
We take a look at next week's
USPS rate changes and how they impact sellers in Sunday's Update newsletter. The June 23rd change means higher rates (of course), though only for large lightweight parcels shipped via certain services - including Priority Mail.
An article in
Freight Waves caught our attention as we were putting the story to bed. All three major carriers charge DIM weight rates, but it seems they give a break to the largest shippers:
"FedEx and UPS have been known to grant temporary exemptions to DIM pricing for large customers, and have tweaked the formula for some to allow their parcels to slide by at the higher thresholds.
"Mark Magill, vice president of marketing for OnTrac, a regional parcel provider that covers eight states including California, said the company has no issue with bumping up the DIM for its biggest customers from its current 166 divisor to 194.*
"USPS negotiates highly confidential service agreements that provide rate discounts to its big shippers. It may also modify the DIM formula for those shippers but is unlikely to allow them to avoid the pricing scheme altogether."
*Note: The larger the divisor, the lower the cost.
While volume discounts make sense in the real world, it may be tough to swallow that large merchants can more easily offer free shipping to customers since their costs are lower, thereby putting pressure on smaller retailers to do the same, but at higher costs. And instead of holding firm, companies like eBay and Etsy also pressure their marketplace sellers to offer fast, free shipping.
The best thing sellers can do is make sure they make their shipping operations as efficient and cost-effective as possible, and try to differentiate their merchandise and services to make them more appealing.