Wednesday, January 30, 2013

New Post Office Rates Threaten Indie Label's and Musician's Livelihoods

"Cool story, bro" time.  Over the weekend, as I was browsing Facebook, a guy I know who ran a label and sells his own music was complaining about the post office's recent hike in the price of international shipping rates.  Having been to the post office mailing international packages just a couple days prior and not noticing any difference, I asked what was up.  Turns out that although I knew the post office was raising the price of a stamp by 1 cent, somehow an outrageous increase in international shipping had slipped under my radar.

Cut to today and I head to the post office with some international packages.  I ask the clerk what the story is and he informs me that international shipping rates have gone up by an average of about $6 per package.  My jaw hit the floor.  Nearly 60-65% of the merch and CDs I sell online ships to Europe.  I already charged a flat rate of $8 for shipping, which covered small orders fine, but I still paid out of pocket for some of the additional shipping expense just in the hopes that offering a flat shipping rate would encourage larger orders.  Today, I mailed a copy of my recent vinyl release to Germany.  The record retails for about $17. With the increased postal rates, the shipping was an additional $17.50.  This is not okay.

I sympathize with the plights of the USPS.  I know it's a popular thing to complain about, but in the 15 years or so I've run my online store, they've delivered stuff for pretty damn cheap and did so fairly reliably.  A good part of what has hurt the post office is a 2006 law that said they must pre-fund $5.5 billion worth of employee pensions aside.  As the post office is not funded by taxes, their rates have to somehow support this huge amount of money, plus enough to run day to day operations, pay their employees, etc.  Now consider that less people are using the mail than ever.  As less people mail letters and more send emails or texts and as more people pay their bills online versus mailing them, the post office has seen a dramatic drop in volume.  So they're fighting an uphill battle.  I get that.

But this new policy could prove pretty harmful to small businesses, or indeed anyone who can't ship high-cost products or in bulk.  Many of these businesses (especially record labels and musicians) are running on slim profit margins to begin with. So we're now left with the choice of raising shipping costs for our overseas customers and risk losing their business (who wants to buy a CD when the shipping costs as much as the CD itself?), or eating the additional cost and losing around $6 per order in expenses we didn't have before.

Unfortunately, we are a bit over the barrel, as even with the new rates, they're still cheaper than pretty much all other international shipping services when it comes to the shipping of individual items.  But I can't help but feel the post office is insuring their own demise here. For the time being, my solution is going to have to be to raise shipping costs a bit and pray it doesn't scare off customers.  I can't screw my customers by overnight raising my shipping by $6, but I'll increase it somewhere halfway, so I still absorb some of the cost, but not all of it.  Rest assured, I'll be looking for other, cheaper solutions than the USPS for my international shipping.  If the folks at FedEx and UPS were smart, they'd come out with a cheap international shipping option pronto and eat the USPS's lunch.

Lest you think I am cheering for the demise of the US Postal Service, I assure you, that's not the case.  Aside from my own relatively positive experiences with them over the years, the lower prices the Post Office offered kept the prices of private shippers in check.  With them out of the picture, it's hard to avoid the feeling that  FedEx and UPS would take advantage of the lessened competition by raising their international prices further.  The cable industry has been enjoying the spoils of lessened competition for decades.

I do hope that the USPS will reconsider their new policy.  As I said before, I understand the position they are in.  Yet, just jacking the rates for international shipping by such a huge amount out of the blue feels like a lazy fix, and one that doesn't solve the USPS's problems.  In fact, I'd be willing to bet it only exacerbates them.  If you're someone who does a lot of international shipping, I urge you to call and register a complaint with the USPS consumer line at: (253) 214-1800.


Alan said...

From Canada, this sucks. As it stands, FedEx and UPS charge the receiver and extra $30 to $50 just to cross the border. USPS was the only reasonable alternative... and now they're decided to gouge folks too.

El Salvador Shipping said...

Shipping with FedEx here will burn a hole right through your pocket, and your wallet!

-Panamerican Shipping

Anonymous said...

I applaud the amazingly reasonable tone of this blog, it's far better than I could manage. I'm a small bookseller and Postal rates, although previously high, were at least something I could (mainly) cope with or offset. But Global Priority rates have gone from outrageous to punitive: a little over 2 years ago I believe they were $12.95. Then there was a $4 jump to $16.95. Today when shipping a single book to Hungary I was informed the new rate was $23.95. That's for the flat-rate envelope. One book. A 40% increase.

Obviously, that's prohibitive.

It's hard to believe that the PO's problems will really be solved by passing all price increases on to the customers. What'll that net them?--one, two billion extra a year? It still won't come near to making up their shortfall. Instead, they'll continue to lose volume (don't get me started on how awful the lines are, since payroll is also being savagely cut--but not middle-management positions). In the end--which imo is not that far away, 5 years max--I believe this particular Congress would be happy to see the PO privatized. Which would make the price-hikes of today look reasonable. It's a disaster waiting to happen. Meanwhile, small businesses suffer. The whole thing is seriously demoralizing: "no one" is responsible; "no one" can fix it... and the little guys suffer. What else is new.

--poverty-striken bookseller