Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Tue Nov 12 2019 09:17:37

Do Marketplace Shipping Deals Disadvantage Sellers?

By: Ina Steiner

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Shipping carriers are reportedly giving online marketplaces like Etsy a discount in exchange for making them the default shipping method on their platform. But are those marketplaces passing along the discounts to sellers, or keeping it for themselves?

If not, it's shortsightedness on the part of both parties at best - low shipping costs should help conversion rates. At worst, it's a money-grab at a time when those marketplaces are taking a commission fee on shipping costs.

Wall Street firm K. Liu & Company LLC wrote about an agreement (Negotiated Service Agreement, or NSA) between USPS and what it believes is Etsy. 

USPS agreements are usually confidential, but K. Lieu noticed a mention of Etsy division Reverb in the NSA.

K. Liu said it appears the US Postal Service is giving discounts to Etsy for default placement on its site, and it wrote the following (note that "customer" refers to the marketplace):

"...if the USPS determines that it has been positioned as the "Preferred Shipping Provider" by the customer, then the customer is entitled to additional "Positioning Discounts" beyond other discounts and growth incentives included in the agreement. To qualify for these discounts, the customer must display the USPS as the default and only shipping carrier and force sellers to navigate to a different page in order to view other carrier options."

We don't know if online marketplaces pass along any "positioning" discounts to sellers. But frankly, sellers are getting the short end of the stick either way - notice in the paragraph above that in order to get the discount, the marketplace must make it more difficult for sellers to see all their options: the marketplace must "force sellers to navigate to a different page in order to view other carrier options."

K. Liu's revelations give sellers another reason to explore using third-party postage providers that offer greater transparency to sellers, not less.

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This user has validated their user name. by: NoMoreEbay

Tue Nov 12 09:51:04 2019

The answer to this and all money related questions is...Companies big and small do whatever it takes to make the most money at the time all the time regardless of the moral or long term implications.

The greed and corruption has increased 10 fold since the Internet. Profit, power and money are everything to everyone in business and in Govt. Nothing else matters. Period.

They should change the name of 'consumer' to victim.

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by: go-figure This user has validated their user name.

Tue Nov 12 09:58:13 2019

Color me anything but surprised on this one!

Of course, they DON''T pass along the savings! This has been going on long before Etsy even existed. If you don't think Paypal wasn't giving incentives to eBay way back in the day (long before eBay acquired them and then divested them), then you'd be mistaken.

Why is eBay now kicking Paypal to the curb? While obviously no privy to the docs, it doesn't take much to imagine that the past incentives were no longer a part of the new agreement between eBay and Paypal. Hence, the birth of Managed (mangled?) Payments.

Much of this is just business. Not necessarily nefarious, just business. Does Shopify profit from each and every payment transaction ran through Stripe? Of course they do. I don't begrudge making money off of the spread, it's just the way things are.

Bottom line here, no big surprise. Whether it's a marketplace, website company, etc., there are always product and service providers to those entities enticing them with deals to buy/use their products and services. It's just the way business gets done.

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by: eBaySince2006 This user has validated their user name.

Tue Nov 12 10:39:13 2019

They keep most of the savings for themselves and pass some to the seller. For example, if Etsy saved $3 from the normal shipping rate they'd probably pass about 50 cents or less of savings on to the seller and keep the majority for themselves.  

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by: Whatever This user has validated their user name.

Tue Nov 12 12:09:16 2019

Far be it from me to figure out the ever changing schemes that Corporate America is reaping upon the peasants but I do know this - everyday my traffic increases on my website. I have the choice to utilize any shipping method I choose along with any payment processor I choose. The way I see it these smartie pant marauders are doing nothing more than chasing away their victims (sellers) So how does that work out in the long run?

Greed is a buggar

This past weekend I had more sales on my own venue than eBay - that makes me very happy and I look forward to eliminating eBay altogether - will eBay miss me? Not hardly - I'm a very small fish in a big sea. Visa versa I won't miss them much either  

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This user has validated their user name. by: The End

Tue Nov 12 12:38:45 2019

My Business.
My choice.
My Shipping method.
Etsy HAS NO PRODUCT so this is just silly.
USPS appears to have no clue whatsoever.
USPS please MYOB.

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by: pace306 This user has validated their user name.

Tue Nov 12 12:44:12 2019

None of this is NEW news.

All companies "co-brand" services and do behind the scenes deals.

Its sleazy when you lie about it like eBay. Because eBay gets a %10 VIG on shipping services they have nothing to do with (aka they steal it from sellers), so what ever they tell you (about shipping services) ... is a lie.

Its obvious (to anyone besides the dopes on Wall Street and the eBay cheerleaders) that they cant/wont give you the best discounts - since that would be shooting themselves int he foot - since they make money off the price of those services. The higher the sale price, the higher the FVF, so theres no reason that they should discount anything. And if they do - what ever it is ... is arbitrary.

If you only ship a few packages a week/day - then it doesnt "really matter" since there are numerous great places that you can buy services from. If you do alot each day/week - then spend some time researching it all and get your self into a good program that meets your needs .....

............. and as always - never let eBay tell you what you should do - its YOUR business (in the end) and they are only looking out for THEMSELVES and not you.

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by: thievesBay This user has validated their user name.

Tue Nov 12 14:05:28 2019

All of these ecommerce companies are most likely involved in backroom deals getting carrier shipping rates increased every year. Reason being: they get more money out of it because they take fees from shipping charges! Both the platforms and payment processors are doing it. More money all around for the greedy corporations and less for you. That's what it's all about.

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by: jeanne*gene This user has validated their user name.

Tue Nov 12 14:06:01 2019

eBay is definitely NOT passing on Fedex discounts.  Checking the Fedex price on eBay and comparing it to the Fedex price to a corporate account (which I am pretty certain that eBay has) shows a major difference.  An over the counter Fedex price of $15 will be offered by eBay at $12, but a corporate account would only pay about $8.

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by: Shanna This user has validated their user name.

Tue Nov 12 16:43:57 2019

When asked directly, years ago, on the weekly chat Griff said eBay makes no money off of the shipping. He didn't lie did he?

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by: Geetar This user has validated their user name.

Tue Nov 12 20:23:39 2019

Are you kidding me? Do you really think ebay, and etsy dont get better discounts than commercial pricing? Well thats what we as sellers get from them.

So yes, I use a third party for shipping. The cash back pays for the monthly fee and then some labels. I also get a lot of reports about sales that helps when I have variances that EBAY causes by changing things all the time. And I also get ALL my customers emails! I go with what is the best deal, period.

I ignored the survey ebay was asking about the third party shipping a few months ago. I dont want to give them any reason for slowing my sales any more than it already is.

If they want me to use their shipping, well, they better do better on the price then what they are doing.

I also use inkfrog witch will ends listings at the end of the month if I want them to. The ones that sell slow I end, and relist a week later.  the ones that sell well I leave good till cancelled. Works for me.

These marketplaces dont understand that they are the only game in town. They are slowly but surely making themselves irrelevant. They just dont understand, they cant steam roll sellers. They just take their wares elsewhere.

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by: Sierra This user has validated their user name.

Thu Nov 14 08:08:53 2019

Try PirateShip for better shipping rates on Priority Mail!

Sometimes I save little or nothing, but other times I've saved as much as $10 over what Etsy would have charged for a shipping label on the same package! (BONUS! If your credit card awards miles or points, use it to pay for your PS labels!)

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by: purpleiris This user has validated their user name.
Web Site

Thu Nov 14 08:58:41 2019

Not sure if this has been mentioned, but has anyone ever given thought to the idea that Amazon's business model is in direct competition with its customers (sellers)? Wouldn't it be considered unfair trade for Amazon to compete with its own customers for any reason?

That said, shouldn't Amazon and these other marketplaces be required by law to pass on those savings to their customers? Particularly if they are taking advantage of the same discounts to compete with their customers? And also especially because it is against the law to profit from USPS postage?

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by: AngelaTC This user has validated their user name.

Mon Nov 18 20:38:24 2019

Etsy's partnership with Fed Ex turned a $160 shipping cost into an $80 shipping cost.  I don't see any special discounts on the Esty postage.  So while the USPS deal doesn't give me an advantage, the FedEx partnership does.

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by: Jimk1966 This user has validated their user name.

Fri Nov 22 05:53:07 2019

I know for a fact that they get a discount, i have a friend who is partners with some big online sellers and the get 10% off of the first class rate that ebay, pirateship, stamps.com and others give us, stamps.com even offered them 5% off but they made the better deal directly witb USPS, they ship hundreds a day so you know Ebay gets at least 15 to 20% off the rates they charge us for shipping, from what he said amazon gets 25% off, as well as they get $8 rate from fedex to anywhere in usa for up to 8 pounds, so Ebay is making millions on postage we buy from them.



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