Amazon told Congress on Tuesday that it is often cheaper for a merchant in China to send a package to a customer in the U.S. than it is for a domestic seller - the cost to ship a one-pound package from South Carolina to New York City would run nearly $6; from Beijing to NYC: $3.66, it said.
The disparity is due to ePacket deals struck between the USPS and China Post, something EcommerceBytes has been writing about for years and that Congress is now investigating.
What Amazon didn't mention is that its rival eBay is benefitting tremendously from ePacket deals. Cross border trade is extremely lucrative for eBay and its payment processing subsidiary PayPal. In fact, eBay has struck tri-lateral deals with the USPS and postal services in Asian countries including China, Hong Kong, and Singapore.
"Nearly 40% of eBay sellers in China are using the ePacket service to ship to the U.S., with over 80% of items delivered in five to 10 days. Upon arrival in the U.S., these shipments are processed as domestic First-Class Mail, with a one to three-day delivery standard. According to the original announcement, "Sellers in China using the shipping platform through eBay GC are expected to ship small items such as cellular telephone accessories and electronics weighing up to 4.4 pounds (2 kilos), with most in the range of 13 ounces and under."
"The service offers local pick-up service and label printing, coupled with online tracking and pre-customs declaration for a 7- to 10-day guaranteed delivery period and at a 30-50% discounted price compared with many equivalent services."
Amazon's vice president of global public policy Paul Misener called the system frustrating and illogical, and said the losers are American businesses selling to American consumers, and the winners are foreign sellers selling to American consumers.
Misener said Amazon was looking out for its seller customers. "We're going to be fine either way, but this kind of imbalance for our seller customers is illogical."
FedEx also weighed in about the impact of such deals on the private sector.
Read the full story about Tuesday's hearing, including what the USPS Inspector General had to say, in Tuesday's Newsflash
, and let us know what you think.