Recently, I was shopping for a couple of books on half.com. However, having spent about a half hour in my search, I decided, at the last minute, to forego my purchases. While the sellers were offering great prices, the shipping raised the books' costs to above what I would pay in a local bookstore. In the end, it just wasn't worth it.
As the price of gas goes up, so does the price of postage. While this hasn't been much of a concern with the U.S. Postal Service, private carriers like DHL, UPS (NYSE: UPS), and FedEx (NYSE: FDX) all pass the cost of fuel on to their customers. For example, at the end of 2007, UPS was tacking on a 4.75% gas surcharge for ground deliveries. Right now, it's 8.5%, with an even higher price for express shipping.
Some retailers are fighting back with free shipping or a flat fee for unlimited shipping. Unfortunately, while these deals may draw in customers, they chip away at the sellers' bottom line. As many online sellers have built their client base by offering better-than-store prices, the added costs may make it impossible for them to generate sufficient profit. This is likely to be particularly devastating for companies like Amazon.com (NASDAQ: AMZN), who are completely reliant upon their internet sales. At the very least, we're likely to see a major surge in companies that use U.S. Postal Service!
Something to consider: Rising postage may lead to falling sales
Posted Jun 23rd 2008 6:30PM by Bruce Watson
Filed under: Amazon.com (AMZN), FedEx Corp (FDX), United Parcel'B' (UPS)
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Reader Comments (Page 1 of 1)
6-24-2008 @ 12:16AM
ralphpal said...
good it will show how much better the post office really is
6-24-2008 @ 2:14AM
Gene Dexter said...
You have certainly identified a problem with the purchasing of multiple items on half.com . Unless it is the same seller, each book or cd would have to be shipped separately with a per unit charge.
Half.com is still a great site if buying one item every so often, or multiples from same seller.
6-24-2008 @ 3:31PM
Colin said...
What about the gas used to go to the store and buy these products? I've been *increasing* my online purchased just because of the expensive of driving to the store.