Chris Vaughn is Vice President of Marketing at ShippingEasy, which provides a simple online shipping app for online sellers with optimized USPS postage rates and the ability to plug in existing UPS/FedEx accounts along with real-time integration into ecommerce platforms. He discusses major changes in USPS rate structure as well as the growing trend of voice technology in Part 4 of EcommerceBytes Online Selling Trends 2019.
This year’s changes to USPS shipping rates are the most significant changes we’ve seen in years. The impact of these changes will affect merchants of all sizes, potentially in substantial ways. Smarter shipping will be paramount to success in 2019.
The changes to FedEx and UPS are pretty typical for 2019 at around 4.9% over last year. However, USPS is making some significant changes not only to rates but also to pricing structure for multiple shipping methods. These changes can have a significant impact on merchants who ship using certain methods or sell specific types of products.
Some examples of USPS rate changes and their impact follow.
Merchants who ship using First Class Package Service (FCPS) will experience probably the most notable difference in 2019. FCPS was previously a single rate based on weight up to 15.999 oz., regardless of destination. This shipping method is now moving to Zone-based pricing, meaning distance matters.
USPS is keeping the rates in batches of 4 oz., meaning 0-4 oz. all carry the same rate, 5-9 oz. are the same rate, etc. Local and Zone 1 & 2 closely resemble 2018’s rates, but the change to Zone-based pricing increases the cost of shipping First Class Package Service by an average of 12% across the board.
- 2018 First Class Package: 5 oz. package, New York to Los Angeles = $2.79
- 2019 First Class Package: 5 oz. package, New York to Los Angeles (Zone 8) = $3.63 (+ $0.84)
Another major change USPS is implementing, though it has been pushed back to June to help shippers prepare, is extending the application of Dimensional Weight (DIM Weight) when calculating shipping costs. Previously, DIM Weight only applied to packages greater than 1 cubic foot shipping to Zones 5-9, referred to as Balloon Pricing. Now, DIM Weight will apply to all applicable USPS shipping services except First Class Package Service and Flat Rate/Regional Rate (which use specific-sized boxes).
Dimensional Weight is calculated for packages larger than 1 cubic foot by multiplying the L x W x H and then using the USPS divisor of 166. If that outcome is higher than the package’s actual weight, the DIM Weight applies.
This could have a major impact on merchants who sell large, lightweight items that cannot be folded or forced into a smaller box. We break down some specific cases in our E-Commerce Seller’s Guide to 2019 Shipping Rate Changes.
The following example demonstrates the challenge for online merchants:
A 14 x 12 x 14 package, weighing 12 lbs., shipping Zone 4
Is it larger than one cubic foot: (14 x 12 x 14)/1728 = Yes (1.36 cubic feet)
Dimensional weight: (14 x 12 x 14)/166 = 14.17 lbs. (round up to 15 lbs.)
If a merchant is shipping this package Priority Mail, the shipping cost jumps from $15.93 (using Commercial Plus Pricing) to $18.42.
Over $2 increase per package can be a tough pill to swallow for many online sellers. In 2019, proper-sized packaging and utilization of Flat Rate or Regional Rate boxes can yield major savings for sellers, whenever possible.
Smarter shipping will be paramount to success this year.
We also see voice technology becoming a significant part of ecommerce in the coming year. Smart speakers continue to reach major milestones in popularity, and that technology will work its way into warehouses and shipping departments. Shipping Managers and warehouse fulfillment staff will be able to speak to devices like Amazon Alexa to get rate quotes, check postage balances, process shipments, and check on order statuses.
This hands-free approach will lead to better multitasking and more efficient shipping in 2019, particularly as these integrations get smarter and smarter. This is why ShippingEasy developed an integration with Amazon Alexa last year, so merchants can get a jump on implementing AI into their shipping processes.
Introduction to Online Selling Trends 2019: Back to Basics
1) Diversification and Expansion Beyond Marketplaces
2) New Sales Tax Obligations
3) An Increase in Returns Combined with High Demand for Used Goods
4) Major Changes in USPS Rate Structure, Adoption of Voice Technology
5) Retail Convergence Accompanied by Tax Complexities
6) Increasing Cost and Complexity of Parcel Shipping
7) “Glass Box” in Artificial Intelligence, In-Store Personalization
8) Continued Dominance of Ecommerce by Amazon