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Shipping Through Amazon Just Got More Expensive

Five weeks after the USPS instituted new rates for shipping services, Amazon raised the rates its sellers pay when printing Priority Mail shipping labels on its marketplace. The move, which came with no warning, impacts merchant-fulfilled items, since sellers don’t print postage for FBA orders.

Last month EcommerceBytes noted that Amazon announced it was keeping 2015 rates in place for Priority Mail and Priority Mail Express postage despite the January 17th postal rate increase from the USPS.

A message initially greeted sellers logging into Amazon Seller Central: “On January 17, 2016, new USPS rates will go into effect. Amazon has negotiated discount prices for Priority Mail and Priority Mail Express that are available when you buy shipping through Amazon Shipping Services. For Priority Mail and Priority Mail Express, for the time being the total shipping costs will remain at 2015 rates. USPS rates for all other shipping options will increase at public rates.”

Industry sources told EcommerceBytes the USPS does not allow partners and customers to advertise negotiated rates as Amazon had done in the message to sellers, and Amazon quickly removed the message from its system.

Neither Amazon nor the USPS would comment at the time. Unlike with dominant rates, there is little transparency into how the Postal Service negotiates with shippers, resellers, and shipping postage providers when it comes to competitive rates.

Amazon is in a unique position – it is fairly certain it has a Negotiated Service Agreement with the USPS for the large number of packages it mails (including FBA shipments), but it’s unclear if it is allowed to extend those rates to sellers who use its system to print shipping labels for their packages.

In response to our inquiry about its Priority Mail rate increase on Wednesday, Amazon spokesperson Erik Fairleigh told EcommerceBytes, “Carrier rates available to sellers in Seller Central change from time to time. Please check Seller Central for the updated rates. We will continue to work with carriers providing shipping services to sellers to provide competitive rates.”

When we asked where in Seller Central those rates were available for viewing. Fairleigh explained, “The rates are available in the Amazon “Buy Shipping Tool.” Specifically, once a Seller makes a sale, they can see the rates there (as part of the label purchase flow).”

One industry source speculated that the USPS forced Amazon to make the change; either that, the source said, or “They just want to mark the rates up more and make more money.”

A reader who told EcommerceBytes about Wednesday’s rate change said he didn’t realize that the Priority Mail discount would be temporary. “I assumed Amazon’s clout and discount structure with the USPS would allow them to keep our Priority Flat Rate the same for at least a year, maybe more. But we only got about a month.”

One seller was actually happy to hear the rates offered through Amazon had increased. On an Amazon discussion board, the seller said they were too busy to use Amazon’s “slow postage” and said, “Hopefully they’ll keep going up until they reach the rates the rest of us have to pay through Endicia and Stamps.”

A different reaction from a seller on another board: “Looks like AMAZON’s special rate has expired. Postage goes up & up & up, never does it go down, down, down. However, sellers’ incoming freight from AMAZON stays the same.”

Comment on the EcommerceBytes Blog.

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Ina Steiner
Ina Steiner
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.