It’s official – USPS rates are going up in 2018. The Postal Regulatory Commission approved the USPS request on Wednesday. Sellers who use online postage to print shipping labels (commercial) for Priority Mail will see prices increase about 6 percent on average when the rates take effect on January 21, 2018. We checked in with some online postage providers for their take on the changes and to see if they had any tips for sellers.
ShipStation Director of Strategic Partnerships & Business Development Krish Iyer said for sellers shipping in the 13-ounce to 1-pound range, the increase could actually be as high as 15%, and flat-rate packaging is also increasing by as much as 10%.
“While the USPS is unquestionably still a cost-effective option, 10 and 15% increases impacts anyone’s business if shipping is a core part of their offering (i.e. free shipping). A 50-cent increase (for a 15-ounce shipment) may not sound like a lot, but can quickly add up if you ship a lot,” Iyer said.
He also offered a reminder for sellers who offer free returns to factor that into any product price adjustments.
Iyer recommended sellers challenge their assumptions. For example: flat-rate boxes. “Would you be able to save more using your own packaging and a first-class package service instead of a flat rate? Consider this – a padded flat rate envelope is $6.90 in 2018, while a 15-ounce single piece (2018 rates) is $4.16. If your packaging cost is less than $2.74 ($6.90 minus $4.16), then simply utilizing your own packaging and the first class package service would make sense.”
“It’s a question of convenience versus cost – but one worth asking,” he said.
As is usually the case when postage rates rise, Stamps.com published some useful tables outlining the impact of the changes. For instance, if you scroll down to the chart labeled “Priority Mail – 2018 (Commercial Base Pricing), you can see by how much the rates are going up. For example, a 1-pound package going to Zone 8 using Priority Mail will cost 51 cents more in 2018 compared to the current rate. The table highlights in red some of the few instances where the cost will actually decrease in January.
Stamps.com Senior Director of Online Marketing Eric Nash said with the proliferation of free shipping, online sellers should analyze their product prices to make sure their listings are profitable.
One of several services to pay attention to: First Class Package Service. But even with higher prices, FCPS remains the best deal in the shipping industry among all shipping carriers, Nash said said, typically delivered within 2-4 days and including tracking.
Nash also recommended that sellers who use Parcel Select consider using Priority Mail instead to get faster delivery, since the prices are almost identical. “However, most sellers use Parcel Select for a specific reason, such as shipping liquids that are not allowed to travel by air via Priority Mail.”
Packaging is also important. Shippo Director of Business Development Richard Garcia suggested sellers be aware of tactics such as optimizing box size and accurately weighing items (rather than overestimate). “Sellers should look closely at flat-rate options that could suit their business even more. If possible, they should try to diversify the packaging,” he said.
Stamps.com Nash pointed out that FedEx and UPS are also raising rates for 2018, and said sellers should watch out for DIM weight pricing.
ShipRush offers a dashboard so sellers can compare USPS, UPS, and FedEx Rates on one screen for all of their orders across multiple marketplaces and ecommerce platforms. ShipRush Product Manager Rafael Zimberoff said sellers who create massive spreadsheets to determine the optimal service for each of their products will be particularly challenged in the coming months as each carrier is set to implement new rates at different times, starting on Christmas Eve and into the middle of January.
Zimberoff said his company’s Rate Shopping Dashboard is the only system that will show shippers what the rates are carrier by carrier, day by day.
It’s a busy time of year, but adjusting for the impact of 2018 shipping rate changes could easily pay off.
See part two for additional tips on dealing with the 2018 postal rate increases.