Peter Griffin: Cutting the cost of online shopping

It's an embarrassing admission, but I haven't sent a letter in a couple of years.

Sure there have been postage-paid bills, but actually sending a personal letter? Not lately. I email, text-message and strike up internet chat sessions - anything but put pen to paper.

It's people like me and businesses cutting back on letter sending on a huge scale that had pundits a few years ago suggesting the decline of the postal system. What a myth that turned out to be.

Sure, New Zealand Post still makes its bread and butter from the 45c stamp - it says it processes a stack of mail as high as Mt Cook every day. But the company, which in March reported a much-improved profit of $40.4 million for the second half of last year, is making more money from packages these days.

In fact, it put the profit down to growth in its Express Couriers operation, which runs packages all over the country to tight delivery deadlines.

The trend is the same worldwide. Postal services are sending more packages, which means more airfreight and couriers. It's a boon for the likes of FedEx and DHL.

The internet is partly responsible for this parcel explosion.

In the United States, one of the US Postal Service's biggest customers is now Netflix.com, a DVD rental company that lets customers choose what movies they want via their website, and then sends them the DVDs in the mail, with prepaid envelopes for return postage.

Now, Amazon.com, the king of e-commerce, has moved to an all-you-can-eat shipping plan for its US customers, called Amazon Prime. Customers, whether in Ohio or Alaska, can buy as many items as they like through Amazon in the space of a year and pay a flat rate of US$79 ($109) for two-day shipping. Overnight shipping costs an extra US$3.99 per item.

The membership system has already taken off, with 70,000 users moving to the flat-rate service. But it is driving the company's shipping costs through the roof. Amazon's first-quarter shipping loss reported this week rose 29 per cent to US$55 million.

New Zealanders still have to pay anywhere from US$4 to US$25 in shipping when buying books, CDs and movies through Amazon, depending on how quickly we want them delivered. But even New Zealand merchants are moving to a free shipping model to stay competitive.

Music retailer Real Groovy's shops are few and far between, but the merchant is now offering free shipping on goods bought through www.realgroovy.co.nz - except for vinyl LPs, which must take up more room in the back of the courier van.

Real Groovy doesn't hold stock, so it puts an order straight through to the supplier. A CD or book may therefore have to be imported, so shipping time could be a few weeks for rarer purchases.

Real Groovy's main competitor is Smokecds.com, which hasn't yet gone down the free shipping path, but offers delivery nationwide for a reasonable $4.75.

A few Amazon challengers have even moved to offer free shipping globally - an expensive exercise.

British-based Cdwow.com advertises CDs, DVDs and games in British pounds, but ships free worldwide. The prices work out similar to new releases here, but the service gives access to obscure titles not released in New Zealand, without having to account for shipping. The company says goods take seven to 10 days to reach New Zealand.

Pricespy.co.nz, a major aggregation site for vendors of computer equipment, features a good deal of hardware that ships free.

Obviously nothing comes for free, but with the psychological barrier of shipping costs removed and some good deals available for online buyers, punching in that credit card number and waiting for the courier to arrive is becoming a vastly more pleasant experience.