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EcommerceBytes-Update, Number 29 - January 06, 2001 - ISSN 1528-6703     3 of 12

Shipping Options: Priority Mail or UPS?

By David Steiner

January 06, 2001

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Happy New Year! Postal rates are going up!

For some reason, those two sentences don't seem mutually exclusive anymore. The last postal rate hike was January 10, 1999, and raised a first class stamp from 32 to 33 cents. The increase taking effect January 7, 2001, will cost us yet another penny to mail a letter.

So, should I be concerned about one cent?

Well, if everything that I sold online fit into a first class envelope and weighed less than one ounce, I'd probably laugh it off. But unfortunately, my packages tend to weigh between 2 and 20 lbs, and there is a substantial increase in these rates. Take, for example, a Priority Mail package that weighs 1.5 lbs. The rate has gone up 75 cents. Add in the 25-cent hike in insurance for items under $50 and the nickel extra for delivery confirmation, and the winner of my auction is now going to pay an additional $1.05 to receive their item. And it gets worse.

Priority Mail packages to zones 1, 2 & 3 go up alarmingly fast in price as the weight increases. The cost of a 10 lb package being delivered to a local zone has increased from $7 to $8.75. If you take a careful look at the new rate chart http://new.usps.com/ratecase/not123.pdf*, you'll notice that the cost of shipping to zones outside your local area haven't increased as much. This, I assume, is to stay competitive with independent shipping companies like UPS.

There is a point where you'll want to seriously consider using UPS to deliver heavier packages. I compared the cost of sending a 1.5 lb package from my Zip Code, 01760, to a fictitious address in 90210. Using the USPS and the UPS Web site calculators, the package was $2.78 cheaper to send via Priority Mail.**

However, using the same origin and destination Zip Codes, and changing only the weight of the package, you may decide that the savings on shipping outweighs the speed of Priority Mail. A 10 lb package resulted in a savings of $5.02 in favor of United Parcel Service, and a savings of $10.63 on a 20 lb package.

These savings piqued my curiosity, so, I created a chart of all the zones and compared shipping prices between USPS Priority Mail and UPS Ground Shipping. While decidedly unscientific, it does illustrate that there are advantages to using both services and what the cost savings are for your customers.

For a UPS/USPS comparison chart of packages up to 20 lbs. go to http://www.auctionbytes.com/Yellow_Pages/postrates/postrates.html

Of course, cost is only part of the issue. Buyers are also concerned about speed of delivery. And you may not have a UPS outlet convenient to your location.

For those of us doing online auctions and losing "gray matter" by the minute, we now have to re-commit the Priority Mail Rate Schedule to memory. I was even starting to get the different zones down. And if you're thinking about memorizing my chart, forget it. UPS is increasing its rates next month (as is Federal Express), so a new comparison will be in order. (See December 29th Newsflash for these announcements http://www.auctionbytes.com/Email_Newsletter/newsflash/newsflash.html)

Even with the new rate increases, the USPS is projecting a loss of $480 million dollars for fiscal year 2001. Not a great harbinger of things to come for 2002!

*You must have Acrobat Reader to view this file.
**For this comparison, I used a 12"x12"x8" package (same as a Priority #7 box), 5-Day UPS Ground Shipping to a residential address and 2 to 3-Day USPS Priority Mail shipping.

About the author:

David Steiner is President of Steiner Associates LLC, publisher of EcommerceBytes.com and the EveryPlaceISell.com merchant directory. David, a former television producer, handles business development and advertising for EcommerceBytes. You can reach him at dsteiner@ecommercebytes.com

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