Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Sun Nov 24 2019 20:40:08

eBay Answers Questions about Shipping

By: Ina Steiner

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eBay answered some uncomfortable questions about shipping posed by a seller during its recent weekly chat session. One was about the ongoing rumor that eBay profits from its shipping label program that lets sellers purchase postage right from its site.

For example, a seller wrote on this thread from January: "I have info from a very reliable source connected with eBay shipping that eBay HAS negotiated a lower rate with USPS and are pocketing that money instead of passing the discount along to us. These eBay insiders also expressed their dismay at this practice but that their hands are tied up upper execs to do anything about it."

In Wednesday's chat, a seller asked eBay moderators pointblank: "Can you confirm that labels are a profit cent for eBay or that the money flows through to Pitney Bowes and the shippers? i.e. do eBay have more of a discount than the Commercial rates they give to sellers?"

The eBay moderator responded, "We work to negotiate discounted rates for our sellers and pass these discounts on to any seller who prints labels on eBay."

That response may not be enough to quash the persistent rumor, nor does it address another possible way eBay benefits from carrier partnerships - you might remember the recent EcommerceBytes Blog post about "positioning discounts" that one carrier offers an unnamed marketplace (thought to be Etsy) as a reward for being a Preferred Shipping Provider (note that the reference to "customer" is 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."

The same seller in Wednesday's chat session also asked what eBay was doing to help smaller sellers that don't qualify for shipping discounts with FedEx or UPS. In an obvious reference to Amazon, the seller wrote, "I see your competition is building its own fleet for delivery and often thus able to do 1 or 2 day delivery. How can eBay remain viable in the long run with ever increasing shipping costs for sellers as the small guys get priced out of the market?"

The moderator replied, "We will continue to strive towards supporting our sellers and giving them an opportunity to compete on an equal playing field, and also work towards improving the shipping options and tools available to our Community to remain competitive in an ever changing market."

You can find the exchange in Message 67 on the November 20th eBay Weekly Chat thread.

One key issue was not addressed during the exchange. eBay (and Etsy) charge commission fees on the total transaction amount (price plus shipping), so every time shipping carriers raise their rates, eBay and Etsy in effect raise their selling fees - but without having to announce a seller fee increase. 

It's long overdue for marketplaces to reconsider that policy for the health of their marketplaces given the ever-higher costs of shipping, but it's hard to imagine companies like eBay and Etsy being able to wean themselves from the easy money.

Comments (62) | Leave Comment | Permalink
Readers Comments

Perminate Link for eBay Answers Questions about Shipping   eBay Answers Questions about Shipping

This user has validated their user name. by: iheartjacksparrow

Mon Nov 25 10:35:09 2019

Marie writes: "Why is this subject primarily addressed to Ebay[?]"

Because the article is about eBay. Not Etsy. Not Amazon. eBay. And whether eBay is making an inordinate amount of profit from the rates they negotiate with shippers.

Perminate Link for eBay Answers Questions about Shipping   eBay Answers Questions about Shipping

by: Frank Abagnale This user has validated their user name.

Mon Nov 25 11:00:32 2019

@Marie

Thank you for informing us that other platforms also profit from the buying and selling of postage. We know that Ebay charges sellers 10% of the seller's lowest domestic shipping rate when they charge for shipping. What do the other platforms charge?  

Perminate Link for eBay Answers Questions about Shipping   eBay Answers Questions about Shipping

by: moonmyst This user has validated their user name.

Mon Nov 25 11:23:09 2019

Have always used Pitney Bowes to ship my packages. They offer a substantial discount to small sellers which I've always appreciated. Why anyone would rely on eBay or PayPal for labels is beyond me.

Perminate Link for eBay Answers Questions about Shipping   eBay Answers Questions about Shipping

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

Mon Nov 25 11:30:16 2019

I would just like for buyers to stop trying to screw me out of my money when it is already reasonably priced.  Then ebay sends me these "You have items in the cart, now cut the price to make the sale"  Why should I need to cut an already reasonable price to make a sale.  Then on top of that if I cut the price, I am expected to send them an offer and still lower it at least 5%?  Makes no sense.  Cut, Cut, Cut, til I make NOTHING on the sale.  I am sick of it.

Perminate Link for eBay Answers Questions about Shipping   eBay Answers Questions about Shipping

This user has validated their user name. by: CanBrit

Mon Nov 25 11:54:20 2019

@Windkissed

I'm guessing you very recently had one of those bottom feeders come after you. I agree. It is all cut cut cut now because our good customers have fled the sinking or is it stinking? ship.

Perminate Link for eBay Answers Questions about Shipping   eBay Answers Questions about Shipping

by: hopeforthebest This user has validated their user name.

Mon Nov 25 12:02:26 2019

I've read a number of times that USPS does discount the cost of postage to large volume companies such as Amazon, Ebay, and Stamps.com, and that these companies are REQUIRED  to present us with the prices we see when we purchase postage from them.

That's why the price is fairly uniform across platforms, unlike most other products which are set by demand.

This is standard practice in most distribution businesses.

If I recall correctly, Amazon pays on the order of 25% of the lowest rate you or I will ever see quoted, so that USPS Priority Flat Rate Envelope you and I pay $7.65 for costs them less than $2.

I do know that if you investigate purchasing postage directly through the USPS, you can get an idea of the structure of the massive discounts available for huge shippers, though none of us are in the class of companies that ship millions or packages a week.

Perminate Link for eBay Answers Questions about Shipping   eBay Answers Questions about Shipping

by: Shanna This user has validated their user name.

Mon Nov 25 12:08:23 2019

@Marie, you are incorrect. If you are a volume seller on Amazon, you get discounted 1st Class shipping rates, sometimes 25% off the online rate. And the USPS guarantees these packages get 2 day delivery to all but the farthest zones.

I am sure eBay gets this exact same discount from the USPS and keeps the vig.  If nothing else, as a TRS, I get a small discount off of Priority and International shipping. Ebay buys all of their Priority and International postage at the same rate, but only passes this small discount to a tiny percentage of its sellers.

Perminate Link for eBay Answers Questions about Shipping   eBay Answers Questions about Shipping

This user has validated their user name. by: toolguy

Mon Nov 25 12:17:03 2019

Do I hear this right?

eBay makes money on shipping labels then tacks on an ADDITIONAL 10%

14 more months and I can unlock these handcuffs. . . .

Perminate Link for eBay Answers Questions about Shipping   eBay Answers Questions about Shipping

by: Dalpal This user has validated their user name.

Mon Nov 25 12:25:41 2019

We all know there is a profit for any shipping provider, whether ebay, etsy, Stamps.com, Pirateship, etc., otherwise there would be no incentive for them to market the carrier.  When ebay already takes 10% of our shipping cost (and has for years), the ''right'' thing to do would be to pass along even deeper discounts to the sellers, but of course that would never happen.

I enthusiastically support and promote Pirateship, who DOES pass along discounts that no other service has done, via the ''Cubic Rate'' on Priority Mail.  I have saved as much as $5 on a single shipment, many many times  On First Class rates, they are the same as ebay, but the optional insurance cost is also less than ebay.  

And there's no subscription fees to use their service. (They apparently fund their entire operation thru that discount the carriers provide, so that suggests that it must be a fairly significant amount.)

I will do anything necessary to be sure to NOT give ebay one penny more than I have to, and using Pirateship has been very beneficial for me.

Perminate Link for eBay Answers Questions about Shipping   eBay Answers Questions about Shipping

This user has validated their user name. by: toolguy

Mon Nov 25 12:44:28 2019

@toyspast

What shipping service charges more online then retail?

And how much did the package weigh.

I ask because I find this hard to believe. . .

Perminate Link for eBay Answers Questions about Shipping   eBay Answers Questions about Shipping

This user has validated their user name. by: unsuckEBAY
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Mon Nov 25 12:48:11 2019

There is no doubt eBay receives a USPS discount and/or rebate, and it's likely substantial -- whether that invokes indifference or outrage is clearly a personal matter.

Two months prior to being ousted, Devin Wenig boasted at eBay open that eBay was the #2 Postal Service customer.

Let that sink-in for a moment... (since we all know who #1 is).

Key USPS Figures From eBay Open:

~6 million packages shipped daily
$1.5 billion in USPS postage
#2 USPS customer is eBay

Perminate Link for eBay Answers Questions about Shipping   eBay Answers Questions about Shipping

This user has validated their user name. by: toolguy

Mon Nov 25 12:53:17 2019

@hopeforthebest

Where did you get that $2 figure?

My sources say it's closer to $3.50

Perminate Link for eBay Answers Questions about Shipping   eBay Answers Questions about Shipping

This user has validated their user name. by: Marie

Mon Nov 25 12:57:56 2019

@jack

You and I both know that if the article was written about Amazon or Etsy it would still circle back to Ebay.  And your post is a great example of that.  My example was using FCP Domestic.  For FCP Domestic every single online provider of postage charges the same rate.  NO EXCEPTIONS.  And you stated "...whether eBay is making an inordinate amount of profit..."  Which would then mean that if Ebay is making "inordinate" $$$s, then so are all the other sites.

Perminate Link for eBay Answers Questions about Shipping   eBay Answers Questions about Shipping

This user has validated their user name. by: toolguy

Mon Nov 25 12:58:30 2019

@unsuckEBAY

"6 million packages shipped daily
$1.5 billion in USPS postage
#2 USPS customer is eBay"

Proof that eBay is still a very viable selling format. . . .

To those that think eBay is dying let the above numbers sink in.

6 million packages a day!

Perminate Link for eBay Answers Questions about Shipping   eBay Answers Questions about Shipping

by: stevel This user has validated their user name.

Mon Nov 25 13:33:20 2019

eBay has benefited ever since the USPS "discount" started many years ago.
This practice of is common in many industries on the backs of the customers, in eBay's case their sellers. eBay has always squeezed every penny out of it's sellers!

Perminate Link for eBay Answers Questions about Shipping   eBay Answers Questions about Shipping

This user has validated their user name. by: toolguy

Mon Nov 25 13:42:21 2019

@stevel

"eBay has always squeezed every penny out of it's sellers! "

I would venture to say that is the goal of any profitable company that isn't a charity! To squeeze as much out of the customer as possible and still retaining their business. . . .

Perminate Link for eBay Answers Questions about Shipping   eBay Answers Questions about Shipping

by: quirkyantiques This user has validated their user name.

Mon Nov 25 14:05:00 2019

@toyspast. The reason is this. Online parcel services-which used to be the same exact price as usps retail ground, have now moved to dimensional weight pricing. They are barely cheaper than Priority. However OVER THE COUNTER usps retail ground prices are NOT priced this way. If a parcel is going to zone 4 or beyond do NOT use online "parcel select".

Perminate Link for eBay Answers Questions about Shipping   eBay Answers Questions about Shipping

by: TomH This user has validated their user name.

Mon Nov 25 14:12:19 2019

Re Dalpal and Pirate Ship

Almost everything I sell on any platform is in the one to three pound range.  Lots of jigsaw puzzles and larger toys for the most part.

Package today: 2 pound jigsaw puzzle from Atlanta to Las Vegas: Basic Priority, USPS Retail and Online 13.00  Pirate Ship 10.25.

The above was not an eBay nor Amazon item sale. However my experience and selling on both of those platforms; the price would have been higher.  

I ship almost everything via Pirate Ship.  On the above by the way any of the Post Office Flat Rates that the puzzle would fit in would be significantly higher.

Perminate Link for eBay Answers Questions about Shipping   eBay Answers Questions about Shipping

by: TomH This user has validated their user name.

Mon Nov 25 14:21:25 2019

Yes all of the shipping services make a profit on the price difference contracts that they have with the provider; we all understand that.

What is very irritating about eBay is that they get a profit on the actual label printed but that they double dip and charge an additional percent of the label. And are not stand-up people and just admit it clearly.  Then basically people would not be as pissed, and make whatever decision makes sense for them personally.

Perminate Link for eBay Answers Questions about Shipping   eBay Answers Questions about Shipping

This user has validated their user name. by: Lightning

Mon Nov 25 14:26:51 2019

Ebay, or Amazon, or Etsy will charge what the market will bear on shipping.  As long as no one is cheaper, they won't lower their rates even though they have negotiated huge discounts.  They attribute that price difference being due to the size of THEIR enterprise, not yours, so they're keeping it.  

They have the power to demand lower rates and use that power, not to help you, but the stockholders (might also be you).  That is why they dodge that pointed question of whether they are passing through the savings.  They aren't, but don't feel obligated to reveal ANY of their internal workings to us peons.

I also want to put in a good word for Pirate Ship.  That service has become my #1 shipper.  I'll even pay slightly more for Regional on Pirate Ship than eBay, but would rather give my money to PS.  The interface at PS is much better than ebay - more flexible, user-friendly, has presets, good reporting, very intuitive.  And best of all it doesn't keep changing every week.  EBay was driving me crazy.  I only use eBay Shipping now for international package shipments in the 5-25lb. weight range, as they are about 8% - 13% cheaper than anyone else.  

I take great pleasure in printing each label on Pirate Ship, as that money no longer goes to eBay's coffers.  I can also pay for my postage with a credit card, so I get rewards points.  If I have a problem or question on Pirate Ship, their support base usually has the answer.  If not, I email and get a real person replying very quickly.  Can't say enough good things about the service.

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