USPS losing millions helping Chinese eBay sellers sell cheap

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USPS losing millions helping Chinese eBay sellers sell cheap

Post by aethelwulf »

Reported in the Washington Post (Sept 12 2014)
The Postal Service is losing millions a year to help you buy cheap stuff from China

You can get anything you want at Harry “Skip” McGrath’s 21st century digital storefront.

McGrath was an executive for a Fortune 500 company before his son showed him eBay. The first thing he sold there was a set of 19th century brass candlesticks, the kind his wife would list for $100 at her antiques store. Someone on the Internet bought them for $169.

Eventually the couple ran out of antiques and McGrath started looking into other things to sell. He began buying all kinds of bric-a-brac from wholesalers, becoming a kind of Marco Polo of Internet goods. Some of the items reflect his personal interests. He’s a handgun enthusiast, which is why he deals in a variety of leather holsters. But a lot of what McGrath sells is just what he thinks can be profitable — like remote-controlled boats, which he used to buy from an importer in Long Beach at around $14 and could resell on Amazon for $34.95.

But a couple years ago, people stopped buying McGrath’s toys. He discovered that Chinese merchants were selling the same boats shipped directly from China for a total price of around $18, including postage. He couldn’t compete. Just the mailing cost would put him way past that price.

Though McGrath didn’t realize it at first, he was running into a quirk in an international treaty that makes it possible for an individual to send a pound of stuff from Hong Kong to D.C. for less than it would cost to send the same package from, say, Seattle.

This strange consequence of postal law was less significant when the mail was mostly personal correspondence. But as Chinese companies began logging on to Web marketplaces like eBay, Amazon, and Alibaba, they started taking advantage of the shipping deal to sell directly to American consumers. And so it’s never been easier to get something cheap and Chinese delivered to your door for a startlingly low price: $4.64 for a digital alarm clock; $2.50 for a folding knife; $1.88 for an iPhone cable — all with shipping included.

“I can’t believe our government would do this to undercut American sellers to help the Chinese sell more in America,” McGrath said.

Under this decades-old arrangement, which is overseen by an agency of the United Nations and has participation from nearly every country, national postal services give each other discounted rates on international mail under a certain size and weight.

Here’s how it works. Say someone from Germany wants to sends a letter or package (under 4.4 pounds) to Chicago. The German postal service will handle the Germany-to-U.S. leg. After the package arrives in, say, New York, the USPS takes over, delivering it to its final destination.

Countries used to provide this forwarding service to each other for free, but in 1969 an update to this postal treaty called for small fees (called terminal dues) on each mail piece. Since then the dues have grown, and the payment system has become labyrinthine. In most cases, however, postal services still charge each other less than they would charge their own citizens for moving a package across the country.

According to the terms set out in Universal Postal Union treaty, the USPS in 2014 gets paid no more than about $1.50 for delivering a one-pound package from a foreign carrier, which makes it hard to cover costs. The USPS inspector general’s office estimated that the USPS lost $79 million in fiscal year 2013 delivering this foreign treaty mail. (The Postal Service itself declined to provide specific figures.)

In an effort to ride the e-commerce boom, the Postal Service signed a deal in 2010 with China’s state carrier to sell a special service for small packages entering the U.S. For a small premium, the USPS offered tracking and delivery confirmation, an essential feature for online retailers, as well as expedited shipping.

The Postal Service plainly hoped to grow its Asia presence. One official said in a press release at the time that the arrangement “holds great potential for increasing international package volumes for the Postal Service.” In 2011, the Postal Service announced a similar deal with Hong Kong’s postal carrier. The press release said that the move “solidifies our role as a key supplier in global commerce.” Singapore Post joined in 2012, and Korea Post joined in 2013.

The USPS offers this service, called “ePacket,” to foreign postal operators looking to increase global trade with the United States, spokeswoman Darlene S. Casey said in an e-mail. It has proven popular. Between fiscal years 2011 and 2012, China nearly tripled the number of packages sent under this program, from 9.5 million to 26.8 million. Revenues quadrupled. Casey also noted that the USPS relies on business income, not tax dollars, to fund its operations. (It lost another $5 billion last fiscal year.)

But this has still been a money sink for the Postal Service. In 2012, USPS was paid only 94 cents on average for each piece of Chinese ePacket mail, according to a February report from the Postal Service’s inspector general’s office. That report estimated that the Postal Service was losing about a dollar on each incoming item, adding up to a $29.4 million net loss in 2012.

Forums on eBay are filled with angry notes about ePacket. “I must say that it is simply an economic disaster for US Sellers,” one person wrote. “One product that we sell for 2.00 with 2.50 shipping a chinese company is selling for .99 with free shipping,” another complained. The person added, “Too much work no money here anymore. Let the Chinese have it.”
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Re: USPS losing millions helping Chinese eBay sellers sell c

Post by ausfoo »

Now I know the exact reason why stuff is so cheap on eBay when shipped from China!!
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Re: USPS losing millions helping Chinese eBay sellers sell c

Post by Allanswood »

It happens here is Australia to. Our office bought 2 long arm staplers (the sort that can staple the middle of a page. I got them on ebay, postage paid for $24.00 the pair ($12.00 each). They came in a packaged, padded, plastic satchel.

For me to post those back to Hong Kong would cost, even by sea, far more than that. For me to buy the same thing is Australia came in at $42 each = $84 without postage.

Basically they were packed and posted for nothing.


I also bought 5 LED torches (torch, UV led and whiteboard pointer style) $5.00 ea including postage. No one can compete with that over here.
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Re: USPS losing millions helping Chinese eBay sellers sell c

Post by GlenStephens »

I like wearing socks made of bamboo fibre are they breathe and are very comfortable.

Retail locally they are $10 a pair.

On ebay they are 99c a pair POST FREE!

http://cgi.ebay.com.au/ws/eBayISAPI.dll?ViewItem&item=171356588588

Cost for me to send a pair to China is about $5 in postage alone.
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Re: USPS losing millions helping Chinese eBay sellers sell c

Post by amprantino »

GlenStephens wrote:I like wearing socks made of bamboo fibre are they breathe and are very comfortable.

Retail locally they are $10 a pair.

On ebay they are 99c a pair POST FREE!

http://cgi.ebay.com.au/ws/eBayISAPI.dll?ViewItem&item=171356588588

Cost for me to send a pair to China is about $5 in postage alone.
The biggest problem with chinese products is quality: too low price usually means tooooooooo low quality...
Are you sure that are made from "Bamboo Fiber" and not from the worst quality nylon, made under the worst conditions ?
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Re: USPS losing millions helping Chinese eBay sellers sell c

Post by Tassie_Stamps »

Yeah, all this cheap stuff from China is great for the first week, then it breaks and you have to throw it in the bin, and buy it again - time and time again. Australian businesses are suffering big time due to the imports of low quality junk at rock bottom prices.


So whilst a $10 pair of socks is more expensive than a 99c pair, you will probably go through 10 pairs of 99c socks by the time your $10 ones have worn out. :)
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Re: USPS losing millions helping Chinese eBay sellers sell c

Post by GlenStephens »

Tassie_Stamps wrote:
So whilst a $10 pair of socks is more expensive than a 99c pair, you will probably go through 10 pairs of 99c socks by the time your $10 ones have worn out. :)
Nonsense in this case. What David Jones sells for $15 a pair are Chinese made. Durrhhh.
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Re: USPS losing millions helping Chinese eBay sellers sell c

Post by amprantino »

But probably made with different requirements & quality standards.

Iphone & samsung phones are also made in china, but have different standards from $40 chinese cellphones found on ebay.
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Re: USPS losing millions helping Chinese eBay sellers sell c

Post by locakart »

Tassie_Stamps wrote:So whilst a $10 pair of socks is more expensive than a 99c pair, you will probably go through 10 pairs of 99c socks by the time your $10 ones have worn out. :)
Worth getting the Chinese ones then as you are still making 10 Cents on the deal. Every little helps.
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Re: USPS losing millions helping Chinese eBay sellers sell c

Post by Tassie_Stamps »

No. If you click the link you'll find they cost $1.11 AUD
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Re: USPS losing millions helping Chinese eBay sellers sell c

Post by locakart »

Tassie_Stamps wrote:No. If you click the link you'll find they cost $1.11 AUD
Sorry, you quoted the $0.99 figure. Therefore my argument is valid given the information you provided.

If the real figure is $1.11, then as long as you still have the use of 2 pairs of the Chinese socks in the same time as it takes for a pair of Australian bought socks to wear out, then you are still winning with the Chinese. If they wear out at a greater than 10 to 1 rate, then you will never win with the Chinese ones even on the $0.99 figure given the same online method for purchasing them.

The Chinese ones are delivered to you after ordering online. The direct price comparison therefore only works if you are also ordering the Australian ones online. Otherwise you have the cost of getting to the retail outlet and back (and the time, for time is money) to factor in.
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Re: USPS losing millions helping Chinese eBay sellers sell c

Post by Allanswood »

Good grief you lot! Buy a pair for a dollar and find out for yourself. If they're no good use them to clean your shoes instead! :lol:
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Re: USPS losing millions helping Chinese eBay sellers sell c

Post by Madstars »

Yep...this thread has convinced me....Im buying some bamboo socks....
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Re: USPS losing millions helping Chinese eBay sellers sell c

Post by Tassie_Stamps »

Please do, and let us know the difference between the cheaper and more expensive ones :wink:
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Re: USPS losing millions helping Chinese eBay sellers sell c

Post by billw2 »

GlenStephens wrote:
Tassie_Stamps wrote:
So whilst a $10 pair of socks is more expensive than a 99c pair, you will probably go through 10 pairs of 99c socks by the time your $10 ones have worn out. :)
Nonsense in this case. What David Jones sells for $15 a pair are Chinese made. Durrhhh.
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Re: USPS losing millions helping Chinese eBay sellers sell c

Post by GlenStephens »

And a Ferrari and a Fiat are both made in Italy ............ :lol: :lol: :lol:
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Re: USPS losing millions helping Chinese eBay sellers sell c

Post by David Smitham »

So what! The old adage still applies: caveat emptor.

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Re: USPS losing millions helping Chinese eBay sellers sell c

Post by Monaco75 »

I realized this (not the socks) about 2 years ago. I do buy on e-bay and the cost of shipping is very high (Australia & England) so its very easy to be taken in by the price of an item and the s/h. I try not to buy outside the USA but its very hard. Its also true if you go to a store the item(s) are also made in China.
I think what can be said, is that there are many area a government can investigate and save money ... and help the individual. It would be great to have a solution(s).
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Re: USPS losing millions helping Chinese eBay sellers sell c

Post by Freeze »

This has been going on for quite some years now. Companies just pack up the goods, and then drop the packages at the post office, for probably little to no cost (sites like dx.com will happily ship you a ton of items for $1). As far as I can remember their packages just say "port paid", nothing more.

No metering, so I can't check what they really paid. From what I remember the agreement is that as long as you export your packets, you get a special low price, because it boosts the economy, which pays itself back again.

Then again, the costs for the HongKong Post will be low, since they just have to sort the packets and push them in the right container, then ship them to the right country. Divide the cost of shipping a container ($1000 or so) by the amount of parcels in it (40ft container = 38 m^3 or 14 ton should hold some ten thousand small parcels on average) and you'd probably end up with an actual cost in the order of cents.

I actually wonder why Western post offices charge me so much for anything larger than a standard letter. If they too can drive the price down, or hike prices for foreign mail services, the inequality would drop, and although China will still have the advantage of lower wages, national distribution will become interesting again.
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