UPS is more aggressively targeting small- and medium-sized online sellers and is leveraging agreements with services like Stamps.com and Shippo as it seeks to gain more share in the ecommerce market. That’s significant considering how many small sellers rely on rival USPS.
As part of its strategy, UPS is promoting its flat-rate solution called UPS Simple Rate. That leads to the questions, how do the flat-rate options from the three major carriers compare, and in what cases does it makes sense for online sellers to consider flat rate shipping versus other options?
Note that we first wrote about UPS tests of flat-rate options in 2016 on the EcommerceBytes Blog where sellers discussed why they might or might not consider such a service – “While I like the idea. it depends on the execution,” wrote one reader.
The plan UPS Simple Rate has officially launched with three shipping speeds (Ground, 3 Day Select, and 2nd Day Air), and with packages of various shapes and sizes in 5 ranges – up to 50 lbs in weight and a volume of 1,728 in. You can find the details on this page of the UPS website.
It’s difficult to make direct apples-to-apples comparisons among the flat-rate options from the three carriers. Two major differences between UPS Simple Rate and its rivals: UPS doesn’t provide free packaging, though that provides shippers greater flexibility and branding opportunities; and UPS offers a ground option.
Upon taking a cursory look at the three programs, there were certain criteria that jumped out at us that sellers should keep in mind when making comparisons:
- Does the carrier offer free boxes and supplies?
- What are the box size and weight restrictions?
- What is the delivery speed of the flat rate services?
We spoke to several providers of online shipping solutions for more information and tips on when to use flat-rate shipping.
When to Consider Flat Rate Options
“Small but heavy” is a general rule of thumb for flat rate shipping. Several shipping service providers pointed to auto parts as an example of the kind of small but heavy packages that might be ideal for flat rate shipping.
Eugene Nilus, Shippo Director of Demand Generation, pointed to a blog post published earlier this year comparing USPS Priority Mail vs. USPS Priority Mail Flat Rate: “A good rule of thumb is to ship small, heavy packages via Flat Rate, and large, lightweight items via Priority Mail,” and it noted that distance also impacts rates. Shippo’s blog post includes charts that show when it’s better to use USPS Priority Mail (which is zone-based) vs. Priority Mail Flat Rate – based on 2019 rates.
Krish Iyer, Director of Strategic Alliances at ShipStation, explained that a flat rate package can take the stress out of making a decision on packaging and/or the service level to select. A shipper, especially a less frequent one that may not know about various carrier services and products, can feel more comfortable in using a flat rate service.
But Iyer added that flat rate services typically represent a “middle ground” on delivery, at a speed that is generally 2 days or longer and not always suitable for highly time-sensitive shipments. Another factor to consider, he noted, is whether the seller wishes to use packaging that features their own branding.
Rafael Zimberoff, who founded ShipRush (which Descartes acquired in 2017), currently consults in the industry. He noted that flat rate options are generally for small packages – “If you sell BBQs, or anything else large, it isn’t going to help.”
He said with flat rate shipping, you can have a set of standard boxes, and you know what it will cost to ship before you even pack the box. That means sellers can easily know upfront what the shipping costs are going to be – and sellers can change their workflow: they can pre-print shipping labels without ever weighing the box since they’ll be using a standard box.
Those benefits apply to all flat rate services, on all carriers, Zimberoff said, but UPS opens it up more by letting shippers use their own packaging and by offering a Ground option. Because FedEx One Rate is limited to express services, it may be less applicable to ecommerce – most merchants using FedEx would ship Ground or SmartPost, he said.
UPS Simple Rate
A UPS spokesperson explained that UPS Simple Rate is a predictable flat-rate option designed to help small- and medium-sized businesses streamline and simplify their outbound shipping processes.
The maximum weight for all UPS Simple Rate sizes is 50 lbs, and it is offered in three flavors: UPS 2nd Day Air, UPS 3 Day Select, and UPS Ground, and five size ranges.
“UPS Simple Rate offers larger size options than what is in the marketplace today, the spokesperson told us, “and customers do not need to enter package weight and dimensions or look up shipping zones when using UPS Simple Rate.”
UPS Simple Rate is available to account and non-UPS account holders through UPS.com/simplerate.
Keep in mind that discounts and promotions do not apply to Simple Rate shipments. “There are two sets of rates for Simple Rate – a retail rate version and a daily rate version. If a shipper has an account with UPS, they will generally be on daily rates and will receive the Simple Rate daily rates. A customer on ups.com who is not logged in or doesn’t have an account number would see the retail rates.”
In addition, UPS is forming a series of alliances and agreements with ecommerce platforms so SMBs can access UPS services directly from their platform of choice – part of its Digital Access Program.
“Stamps.com is our most recent addition to that program, but we also have similar relationships with Shippo and Shopify. We are working to bring on more agreements in the future as well,” she told us.
USPS Priority Mail Flat Rate
Many small sellers are familiar with USPS Priority Mail Flat Rate. The USPS offers shippers free supplies, and speed of delivery is between 1-3 days based on where your package starts and where it’s being sent. The weight limit is 70 pounds.
Beginning in January, USPS Priority Mail Retail Flat Rate Box retail rates (the price you pay at the Post Office counter) for three box sizes will be as follows:
- Small, $8.30;
- Medium, $15.05;
- Large, $21.10 and
Sellers who use online postage get Commercial Base pricing. Stamps.com published a chart showing the new rates for envelopes and box sizes, and how they differ from the current rates. Looking again at three box sizes, the new rates are as follows:
- Small, $7.65
- Medium, $13.20;
- Large, $18.30 and
Other points to consider:
- USPS Priority Mail offers envelope options (see website for all sizes of boxes and envelopes);
- USPS offers overnight delivery options (Priority Mail Express flat rate);
- USPS offers free package pickup.
FedEx One Rate
A FedEx spokesperson told us, “Because FedEx One Rate provides simple, flat rate shipping in a variety of package sizes and speeds, online sellers enjoy the predictability of the cost of shipping and the reliability of FedEx as well as the convenience of free packaging and access to our exceptional retail network.”
He noted that dropping off packages is extremely convenient, as 80% of the U.S. population works and lives within 5 miles of a FedEx drop off and pick up location. “As we continue to expand our retail network, it will reach even more of the U.S. population – especially rural communities.”
Some Rules of Thumb to Keep in Mind
Consultant Raf Zimberoff offered some advice that applies to a generic ecommerce shipper in the lower 48 states:
- Everything up to 1 lb goes USPS First Class package, it is the best deal.
- For over 1 lb: USPS Priority Mail Small Flat Rate Box (if it fits…)
- When using your own packaging up to 8 lbs, USPS Priority Mail will usually be the best deal up to half a cubic foot.
- Once you get at or above half a cubic foot, the UPS Simple Rate option will sometimes be a better deal (though often by a small amount).
Note that in nearly all cases, Priority Mail is going to be faster than Ground for zones 3 and up.
“I think UPS Simple Rate is a great new service,” Zimberoff said, but shippers should note the sweet spot. “If I am OK with Zone 3+ taking 3-5 days in transit, and my boxes are over half a cubic foot, UPS Simple Rate Ground is going to rock it for a number of configurations.”
Some Hidden Gems
If you have a package over one pound and it fits into a Priority Mail Flat Rate Padded Envelope, that’s a deal, Zimberoff pointed out.
Regional Rate is another “hidden” gem for certain situations. One provider said shippers should consider USPS Priority Mail Regional Rate Box A for items up to 15 pounds, and Priority Mail Flat Rate for items between 16 lbs and 66.99 lbs. An exception: Priority Mail Cubic Rate, which is usually cheaper for items that are very small and weigh under 20 lbs – they are typically significantly lower than Flat Rate boxes.
Christopher Vaughn of ShippingEasy also discussed Regional Rate from the USPS. “An often-overlooked flat rate option is USPS Regional Rate. Regional Rate still takes the destination into account and there are two box sizes, A and B. This option can offer a better rate for packages that weigh up to 15 or 20 pounds, respectively, and are not traveling far.”
Vaughn said merchants who ship many packages locally or in-state (Zones 1-4, mainly), can see further discounted shipping rates over regular USPS Flat Rate or UPS Simple Rate.
“It’s always important to compare not only across carriers but also across the services those carriers offer. By considering the weight, box dimensions, and destination for individual packages, you can find the best shipping method for that individual package.”
Let the Software Do the Work
The shipping providers we spoke to have deep knowledge, but how can sellers be expected to keep up with changes and apply these rules of thumb?
Zimberoff said the days of having to dance around to compare rates are over. He advised sellers to demand their shipping system does “full real-time, in front of you, rate comparisons for everything you need.”
Many small sellers rely on the shipping-label tools offered by the marketplaces on which they sell. Unless you ship only the occasional package, it may be time to research shipping service providers, especially if you sell on multiple channels. Being able to compare rates on the fly – and save time – can add up to savings that can make the cost of the programs a good investment.
Negotiating Shipping Rates
Finally, sellers who use or are considering using FedEx or UPS for some or all of their shipping might be interested in Shippo’s guide, “How to Negotiate Shipping Rates with FedEx or UPS,” found on Shippo’s website.