For years, the cheapest option retailers have had for sending e-commerce purchases into the US was Postal Injection - a simple process that involves retailers sending items from their local post office after which they’re shipped across the pond before being redistributed by the US Postal Service (USPS).
But from 1 July 2020, Postal Injection got more expensive. Exact rates vary from country to country, but the new cost of US-bound Postal Injection has doubled for many retailers. What brought this change about, and what does it mean for your e-commerce business?
Piggy in the middle
When you began selling to customers in America, you probably never expected to get caught up in an international trade war. But things have been getting pretty ugly ever since the US in 2018 threatened to leave the Universal Postal Union (UPU).
The UPU is a United Nations body that helps regulate postage costs between countries. One of its responsibilities is to determine fairly how much countries pay one another for delivering their citizens’ post. Here’s how it works:
- Alicia lives in Melbourne. She goes to the post office and pays Australia Post to send a parcel to the US.
- Once the parcel arrives on American soil, USPS delivers it to the customer in Ohio, incurring costs in the process.
- USPS then charges Australia Post a service fee that is determined by the UPU.
The UPU sets different fees for developed and developing countries, respectively, to allow people from less developed economies to post items to wealthier nations without breaking the bank.
For some time, the US has been unhappy that despite China’s rapidly growing economy, it is still deemed by the UPU to be a developing country. It’s unfair, so the argument goes, that Chinese businesses are paying under par to ship to the US. A 2015 study by Amazon showed that South Carolinians paid USD$6.00 to send a 1 lb parcel to New York while people in Beijing paid just USD$3.66.
With the US threatening to leave the UPU over this, after a great deal of negotiation it was agreed that the US could raise its charges for inbound Postal Delivery. This, of course, affects not just the people of China but the people of every other nation too.
Clearly, with so many Americans wanting and even expecting free delivery these days, sticking them with a new shipping fee may not go down too well. Still, needs must.
So what are your options if you count (or plan to count) US citizens amongst your customers?
1. Continue using Postal Injection
Postal Injection may still be you’re best option, especially if you sell something unique that people can’t find elsewhere and they’re willing to bear the additional cost. It’s definitely still worth shopping around.
2. Private logistics
The advantages of using private logistics companies are speed of delivery and variety of services. It can also provide additional benefits to customers such as delivery tracking. Private delivery is a good option for high-value goods and for when specific delivery dates are essential. Nevertheless, it’s significantly more expensive than Postal Injection even with the new price hikes factored in.
3. Direct Injection
Direct Injection (DI) is perhaps a lesser known method of cross-border shipping but one you should look out for. Many orders from many national vendors are consolidated in one large package that is shipped (typically by air) to the destination country. On arrival, orders are separated and cleared through customs electronically before local couriers manage last-mile delivery.
With the Postal Injection price hikes, shipping to the US using DI is now more cost effective. Crucially, DI puts orders in customers' hands faster and gives them updates at all points along the delivery journey so they’re not left wondering where their new blender or baby carrier is.
It is said that the Chinese word for ‘crisis’ is composed of two Chinese characters signifying ‘danger’ and ‘opportunity.’ Rising costs have revealed an equally costly but far superior way to ship and get more value for your customers and yourself in the process - a crisis indeed.
Borderless 360 has been a leader in Direct Injection for many years. We can offer DI services for your e-commerce business that are quick to set up, easy to use, and come with a satisfaction guarantee.
Schedule a call with one of our experts today.