – sellers who offer “free” shipping pad the cost of the item to cover shipping, and buyers are wise to that.
What Do You Think?
How will postal cost increases affect you?