First Class Package Service (FCPS) is popular with online sellers mailing packages 13 ounces and under, according to Stamps.com Senior Director of Online Marketing Eric Nash. “With a max cost of $3.47 and delivery within 1-3 days plus free tracking when you print postage online, it is a slam dunk for sellers.”
Now, the Postal Service wants to move the comparable First Class Mail Parcels (FCMP) from the market-dominant product list to the competitive product list as a retail subcategory of First Class Package Service.
For sellers who ship lightweight packages and who do not print postage online, that could mean a rate hike – if the request is approved.
First we delve into the issue, then we take a look at why 13 ounces is a magic weight for online merchants.
What’s the difference between FCMP and FCPS?
Amine Khechfe, co-founder and general manager of Endicia, explained that both have the same ounce-based weight options and delivery standards, but for First-Class Mail Parcel, online sellers would have to go to their Post Office to purchase (called retail), while online sellers can purchase First-Class Package Service online and take advantage of Commercial Base prices and free tracking. Endicia sees most online sellers using First-Class Package Service rather than First-Class Mail Parcels, he said.
What’s the difference between market dominant products and competitive products?
The Postal Accountability and Enhancement Act (PAEA) of 2006 established two categories of products. Market dominant are those products where USPS has a monopoly, so it is not allowed to increase rates above the Consumer Price Index. Competitive includes all other products, such as shipping services, where the USPS competes with private companies.
In its filing with the PRC in making its request to move FCMP to the competitive product list, the USPS said, “Approving this request will simply recognize the competitive nature of the marketplace that First Class Mail Parcels serves, and grant the Postal Service the pricing and negotiation flexibility enjoyed by competitors that offer comparable products.”
The USPS said the current classification of First Class Mail Parcels on the market dominant product list is largely an artifact of the product’s history.
What’s the effect on pricing?
The USPS believes it is necessary to raise First Class Mail Parcels rates so that it won’t be forced to inspect the parcels to verify that they don’t contain letters – the base rate would have to be raised to at least $2.94 – six times the cost of a first class letter.
And if the PRC approves the request, the USPS would have the flexibility to raise rates beyond that. However, the Postal Service said from a business standpoint, it couldn’t raise prices above those for a small Priority Mail Flat Rate box, otherwise, FCMP volume would shift to Priority Mail. “Thus, as a practical matter, the price for a small Priority Mail flat rate box would effectively act as a cap on the prices for First Class Mail Parcels.”
A Reminder to Consider Using First Class Package Service
Delving into the issue of First Class Mail Parcels presents a reminder of how economical the comparable First Class Package Service can be for online sellers.
Nash said Stamps.com sees First Class Package Service used for all types of products, including t-shirts, apparel, tech products (mobile cases, etc.), auto parts, and many other items. “The biggest challenge is the 13-ounce maximum weight for First Class Package Service. And since a box often weights 3-4 ounces, it can be tricky. But we see a lot of sellers switch to padded or Tyvek/poly envelopes to keep their weight below 13 ounces.”