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USPS January Rate Increase Would Hit Online Sellers

The USPS plans to raise rates in January for its shipping services, including Priority Mail and other services popular with smaller online merchants. The rate changes include an almost 10% average rate increase for Priority Mail. The Postal Service also revealed plans to do away with Commercial Plus pricing, and on the face of it, that could have a major impact on many small and medium-sized merchants.

The agency filed its request with the Postal Regulatory Commission (PRC) on Friday, which impacts competitive services. The filing does not include changes to market dominant services, including First-Class Mail, which means the cost of a Forever stamp is not impacted.

Some of the changes online sellers can expect to see if the PRC approves the proposed rates include the following:

Prices for Parcel Select Lightweight would increase by 23.5 percent, as the Association for Postal Commerce (Postcom) pointed out.

First Class Package International Service rates would see an overall increase of 21.6%. “This is potentially devastating to small ecommerce sellers servicing international buyers,” one industry player told EcommerceBytes.

The filing also contained the following news:

“The Commercial Plus price category has traditionally offered even lower prices to large volume customers. New for January, Commercial Plus prices as a whole will receive a 13.3 percent increase in order to bring these prices within three percent of Commercial Base prices.

“The Postal Service’s long term goal is to eliminate the Commercial Plus category at some point in 2017 to reflect the industry standard of publishing only one set of commercial rate tables. Deeper discounting may still be made available to customers through negotiated service agreements.”

In general, anyone purchasing postage online receives Commercial Base rates (versus higher “retail” rates at the post office window). High-volume shippers can receive even greater discounts if they qualify for Commercial Plus rates.

The move to do away with the Commercial Plus category could have a direct impact on eBay sellers: as this page on its website explains, all eBay sellers who use eBay Labels to pay for postage and print shipping labels automatically get USPS Commercial Base pricing, but eBay offers Commercial Plus pricing to its Top Rated sellers and those with an average of 300 transactions per month (Platinum, Titanium, Gold, and Silver Powersellers).

However, the USPS noted in its filing, “Commercial Plus customers may be transitioned to Negotiated Service Agreements (NSAs) for additional discounts.”

In related news, low-volume sellers who don’t already use an online-postage provider may need to find one fast. The Postal Service is restructuring Click-N-Ship to offer only retail prices. “Click-N-Ship will no longer be an authorized payment method for Priority Mail Express and Priority Mail Commercial Base pricing,” according to this Mailing Standards filing from Friday.

When the USPS raised rates in May of this year, domestic Priority Mail rates did not rise; in fact, the USPS said in Friday’s filing that the new prices, if approved, represent the first price increase in more than three years for commercial Priority Mail.

The Postal Service said with the proposed rates for January, the average Shipping Services price change is 9.5 percent, “which results in an average shipping price of less than $5.50 per shipment across all shipping products.”

“The Postal Service continues to provide excellent value and reliability for the shipping industry along with convenient choices for consumers,” USPS said in a statement.

The PRC will review the prices before they are scheduled to take effect on January 17, 2016; the filing is available on the PRC website (PDF format).

News of USPS plans to raise rates for Shipping Services comes after FedEx and UPS announced rate increases for 2016 rates along with a rise in fuel surcharges that goes into effect next month.

NOTE: There are a lot of changes in Friday’s filings, stay tuned as we check in with shipping experts once they have digested the news.

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Ina Steiner
Ina Steiner
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.