How best to cope with Royal Mail price rises when selling on Amazon

By Sharon Fussell, April 12, 2013

I do hope you had a lovely Easter break. It has been very cold here and we have not ventured far. I don’t do cold or rain, I have to admit!

Spring time – the clocks have changed, yet again, and the sun is shining, well that’s a maybe, but it’s still freezing!

It’s also that time of year again when Royal Mail puts up its postage charges. This year they have gone further, with changes to packet sizes and weights, perhaps complicating everything.

They claim they are simplifying the way they operate, making it easier for customers. Perhaps it will do so, but whatever, you can bet your bottom dollar that it will cost more to use their services.

To online sellers, postage charges can be very detrimental, especially if you operate on small profit margins. Perhaps Royal Mail are shooting themselves in the foot, due to the amount of online sellers who may have to stop selling due to lack of profits: it remains to be seen.

On this subject, I recently received an email from a very frustrated person called William, and I thought we could share the information and advice given.

Hi Sharon

Hope you are well. My enquiry is: do you really think that it is still viable to sell on Amazon? Now that Royal Mail have increased the postal charges again, and Amazon have not raised the postal allowances (nor did they last year!), […] your thoughts on this would be appreciated.

Many thanks, William B

The answer to this question is yes and no!

I do think it’s viable to sell niche non-fiction books, out of print and out of production items that are in demand but supply is low. It’s still possible to sell books for high prices and make a healthy profit, despite the increased postage charges.

Personally, it is many years since I even attempted to sell popular fiction/non-fiction on Amazon Market Place as a merchant seller, directly because of the low postage credit.

If you own SDNG, you will note that I do advise against selling these types of books, due to low and usually non-existent profits. It used to be very possible to profit on postage credits, believe it or not.

The predicament of small postage credit verses actual postage charges has got worse over the years, as a result of increased Royal Mail postage charges. Year on year, Amazon rarely increase postage credits, with an exception a few years ago, when there was a small increase to the postage credit from £2.75 to £2.80.

Amazon’s answer is that you have to price items to take account of actual postage costs, but that’s often easier said than done (as you know) when you have to contend with other sellers devaluing books to the extreme, thereby not allowing any room to increase prices over £2.81 (unless you’re happy to let your items appear on pages other than page one of the selling page).

Luckily, I am not so affected regarding Royal Mail’s postage charges, thanks to selling using FBA. This means I can sell popular fiction and non-fiction and make a small profit which mounts up when put together with other sales.

Perhaps Amazon has an agenda to try and force sellers to use the FBA platform of selling, and not merchant selling. Trouble is, selling using the FBA method does not suit every seller. Especially if you only have a relatively few items listed and are happy to keep it this way.

Of course, if you are considering increasing your inventory and want to step up a level, FBA does present a way forward. You can at least make a profit selling fiction books, which tend to be cheaper to buy and easier to get hold of on a regular basis. And you are not affected by Royal Mail’s increased postage charges.

If this is something you want to consider, why not look at Automated Amazon Profits – this guides you through the process of FBA selling step-by-step.

Like all change, it’s often hard to accept, but all you can do is adapt. Over the years we have changes and many new practices to adapt to.

It can be annoying, but at the end of the day, Amazon is the best platform to sell high-value books and media products. They know this, and so I suppose they have a ‘take it or leave it’ attitude to sellers. Remember that Amazon is there for Amazon – not marketplace sellers, despite your sales making Amazon hefty profits.

Whilst we are talking about increases, perhaps you can have a little sympathy with those selling electronics and car parts. Apparently, Amazon has increased fees by 70%. Now I can only think Amazon have an agenda regarding this policy: these price rises will surely see off some sellers to other sites.

It begs the question: ‘Why is Amazon killing the golden goose?’


What do you think?

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