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PC Postage Comes Under Scrutiny by USPS Watchdog

PC Postage Comes Under Scrutiny by USPS Watchdog

USPS Office of Inspector General (OIG) is concerned that more vendors haven’t joined the US Postal Service’s PC Postage program, particularly after market consolidation in 2015 when Stamps.com acquired Endicia. But these aren’t the typical concerns regulators might have with regard to a small number of companies operating in an industry – the government had okayed the merger, determining it wouldn’t adversely affect competition.

Instead, the Inspector General focuses on the role of the US Postal Service played in the current state of PC Postage, noting providers now number four.

Since 2000, only one new provider joined the program, which the OIG called “a testament to the high barriers in place since PC Postage’s inception.” The process of getting approval is “long and rigorous, requiring a considerable commitment of time, money, and technical expertise” and includes strict computer-security requirements.

The report states: “That (company name redacted by the OIG) was the only new provider since 2000 is a testament to the high barriers in place since PC Postage’s inception. But now the Postal Service has stopped accepting new applicants entirely, ensuring that the number of providers will remain very small for the time being. Officials say this is being done in order to review the onboarding procedures.”

The OIG explained the importance of PC Postage to the Postal Service, helping its package business. It noted that providers have salesforces “that can help convert some small- and medium-sized businesses from other carriers to USPS,” and stated, “PC Postage gives smaller customers a way to access indicia and shipping labels no matter the time of day and without a trip to the post office.”

The Inspector General also highlighted how PC Postage has grown as a contributor to postal revenue:

“There has been a sharp rise in the volume and revenue passing through PC Postage. In FY 2004, it accounted for $275 million in revenue, increasing to $1.9 billion in FY 2009. That figure rose to about $6 billion in FY 2018. Such rapid growth has turned PC Postage from a niche revenue channel into one of great importance.”

In 2015, we noted that PC Postage is different from other industries: normally competition drives down prices, which is good for consumers – but the USPS is the one setting postage rates paid by consumers, not the postage providers. However, the OIG is concerned about the impact of consolidation on innovation: “The lack of competition may be responsible for the lack of technological innovation in this space. PC Postage technology has not substantially changed over two decades. Former technologists from PC Postage providers and the Postal Service say that providers use older systems which tech companies consider outdated.”

The report delves into PC Postage alternatives. “The Postal Service also has three proprietary solutions, with no usage fees, for electronic postage,” it wrote. eVS, Click-n-Ship, and ePostage have been around for years but have been limited by several factors.

  • The Electronic Verification System (eVS) allows large shippers to access shipping labels remotely. (The electronic manifest system “allows high-volume shippers to pay for postage online for drop shipments.”)
  • Click-n-Ship, through which an individual can enter details about a single package on USPS.com and print out the accompanying label.
  • ePostage, “an eVS add-on built for small merchants selling goods through an online marketplace like Amazon or Etsy. ePostage allows the merchant to buy postage through their marketplace account, then print the labels and mail their packages.”

The latter system is opening up to more players, the report noted in a section titled, “ePostage Enters a New Frontier”:

“A recent development could open the Postal Service’s ePostage offering to a larger audience. In 2015, the Postal Service licensed NeoPost, which was briefly a PC Postage provider in the early 2000s, to offer ePostage to third-party shippers. ePostage had previously only been available to shippers who were selling goods on a marketplace. This change could open ePostage up to more customers. Other shipping services companies have begun following NeoPost’s lead; Shippo, PostageMates, and International Bridge received ePostage certification within the last two years. (Section redacted by OIG).

“Becoming an ePostage vendor may appeal to companies for whom becoming a PC Postage vendor did not. The approval process is far less onerous. (Section redacted by OIG).”

USPS OIG Generating Shipping Labels Online

The Inspector General concluded: “In order to ensure that it is maximizing the benefits of PC Postage, the Postal Service should reexamine the program and address the areas that could be functioning better.”

It made 5 recommendations, but redactions make it impossible to know what they are.

The report makes for interesting reading, you can find a link on the USPS OIG website. It will be interesting to see if it ultimately has any impact on how online sellers purchase and pay for online postage for their ecommerce orders.

Ina Steiner on EmailIna Steiner on LinkedinIna Steiner on Twitter
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). She is a member of the Online News Association (Sep 2005 - present) and Investigative Reporters and Editors (Mar 2006 - present). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com. See disclosure at EcommerceBytes.com/disclosure/.

7 thoughts on “PC Postage Comes Under Scrutiny by USPS Watchdog”

  1. We don’t need any on line shipping outfit for our stuff. A 55 cent stamp sends it all. A sharp seller can buy them for about 40 cents each.

  2. I wonder if that’s why the USPS site only includes retail rates now — so more shipping services would be encouraged to join PC Postage. It doesn’t make sense, really. If they can get the same level of business from their own site, offering the same 24-hour label-printing service, then what difference does it make if shipping services join?

    Although, I guess that was the point — to increase the level of business through these sites. Still, I don’t understand why they couldn’t just do that through the USPS site. People are more familiar with the USPS than they are third-party shipping services.

    The only postage services I’ve used are PayPal, Etsy labels, and PirateShip. I used to use Click’n’Ship all the time when they still offered commercial rates, but haven’t used it once since they moved to retail rates. I even have an account with the USPS, so I don’t understand why they couldn’t at least offer commercial rates to their account holders. What was the point of shifting my usage from their site to another site?

    The fact that it’s a long, arduous approval process may explain why some sites (ie, eCrater) don’t offer commercial rates via their shipping calculator. Sellers there are so used to it being set up that way that they don’t want to shift to commercial rates now because they like having that cushion. Personally, I do not mark up shipping at all as all other expenses are accounted for in my item price.

    So I find it extremely detrimental to my business by not offering commercial rates. Especially when your listings are being compared with others on sites like Google Shopping. eCrater’s system doesn’t even display the calculated rate in GS — just the flat rates from the matrix, which can greatly differ between zones and results in higher flat rates to ensure you’re not losing money.

    So, while the USPS is trying to push more users to third-party shipping services, they should also be pushing marketplace sites to offer the discounted commercial rates rather than retail rates. It’s not like eCrater is making money on the higher postage rates because they only apply their fee to the item price. So it makes no sense why they wouldn’t offer commercial rates unless it’s the USPS that’s creating the barrier.

  3. Here is an idea..skip the middle men and give small to medium businesses direct discounts…instead of send us to middle men who keep a portion of the savings for themselves.

    I seriously question how so many idiots are chosen to run things

  4. @Monkposty – USPS USED to have a “Click-N-Ship For Business.” I already had a C-N-S account so was delighted to get into it because it offered options unavailable in CNS and also a nice local downloaded software. I was really happy to get into the CNSFB. THEN – USPS then some time later changed the requirements for parcitipants (I can’t honestly recall, it was a couple of years ago) so that I was unable to meet them – the only way I would have been able to continue was to get into using a postage meter (and my experience using those at a number of workplaces was not good, to say the least). So I and others who did not comply got kicked out.

    Looks like they may be trying to resurrect some parts of CNSFB (?). After canceling my CNS account as well, I got into Stamps.com which to me is worth the small price. It’s paid for itself many times over, both in time savings and making record keeping tremendously easier for me.

  5. I finally caved and tried PirateShip. Not impressed. Didn’t get a full label or any e-mail notifications. What a joke.

    1. You need to learn how to use pirateship. The cost savings are immense if you use the site correctly.

      I would suggest first starting with turning on email notifications.

      1. I’ve only used them a few times, but didn’t have any problems. I remember it being rather easy to use. I agree you should go through your account settings to make sure everything is set up the way you prefer.

        I did that prior to creating a label because I wanted to make sure I wasn’t wasting labels. I’m a tree hugger and paper equals trees, so wasting paper is a huge pet peeve of mine. LOL I even recycle all of my paper waste, including the shredded stuff.

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