On January 9, 2006, the U.S. Postal Service raised their rates
across the board. The first-class stamp has gone from 37 cents to
39 cents. That's certainly a far, far cry from the
2-cents-per-ounce first-class postage rate established in July,
1885.
Other than that first-class increase, there has been an
across-the-board increase in Priority Mail--the de facto standard
for mailing eBay packages. (Check out this handy grid sheet showing the new Priority Mail
rates by zone for packages that weigh up to 20 pounds.)
Since their inception, eBay sellers quickly jumped aboard the
convenient USPS flat-rate envelopes and boxes. This is the ideal
way to get your packages to the customer in a very timely manner,
for a very reasonable rate. Sadly, aside from the general Priority
Mail increase, we were also hit by the following heartbreakers:
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Priority Mail Flat Rate Envelope--from $3.85 to $4.05 Priority
Flat Rate Boxes--from $7.70 to $8.10 Express Mail Flat Rate
Envelope--from $13.65 to $14.40 Delivery Confirmation--from
45¢ to 50¢
There are several reasons for the rate increases, the main one
being the extra revenue is needed to fulfill a federal law that
requires the USPS to place $1.3 billion in an escrow account to
cover civil service retirement benefits.
The rate increase, along with the many other increases eBay
e-tailers have encountered this year, is digging directly into our
pockets and cutting into the bottom line. The average of 50 cents
more per package may not seem like much, but it can turn into
hundreds of dollars a for a medium-volume eBay business--and
that's significant.
Working With the New Rates
Since the USPS has the best rates for small packages, you have a
few choices as to how to deal with the increase. The first thing
you might consider doing is to increase your shipping charges to
cover the cost. The problem with this is that it may discourage new
customers with the higher rates.
You also might consider doing what I plan on doing--use more of
the lower-category services such as Parcel Post and Media Mail and
give the buyer an option (see the USPS's "Guide to Mailing" for more information on these
services).
Previously, I only sent items via Priority Mail so that my
customers would get their packages quickly. Now my new shipping
rates will be altered to give buyers the option to pay extra for
that quick service. If they're not willing to pay, they can get
the fairly inexpensive ground service. By offering my customers a
range of cost options, they'll feel more in control of how they
spend their hard-earned cash.
Another thing to consider is the post office's increase in
insurance rates. Previously the post office charged $1.30 for
insurance for package values to $50, and $2.20 for packages valued
to $100. The new rates are $1.30 and $2.30 respectively. One very
smart way for a seller to turn the insurance from a high expense
into a profit center is to consider using private package
insurance. I've used the services of a company called U-Pic.com for several years
and have saved considerably on my insurance. My customers get
optional insurance and pay the standard USPS rates. I pay U-Pic
their standard rate, which is a 60-percent savings to me over the
USPS rates. I actually profit while insuring my packages!
Alternative Shipping
Methods
Become knowledgeable about competitive shipping services, costs and
features. My first knee-jerk reaction was thinking I would switch
all my shipping over to UPS or FedEx Ground, but then found out
that they've had rate increases as well.
Another thing to consider when using Priority Mail is the
availability of free boxes--delivered direct to your door by
the post office. This doesn't seem like much, but you can save
up to 65 cents per box when you buy in bulk.
With just these few sample prices, you can easily see what a
bargain you're getting by using the post office's
boxes.
Also, consider printing your postage through PayPal (if
you're a low-volume seller) or endicia.com if you're a PowerSeller so that
you can get free delivery-confirmation labels for Priority
packages.
Creative businesspeople will always find a way. I trust that
you, too, will find a way to weather this distressful rate
increase.