Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Sat June 15 2019 22:11:11

Some Large Merchants Get a Pass on DIM Weight Pricing

By: Ina Steiner

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We take a look at next week's USPS rate changes and how they impact sellers in Sunday's Update newsletter. The June 23rd change means higher rates (of course), though only for large lightweight parcels shipped via certain services - including Priority Mail.

An article in Freight Waves caught our attention as we were putting the story to bed. All three major carriers charge DIM weight rates, but it seems they give a break to the largest shippers:

"FedEx and UPS have been known to grant temporary exemptions to DIM pricing for large customers, and have tweaked the formula for some to allow their parcels to slide by at the higher thresholds. 

"Mark Magill, vice president of marketing for OnTrac, a regional parcel provider that covers eight states including California, said the company has no issue with bumping up the DIM for its biggest customers from its current 166 divisor to 194.*

"USPS negotiates highly confidential service agreements that provide rate discounts to its big shippers. It may also modify the DIM formula for those shippers but is unlikely to allow them to avoid the pricing scheme altogether."

*Note: The larger the divisor, the lower the cost.

While volume discounts make sense in the real world, it may be tough to swallow that large merchants can more easily offer free shipping to customers since their costs are lower, thereby putting pressure on smaller retailers to do the same, but at higher costs. And instead of holding firm, companies like eBay and Etsy also pressure their marketplace sellers to offer fast, free shipping. 

The best thing sellers can do is make sure they make their shipping operations as efficient and cost-effective as possible, and try to differentiate their merchandise and services to make them more appealing.



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by: Windkissed This user has validated their user name.
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Sun Jun 16 10:07:02 2019

I talked with my local post office about this.  They tell me it would not effect all shipped items.  Only oversized items and those that are 3 to 4 zip codes away.  But of coarse with ebay we ship all over the USA.  Once again, the big guy crushes the small business.  If you are going to instill new rules then apply them to everyone or nothing?  Small sellers are already strapped to the hilt to even make a profit and offering FREE shipping may be a thing of the past if they keep this up????

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This user has validated their user name. by: NoMoreEbay

Sun Jun 16 10:21:47 2019

There is little to no profit left for the small seller. The big corporations have managed to put their hands out to take it all.

In the near future, online selling on sites like ebay and etsy will be exclusive to the Chinese and large business. Small sellers will move to Facebook, Letgo and the like. Many will return to trade shows and their garage.

Buyers looking for unique items will follow the small sellers and in the end these greedy corporations will lose.....until they tack on to Facebook and Letgo, and the vicious cycle will start all over again until eventually the small seller becomes extinct.

Greed is a powerful thing and has been for over 2000 years.  

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by: I Must be Crazy This user has validated their user name.

Sun Jun 16 10:55:15 2019

Okay, volume pricing for large customers has been the norm across products and industries forever. I don't think anyone is confused about that.

Ebay must be one of the largest shippers in the world right????

I expect they are negotiating favorable pricing with all of the major carriers and passing those savings onto their customers. Perhaps someone from eBay can make a comment on this.

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This user has validated their user name. by: toolguy

Sun Jun 16 12:13:27 2019

Off Topic

The new and NOT improved "manage orders" page is now mixing "order number" and "sales records"

And the "order numbers" have no numerical order, it's just random numbers which are impossible to file in any order. . .

I am convinced that eBay has Amazon implants that are destroying eBay from the inside out. . .

The only other excuse is complete incompetence at the highest level of eBay. . .

Devin has no clothes!

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by: hawk This user has validated their user name.

Mon Jun 17 04:58:02 2019

it's always the rich and powerful that steals from the smaller companies and working people. these companies and powerful people are just thieving trash in expensive clothes.

it's been like that all through history. it's also time to give the real working people a break on things , like the rich trash in expensive clothes gets. monoply's are supposed to be illegal. where's the law ?

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This user has validated their user name. by: RKTOYS

Mon Jun 17 09:05:18 2019

@NoMoreEBay
That was my take too.  While volume discounts are not new, margins at the lower end have been squeezed out of existence to subsidize them.  When your customer base's number 1, 2, and 3 considerations are price, price, and price, that really disqualifies people selling a manufactured product.

Before the Walmart embargo, small shops could often put out new figures long before the Walmart machine got around to it.  Because most new figures sold, there was no danger in ordering enough that popular figures remained available and thus your selection looked better.  Now, though, by the time you receive your orders, the easy money is gone, so you order less, so your selection gets picked over faster.  Just like the awful Walmart stores that are always picked over.  Normally, stuff would eventually sell, even at a discount, but that doesn't work anymore either because big inefficient Walmart that lets its shelves rot for want of product then blows stuff out online for well below "wholesale" and destroys that too.

No point in the enthusiast seller even trying to get involved in the market.  Just stare at your picked over Walmart shelves and be happy about it.  That's all there is because that's all there can be.

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by: toyman This user has validated their user name.

Mon Jun 17 10:06:53 2019

The real pain...and shame on the USPS..., is that it will restrict sales because of unnecessarily high shipping. We ship 4-5 pound packages, regularly, and being on the East Coast, the cost is anywhere from $15 - $20 to west coast addresses, of which we eat $5 and pass along the rest.

Now, with a 5 pound package, which is even a LITTLE over the 1 cubit foot size, you will be charged the same as for an 11 to 20 pound package (is this not crazy???). That will push shipping to the West Coast into the $45 - $50 range! How many people do you know that will be willing to fork out that much shipping for an item, even if it IS a limited product?
It's just not going to happen.

So, now, my most fertile area for sales (California), will probably dry up and there will be less competitive bidding, simply because of the greed of the USPS.

They had a real advantage over UPS and Fed Ex, but it appears they are going to throw it away, as they seem to want all their money at one time.

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This user has validated their user name. by: RKTOYS

Mon Jun 17 11:13:07 2019

The other thing I like is when shipping is so expensive that it's actually cheaper for me to drive there and deliver it myself.  I don't know how dealers that do out-of-state shows can make it flying in and shipping their stuff by freight.

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by: danny This user has validated their user name.

Mon Jun 17 12:33:28 2019

I would not expect EBAY to negotiate any significant discounts with any of the primary carriers.  The primary reason for this is the largest cost for the carrier is the first mile (the pickup).  EBAY does not offer or facilitate freight consolidation and therefore the carrier still must deal with millions of pickup locations.   If you are a small business doing 100 parcels a day, you may do better negotiating a price with one of the big three.



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