eBay and Etsy charge a commission fee on shipping above and beyond payment-processing charges. As a result, when shipping carriers raise fees during the holidays, sellers end up paying online marketplaces what could be characterized as a "shipping tax." It's a fee increase that the marketplaces don't have to publicly announce!
On October 2nd, the USPS is raising rates for packages sent Priority Mail, First Class Package Service (FCPS), Parcel Select Ground, and USPS Retail Ground that will be in effect through mid-January. In an
article about the holiday surcharge on Wednesday, we used two examples of small or lightweight items to show the low end of the impact on sellers.
A Priority Mail Small Flat Rate Box will jump from $8.25 to $9.00 if purchased online (Commercial Base) - an increase of 75 cents.
A one-pound Priority Mail package going to Zone 9 will jump from $16.39 to $17.19 (Commercial Base) - an increase of 80 cents.
eBay charges 12.9% on the total amount of the sale up to $7,500 calculated per item in most categories (booksellers pay 14.6%, clothing and jewelry sellers pay 15% for items up to $2,000 and $1,000, respectively - see the
chart on the eBay website for details.
To reiterate, the commission fee includes payment-processing costs - but before eBay instituted Managed Payments, that was approximately 2.9% (PayPal fees). So if you take the 10% difference and multiply it by the 75 cents extra sellers will pay per flat-rate Priority Mail package beginning in October, that means sellers pay eBay an extra 8 cents per package.
Using that extremely conservative example, eBay would earn at least an extra 8 cents for every package shipped using USPS during the holidays. And of course FedEx and UPS also institute peak shipping surcharges.
With Etsy's fee increase instituted in April (from 5% to 6.5%), it means this year's higher holiday shipping rates have an even bigger impact on its sellers than in previous years.
While sellers can use calculated shipping to pass along the higher shipping costs to buyers (or change shipping costs manually), that won't spare them the extra fees they pay to marketplaces. (Sellers who offer "free" shipping face the same higher commission fees if they raise their prices to account for higher shipping costs.)
It would be fascinating to hear from sellers on how eBay and Etsy's "shipping tax" will impact them. Break out the spreadsheets, and let us know.
eBay and Etsy 'Shipping Tax' Takes Effect October 2nd
by: Lightning