Online sellers in the US could benefit from an ecommerce service the USPS is preparing to launch as a test next month. The US Postal Service filed notice with the Postal Regulatory Commission (PRC) of its intent to conduct a market test of an experimental product called Global eCommerce Marketplace (GeM) Merchant.
The new GeM Merchant program would allow domestic online merchants to offer their international customers the ability, at the time of purchase, to prepay the estimated duties and taxes that the foreign country’s customs agency would assess upon the shipment’s arrival in the foreign destination.
Some online sellers may be familiar with the concept, since eBay offers something similar through its Global Shipping Program (GSP). In that program, run by Pitney Bowes, eBay displays US listings to foreign shoppers with pricing inclusive of duties and taxes due according to their specific country’s requirements.
However, in the case of eBay’s GSP program, some sellers believe it makes the price of their products too high in comparison to items offered by sellers in the country where the buyer is based.
Note that EcommerceBytes has been covering the Global Shipping Program since we first broke the story about its existence in 2012. Here’s some coverage from 2014 when then CEO John Donahoe discussed plans to expand the program beyond the US.
The description of the USPS’s GeM Merchant program sounds similar to eBay’s GSP program – here’s how the PRC describes the test postal program:
“According to the Postal Service, GeM Merchant constitutes a novel eCommerce service for domestic online merchants and their international customers. The Postal Service explains that at the time of purchase, GeM Merchant would allow international customers of domestic online merchants to prepay estimated duties and taxes. The Postal Service describes that the domestic merchant will receive the order and will prepare the item for domestic shipment to the GeM processing facility. After the item arrives at the GeM processing facility, the Postal Service indicates that it or its supplier will inspect the item for verification and security, as well as prepare and arrange for the item’s international shipment and delivery to the overseas address.”
Interestingly the USPS Inspector General said last year that only 1 percent of America’s 30 million companies export – considerably lower than all other developed countries. Citing data from the Department of Commerce, the OIG said of the US companies that do export, 58 percent export to only one country, usually Canada or Mexico.
Here are some factoids of interest contained in the PRC’s report on the test of the new service:
- The Postal Service intends to offer GeM Merchant to a limited number of domestic online merchants through negotiated service agreements (NSAs).
- The Postal Service anticipates that the GeM Merchant product would contribute to the Postal Service’s financial stability by generating more outbound international package delivery opportunities.
- The Postal Service represents that it intends to offer GeM Merchant using two processing locations and to execute contracts with few merchants, i.e., less than 1 percent of the overall domestic merchant target segment.
According to the PRC filing, the Postal Service does not expect GeM Merchant to create an unfair or otherwise inappropriate competitive advantage for the Postal Service since at least four companies presently offer similar services, including one small business, which the Postal Service has contracted with.
The Postal Service classifies GeM Merchant as a competitive product and asserts that it faces significant competition in the outbound international package delivery marketplace, including major competitors with products for facilitating outbound international shipments with duties and taxes paid at the time of purchase.
The Postal Service plans to begin the market test on or shortly after April 30, 2016. The PRC is seeking comments from the public, which must be received by April 11th.
Comment on the EcommerceBytes Blog.