Post Office Madness

Earlier this week an established eLiquid vendor, a favorite of many, was told by their local post office that they could not pick up the vendors eliquid packages any longer. They had received a memo that outlined the regulations that, to this post office, indicated that it was against regulations to pick up and deliver eLiquids of any kind. That turned out to be somewhat untrue, but let’s pretend for a moment that it was true, and that this ‘regulation’ spread to every post office in the country overnight.

What would Vapers, and eLiquids vendors do in such a scenario?

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Oh, and before we get into that, I spoke with a eCigarette vendor in the UK who assured me that each and every eCigarette they sell, with and without eliquid, is legally shipped through the Royal Mail. I was assured that any such gossip indicating otherwise was patently false. So, for the moment, let’s keep this potential disaster limited to the United States, where ‘government is synonymous to ‘stupidity’.

Without the US Mail could eLiquid vendors survive? Would vapers be content to buy their eLiquids locally, in brick and mortar shops or convenience stores? (Let’s not forget, Johnson Creek will soon begin to show up at your local 7-11 and Wawa stores.)

Honestly, a little more than two years ago I was very surprised that everyone in this industry used the US Mail anyway. In all my days as a tech writer and professional photographer everything I use to wrote about, or photographed, was always shipped through UPS or FedEx, never through the US Mail, so it was weird to see packages being dropped off by our postman and not by our UPS driver.

More Money

Clearly, shipping through UPS or FedEx will be more expensive, and we’ve played with some various package setups and compared the rates to see just how much more expensive it would be.

However, the prices we were able to obtain on UPS and FedEX websites are non-contract prices, meaning that if an eLiquid vendor moved all their shipping to UPS or FedEx they could negotiate a much lower price than you and I can get, probably upwards of 40% lower based on what I remember our contract with UPS used to be a decade ago.

USPS, UPS and FedEx

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For the sake of expediency, let’s use approximate prices, package weights, and contents. “Generally speaking”, is the code word of the day, because to run down a series of prices from individual vendors in different locations and shipping to different locations would be impossible. The example below is based on a one-half pound to one pound package, using a box the size of a small USPS 2-Day Priority box.

Without a contract most eliquid shipments from vendors to normal everyday customers, containing anywhere from one to five bottles of eliquid would cost roughly $16, using the slowest available service and the smallest package size. Sending the same number of eLiquids through the USPS would cost roughly $5.50 using their 2-Day Priority service. Quite a difference.

Anyway you look at it the cost of shipping would rise by at least 100%. With a contract though it could be as little as 50% higher, depending on the number of estimated packages sent each week. It is a complicated situation.

Below are some possible solutions to shipping eLiquids should the post office be dumb enough to turn away several million dollars in shipping fees from all eliquid vendors in and out of the US.

A Basic Shipping Scenario

An eLiquid vendor could choose UPS, enter into a contract with them, and a package that cost $5.50 to send through the US Mail now would cost about $8.50-$9 with UPS Ground Service. This is based on an estimated cost of sending from 1 to 5 30ML bottles of eLiquid and traveling about 2000 miles. There are way too many variables to consider to be even try to be accurate, but just for the sake or argument, play along and agree, for now, that shipping would be nearly twice what it is currently.

#1 – Splitting the Difference

One way to solve the problem would be for the vendor and the customer to split the difference. The vendor makes less profit, the customer pays more, and the shipping time increases from 2 to 3 days to 4 to 5 days. Could both parties live with this? Maybe, but it would take some getting used to and there would be a lot less adventure in exploration of new flavors..

#2 – Minimum Orders

There is a good reason so many vendors offer free shipping when the customer spends $50-$75 on a single order. Both the vendor and the customer pay less to ship, per bottle.

The shipping cost, with the US Mail, UPS and FedEx, remains the same, most of the time, if a customer orders a single bottle or 5 bottles. By ordering 5 bottles at a time you, the customer, may pay zero shipping or the same $5.50 that the US Mail charges. If vendors were to move to UPS or FedEx the higher charges, $8.50-$9 with a contract, would almost double the price of a single bottle of eLiquid. But, if you order 5 bottles than the shipping is dramatically reduced per bottle.

In the case, a vendor moving to a 5-bottle minimum makes a lot of sense. Some vendors might even be able to afford free UPS shipping with a minimum order of 10 bottles, or perhaps 5 bottle orders once a month. There is flexibility this way.

#3 – Pass The Cost On or Absorb The Cost

Both of these scenarios are completely unworkable. Customers won’t order from a vendor, even a favorite vendor, if shipping goes from $5 to $10, unless the customer is already ordering several bottles at a time. And with margins what they are, if the vendor absorbed all the cost of the shipping difference, the profits would be seriously hit in one fell swoop. So these two scenarios are simply too costly for either party. Even so, one of these solutions might be put into play if eliquid vendors are caught off guard.

#4 – Moving to Retail Only

Another scenario being bandied about is vendors moving to retail only, sending cases of eliquid through UPS to retail stores around the country. There are several reasons why that won’t work for the vast number of eliquid vendors.

Shelf Space – No matter how big, or how busy a brick and mortar store is there is just no way they are going to want to stock more than a few brands. Considering that many vendors sell 2 or 3 different PG/VG ratios, 3 and 4 nicotine levels, and anywhere from 10-100 flavors, getting shelf space would be impossible.

Sure, some vendors are on the shelves of retail stores now, Hurricane Vapor is sold in many retail locations; some are even co-branded with Hurricane Vapor. That’s a very smart move on Hurricane Vapor’s part, but hardly do-able for all vendors.

It would also be a logistical nightmare for all concerned, making sure stock levels are maintained, analyzing which brands, flavors, nicotine levels, PG/VG ratios, and more, are being selling or not, and keeping the FIFO system in place (First In First Out) in order to maintain freshness of the eLiquids, and these are just the beginning of the nightmares this kind of scenario would bring.

Definitely a solution for a handful of vendors, but the vast majority wouldn’t survive.

The Spinfuel Our Solution

For the past couple of days I’ve pondered the question; What would I do if the vendors I buy from couldn’t send me my orders through the US Mail. I then discussed it with the staff. After several hours of throwing out ideas, this is what we came up with as the best solution for a bad situation.

Because we have taken the time to talk to the owners of many different eliquid brands over the past 2 years we believe that for the most part, no one holds any animosity toward their fellow competitors. This is key if our idea is to work. If they were all cut-throat vendors, out to destroy the competition, then all bets are off. We don’t see it that way, and plenty of vendors have openly discussed other vendors in friendly ways.

So the first thing that should happen is all of the eliquid vendors in each state should form a coalition for the purpose of shipping.

Take Florida for instance; we have probably 100 eliquid vendors in this state, maybe much more than that since I’ve never counted them. If they all got together and represented themselves as a single shipper to UPS and/or FedEx, a heavily discounted shipping contract would be the result. In all seriousness, as a group, all agreeing to use UPS, they could get rates that are comparable to the US Mail and no one would have to raise prices. In fact, UPS would no doubt offer this special rate to the group for their own 3-Day select shipping.

In order to achieve this, one eLiquid vendor from each state would have to be proactive enough to contact all the others and propose this coalition. Once there is a minimum number of vendors on board (whatever UPS requires for the lowest possible rates), a representative from each vendor would travel to a central location to meet with the others, and UPS, to talk terms. It could, and probably should, be Orlando in this case.

It is possible that UPS wouldn’t even require every vendor from the state, it could be as small as 20 or 25 vendors working together to get the lowest possible shipping rates, and in some states there are more than enough vendors to form a “regional” coalition instead of statewide coalition.

I’m not saying this will be the easiest thing to do, but it is certainly an option that takes away the power of the Postal System and puts it back into the hands of the vendors. Everyone wins, except the post office.

Stalling?

Now, of course this all depends on what the post office is going to do. Someone speaking for the United States Postal Service should come out with a very plain, very precise, memo or speech, or press release, or whatever, and state clearly “what the deal is” with shipping consumer level eliquid. By consumer level I mean the eLiquids that you and I buy, not pure nicotine. If they have the intention of stopping hard-working eliquid vendors from shipping products to their customers they should come out and say so, sooner rather than later. They must allow the vendors time to set up alternate shipping plans.

The logical side of my brain, as small as it is, tells me that the post office doesn’t want to say what they will do, and they don’t want to stop the way its done now. As we have said in the past, this industry is one of the fastest growing industries right now, and in an repressed economy this industry should be getting tax breaks, not tax burdens, and the post office should be accommodating, not threatening. Since when is anything in this world logical and thought out though, so who knows what they plan on doing.

Preemptive Strike

Perhaps, and I mean just perhaps, it might be a good idea to strike first. Maybe some vendor somewhere will try this idea of ours, just to see how it goes. If it goes well, then maybe, just maybe, eliquid vendors could sleep better at night if they went forward and opened a dialog with UPS.

As fun as it is to browse the shelves of eliquids at your local store, the eliquid world online is where the real adventure is. Moving the massive eliquid market to the local brick and mortar stores just isn’t feasible, so if nothing else, I hope our great vendors have their thinking caps on, just in case.

John Manzione

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