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How Congress, The Post Office and Chinese Businesses Are Screwing eBay And Amazon Sellers With The ePacket Program

August 8th, 2014 by Skip McGrath

 Today’s post is a guest post by Jose Calero of LapWorks, Inc

 Where else in the world can you go, except in America, to set-up an online business only to have your government subsidize your Chinese competitors so they can undercut your prices and steal your business? It makes you wonder . . . . . what were they thinking?

In 2011 The U.S. Postal Service entered into a deal with Hong Kong Post and China Post to help Chinese sellers send small packages to the U.S. at a lower cost and in a much shorter period of time than regular international delivery services. This “deal” was entered into “to promote the efficient operation of postal services with other nations” as stated in its Congressional Act. On the surface, this announcement looked well and good until it was discovered that the shipping rates given to these Chinese sellers were so deeply discounted that it gave them a huge cost advantage over U.S. Online Sellers.

Here’s the problem: to ship a one-pound package from China to any address in the Continental U.S., it costs Chinese sellers a mere $5.00. To ship the same one-pound package from the U.S. to Shenzhen, China via UPS, the cost is $58.00. Before ePacket, the high shipping costs from China to the U.S. was a strong deterrent and insulated U.S. online sellers from direct Chinese competition.

Here’s a quote from Internet Retailer Magazine from their August 2013 issue: “The Chinese have gotten smart about it – they used to sell to us through importers, wholesale distributors and mall kiosks. Now they can sell directly to the consumer. With Venues like eBay and Amazon making it possible for them to market to consumers everywhere, and globalization making international shipping and payment easier every year. This is no reason to think there will be less direct competition from Chinese e-retailers in the years ahead.”

Fortunately it’s not all smooth sailing for the ePacket program. On February 25, 2014 the Office of the Inspector General, U.S. Postal Service published a report stating the following:

“Until accurate costs for ePackets can be identified and used as a basis for pricing, the risk of revenue loss for ePackets remains high.” And this: “While China ePacket revenues increased by $19.2 million between FYs 2011 and 2012, the Postal Service still lost $9.6 million in FY 2011 and $29.4 million in FY 2012.” The OIG ended its report this way: “Therefore, it is difficult for the Postal Service to determine whether this increasingly popular mail piece is sufficiently covering its attributable costs.”

What’s worse is that these Chinese sellers don’t play by our rules. Instead of creating a product listing for their product on Amazon, for example as most do, instead they identify a product that is selling well, they clone it in cheaper material and list the counterfeit product under the authentic listing at a 30% to 50% price reduction claiming it’s the same identical product. Most consumers don’t bother to see whom they’re ordering an item from, so long as they get the cheapest price for the item of their desire. So the consumer ends up with a counterfeit product that doesn’t last long or perform as described by the authentic product’s page description.

Adding insult to injury, when the consumer receives the product and realize that it’s a cheap imitation or “not as described” will want to return it. But sadly they discover that the Chinese seller does not have a U.S. return address so the product must be returned to China at a greatly inflated freight costs. Discouraged, they end up keeping the product and the Chinese seller wins.

The ePacket program is a scourge to any and all U.S. online resellers who struggle every day to make a living. And it’s a scourge to the consumers who are duped by these falsely advertised counterfeit products from Chinese sellers. The only way to fix this problem is to cut off the head of the snake –and that snake head is ePacket.

We ask anyone and everyone who reads this press release to contact their political representatives in Washington and urge them to suspend ePacket until they have had time to re-evaluate its efficacy. Because it not just about U.S. jobs . . . . . it’s about U.S. family owned businesses that are taking the hit.

About LapWorks Inc.

Founded in April 2000, LapWorks, Inc. is an online reseller committed to providing customers with high-quality ergonomic accessories for their iPads, tablets and notebooks. José Calero, president of LapWorks, will be making a one hour presentation on the ePacket scourge on Thursday, August 14, at the SCOE Conference for Amazon and eBay resellers in Seattle, Washington. Mr. Calero is producing and will post a YouTube video on ePacket by the end of August that will be found under the title “ePacket Scourge”. LapWorks has two websites: www.laptopdesk.net and www.heldtite.com

 _________________________________________

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Comments

Comment from Jim
Time August 8, 2014 at 1:47 pm

Skip, I don’t disagree with the premise of the article, but it’s not comparing apples to apples. US to China via UPS may be $58.00, but USPS FCI US to China cost is $15.08 (still a 3x difference).

Comment from Skip McGrath
Time August 8, 2014 at 2:09 pm

That is a good point – but still why is the US Government subsidizing overseas sellers to compete with us. I used to sell RC Speedboats that I bought wholesale from an importer for $14.40 and sold for $29.95. Now the manufacturer of the exact same boat is selling them on Amazon for $16.95 plus free shipping from China.

Comment from Serena
Time August 8, 2014 at 2:59 pm

I read the original article in Internet Retailer, and it is a disturbing reality of today’s e-marketplace. It will be interesting to see if platforms like Amazon will be cracking down on counterfeiters who pass their items for the real thing. I’m not holding my breath, but given Amazon’s recent crackdown on sellers in health and beauty, it will be something to keep an eye out for.

Comment from james
Time September 14, 2014 at 2:04 am

Strongly agree with the article. Our government should protect American’s businesses and families. Since the e-Packet came out, it has killed millions of American online and off-line retailers, wholesalers. This e-packet stuff should be stopped right from the beginning.

Comment from Oliver Clevont
Time November 4, 2014 at 8:19 pm

[[While China ePacket revenues increased by $19.2 million between FYs 2011 and 2012, the Postal Service still lost $9.6 million in FY 2011 and $29.4 million in FY 2012.]]

I’m interested in whether ePackets is a way for the USPS to make money. Without the revenue stream from the ePacket service, would the USPS suffer an even greater loss or reduce their loss?

Perhaps the low cost of ePackets is really the actual cost to ship things, and the premium they put for US citizens to ship to other US citizens is really just a way to screw us over.

Comment from Gregory Pschaida
Time January 23, 2017 at 1:49 pm

Now that we have a Commander and Chief that is supposedly going to put AMERICAN FIRST, can something be done promptly to eliminate the E-Packet Program? NOTE: If you purchase an item from the Orient through Ebay, and you find that it is counterfeit, shoddy or misrepresented, don’t let the orient seller win! File a case with Ebay immediately, you will receive a refund, and the seller will most likely not pay U.S. rates to return it. So you keep the item, and receive a refund.

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