Posted by Alex Jackson on October 19, 2018
Terminal dues? What are these again? And what do I need to know? Good question, please see our previous article on the subject and a more in-depth look on how terminal dues helped to create the e-packet. You are probably quite familiar with the e-packet from shopping online, E-packets cover a wide array of consumer goods all weighing 4.4 pounds or less, shipped from overseas markets like China and when it arrives in the US it is treated like your typical piece of first-class mail. It’s an economical way for overseas manufacturers and retailers to tap into the lucrative US consumer market. Inexpensive goods delivered right to your door, sounds like a big win for US consumers, right? Well, it sounds good on paper but not so good in practice.
The problem with e-packets is twofold, it has given a huge competitive advantage to overseas sellers who pay pennies on the dollar to ship, while simultaneously causing the United States postal service to lose money on virtually every package delivered. The USPS has no control over how these terminal dues are calculated, so they have no choice but to raise rates for all other services to cover their losses. That inexpensive e-packet item has a hidden price tag that you may not realize, and it costs you money every time you ship or receive a package. The Universal Postal Union is the governing body in charge of setting these terminal dues; they determine the fee paid to carriers like the USPS for each of these e-packets that get delivered. Attempts at reforming the program have been slow at best, and the issue has finally made its way to the United States Oval Office, and the decision was made just this week to pull the plug. The United States intends to pull out of the Universal Postal Union agreement within one year and plans on negotiating new treaties on a case by case basis.
The effect this will have on online retail cannot be fully understood at this point, but it will be massive, and it’s also pretty evident that the e-packet will soon be a thing of the past. There are winners and losers in every battle, and those standing to gain the most from this decision are domestic sellers and the USPS. Domestic sellers expect to see a mass exodus of overseas sellers pulling out of marketplaces like eBay and Amazon. Some may remain and simply increase their prices to compensate, but they are no longer operating with that competitive shipping advantage. This means less competition for domestic sellers, but what else does it mean? Simple, more visibility! Take a few hundred thousand sellers out of the mix with their millions of SKU's, and this means more visibility and more sales going to domestic sellers. The USPS also stands to benefit greatly, if the costly e-packet were to vanish they could actually start to see profits again and not need to increase rates every year to cover their costs. That’s a big win for everyone using the USPS.
Now the not so lucky are the sellers specializing in unbranded or private label items shipped directly from international manufacturers utilizing e-packets. You have some time but you need to take a serious look at the market before making further investments. Now is the time to diversify your product mix with recognizable name brand merchandise. Sellers, the playing field has been leveled so let’s get back to the game. At Foxliquidation.com, you will find an array of wholesale designer lots which include clothing, shoes, bedding, general merchandise and health & beauty.