Shipping Costs Kill 100,000s of Small US Businesses – We Need Shipping Neutrality


Musings By Joschik
Christian obsesses over collectibles, antiques and toys more than the average person, but (he believes) in a productive way. Documenting collectibles has been a passion since working on a book about his favorite childhood toys from Timpo 41 years ago. As part of his collecting Christian also has sold collectibles using over the years the postal services in Germany, Russia the UK and the US.

Online trading allowed hundreds of thousands to create their small businesses selling directly or via platforms such as hobbyDB to others in the United States and overseas. But shipping costs are now killing these businesses off, in favor of Amazon and maybe some other big corporates that are trying to copy Amazon. There are thousands of stories on this  –


There are many aspects of how Amazon is doing this and you can read plenty about it. But to me, the most worrisome and the least talked about is the ever-widening gap in shipping costs.

Unless a seller has an absolutely unique inventory, better customer service or reliability will not help that seller. Selling now is almost purely a cost to the door game and shipping is the only major factor. Kirk of KMJ Diecast, one of our biggest vendors with more than 14,000 different SKUs, says “With the USPS increasing prices twice a year I will soon end up having to charge $10 for a single Hot Wheels!” As it is he already pays $10 for a Hot Wheels 5-Pack to New York.

 

Compare that to Amazon’s costs. While Amazon does not publish these, there are some good estimates out there. For example, Save the Post Office, a website run by Steve Hutkins, a retired professor who did extensive work in 2018, calculated that even then Amazon only paid $2 per package for shipping to USPS (you can study his work here). Given its explosive growth since then and its ability to leverage, I assume they are now down to $1.50 or less.

Shipping a Hot Wheels 5-Pack   –   nothing to smile about

If that trend continues unabated, as a Seller your options are either join Amazon and pay their very steep fees for warehousing, shipping, return-handling etc. etc. for your items, or you close. Amazon Fulfilled costs small vendors between 30% and 50% of their revenues and that is before COGS, often leaving nothing as profit margin (costs are hard to calculate as they are extremely complex, here is a good overview of the current cost structure).

It is my prediction that at this rate 95% of small collectible vendors have either moved to Amazon or closed shop resulting in the loss of hundreds of thousands of jobs with others being at the mercy of the largest corporation in the world. I just propose that we move to Shipping Neutrality.  We have fought for Net Neutrality, the principle that Internet service providers must treat all Internet communications equally. We have Road Neutrality with everybody paying the same for using our road. I propose that at least USPS should be regulated by its owner, the U.S. Government, to adhere to Shipping Neutrality, i.e. offering the same cost to all shippers.

If you are a seller please share your views below.

 

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Rex
Rex
7 months ago

I hear you loud and clear. A few years ago, I could ship a model car to someone via say, $5 or so, now it’s closer to $15. That’s way more than inflation.

Isaac Nelson
Admin
Isaac Nelson
7 months ago

100% agreed on all of this. It’s also worth noting that we have a lot of politicians in the US who want to privatize the USPS, which would undoubtedly raise shipping costs even more. The USPS is a vital part of our country’s infrastructure and absolutely needs to stay affordable and available to everyone.

Last edited 7 months ago by Isaac Nelson
Sarah Myers
Sarah Myers
7 months ago

Yes, this is becoming a real issue! Mercari recently argued for a very large shipping cost increase and I am reconsidering leaving them as it is too much (you can read about it here – https://www.ecommercebytes.com/C/abblog/blog.pl?/pl/2022/1/1643212439.html).

bud Kalland
bud Kalland
7 months ago

5.50 for a single dollar cost of 1 Hot Wheel car is asinine. You can’t sell five 1.00 cars when mailing costs are 5.50-6.50 for 1st class mail. I think mailing costs have pushed me over the edge. 🙁

Kirk Smith
Kirk Smith
7 months ago

If the Government ever lowers Postage I will be shocked.

I have never heard of them lowering anything, but it sure does need to be done.

UPS & Fed Ex follow the rate hikes, not because they need to, only because they can do what USPS does. They only continue on to make more profit while USPS continues to waste money, it baffles the mind why the Postal Rates go up twice a year now no matter the economy.

I am all for getting rid of the USPS, it has become a burden to run, like most Government agencies do.

Kirk

Frank Barrett
Frank Barrett
7 months ago

Amazon didn’t sign the letter. No doubt they must be making a ton of money on shipping. They could give a damn about their sellers!

Oggie
Oggie
7 months ago

I am glad someone is fighting for this. I understand the increase when fuel prices go up like they have (reasons this happened is another topic) but they never go down when fuel prices return to a normal rate. I had to cut out all international shipping because it just got to expensive. Now to ship within the lower 48 costs almost as much as I used to pay to ship to the UK

bud Kalland
bud Kalland
7 months ago

Hoping you have an excellent trip with some 1st class mailing results. The major problem is small 1st class packages. Paying 6.00 postage for a 4 ounce 2 car Hot wheel package is insane.
Bud thebkallandstore

Mark
Mark
6 months ago

I agree Amazon sets the bar with their so-called free shipping. I offer free shipping on orders over $45. Buyers pay shipping on anything under.

Until some real legislators are voted in the swamp will not address the post office. They have legacy cost for pensions and have been paying checks to past employees who have passed on. The USPS loses billions every quarter.

Mike Thomella
Mike Thomella
6 months ago

Two of my friends closed their part-time business as it became unviable with ever increasing shipping prices. I fully support your proposal here!

thebankerstoy
thebankerstoy
5 months ago

If you are a diecast model collector as I am, you can remember the days when you could walk into a chain store such as Toys-R-Us and have rows and rows of the 1/18th scale Ertl American Muscle Series models to choose from at around $20.00 each. That same Ertl model you paid $20.00 for back in the late 90’s and early 2000’s are now selling on eBay and other online sources for three to four times that amont. The days of buying nice collectibles at the prices they were originally sold for is gone and so is being able to ship most any small to mid sized collectible via any shipper for $5.00 or $6.00 as I paid back in the 90’s and 2000’s.

I believe that we sometimes forget to consider what it takes to design, produce, sell and deliver a collectible of any kind, as well as the ever rising cost of all of the materials it takes to produce those collectibles. Both manufactures are in bussiness to make a profit and they must pay their employees a salary, benefits and the actual cost of doing business, i.e. manufacturing plants, product licensing fees, delivery vehicles, utility bills and the list goes on and on and it’s basically the same for the shipping companies.

Do I enjoy paying much higher prices for my collectibles and shipping fees to get those collectible to my front door step? No I don’t, but welcome to collecting in 2022. Collect carefully, shop wisely.

thebankerstoy

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