Market Overview

eBay, UPS Enter Into Enhanced Tie-up

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E-commerce platform eBay Inc. (NASDAQ: EBAY) and UPS Inc. (NYSE: UPS) said they have expanded their shipping relationship and, for the first time, will integrate UPS' services with eBay's global platform, a move that eBay said will offer its millions of sellers easier and deeper access to the carrier's package-delivery portfolio.

The agreement, which launches next week and is expected to be fully operational by the end of September, is expected to streamline how eBay sellers interact with UPS, eBay said in a statement late Wednesday. UPS has been shipping for eBay sellers for years. However, sellers have been required to visit UPS' website to print out shipping labels. That program will be discontinued in favor of UPS being integrated into the eBay label-printing function on its platform, said an eBay spokesperson.

As part of the new program, eBay sellers will receive discounts on UPS' second-day air and ground service, including the possibility of having package surcharges — costs added on to the basic pickup and delivery charge — waived or discounted, eBay said. Sellers will also get access to UPS' 85,000 drop-off locations, such as the company's drop boxes and so-called access points, like its UPS Store retail outlets, local retailers and national chains where UPS customers can tender parcels while out and about, eBay said. 

Shipping labels are the mechanism for a customer's integration into a carrier's menu of products and services. eBay sellers already have access to FedEx Corp. (NYSE: FDX) and U.S. Postal Service (USPS) labels on the platform.

Under the eBay model, the buyer pays shipping charges to the seller as part of the seller's charges. The seller then reimburses the shipping provider for the cost.

Last October, Atlanta-based UPS announced an initiative to integrate its services into e-commerce platforms leveraged by small to midsize (SMB) merchants to broaden their access to the consumer market. The program is part of UPS' strategy to capture a larger share of the SMB market, which UPS executives consider a priority. 

Smaller businesses are typically stickier customers than their larger brethren because they lack the in-house resources to perform specialized shipping and logistics functions. Carriers can typically charge smaller customers non-discounted prices because they lack the volume clout to demand rate breaks.

Founded in 1995 and based in San Jose, california, eBay was built as an online auction marketplace. It has dramatically broadened its capabilities over the years, and now refers to itself as a "global commerce leader that connects millions of buyers and sellers."

 

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