Friday, April 11, 2008

Internet Selling Relies on Post

All Internet and mail order businesses are very dependant on effective postal and shipping services. If a physical catalogue has to be posted, it costs. The shipped order may appear free to the consumer but is not free to the seller. If the goods are bulky they can often be carried by private companies but if they are small, say a single book, or are to places such as the highlands and islands, they invariably are handled by the likes of the Post Office.

Often postal charges and rules are complex and can be based on size and weight. Importantly they are non negotiable. They can be passed directly on to the consumer or subsidised or merely included in the price of the goods. As we all try to reach new consumers, new markets and do more business over the Internet they are a cost that is not going away.

So it’s interesting to see that we not only have the carriers now pushing up their prices both in the UK and US but that this is also being done by other effected parties.

Can you remember when Abebooks last wrenched up their commission there was much noise about them exploiting their market position. Last week they did it again and this time it simply flew past most observers unnoticed. They cite the currency exchange rate at dramatically impacting their buying power by 30% over the last 5 years. As a result from the end of the month they will raise subscription rates for sellers listing over 50,000 titles on the service. Yes we said 50,000 and they have a rate card for those with over 500,000 listings!
However, far more relevant is the news that Abe now are including shipping and any extra charges into their 8% commission charge. They cite ‘our customer feedback indicates buyers are unhappy with unusually high shipping costs. We want to avoid the negative buyer experience created by very low book prices that are subsidised by higher shipping charges.’

Abe is clearly a global trading operation and facilitates the selling and buying of many rare and hard to find books and often you can find a wide range of prices, locations and shipping costs available. What Abe has done has effectively not only made the vast range of titles available but in doing so has introduced more competitive pricing which in turn has lowered their own commission. If the unit price drops then the commission payable costs – that is until you start to include the one often fixed cost that is hard to effect – shipping. Abe’s business is about lots of single shipment orders so shipment is usually against a single book. The impact is that many will have to increase the cost of the books to offset the shipping cost being included. Where the cost of the book is high the shipping charges may have relative little impact.