E-commerce Marketers Plan for USPS Rate Hike

By Elise Hacking Carr

A big USPS rate hike is coming. According to eCommerceBytes.com, pricing is expected to increase by as much as 23.5 percent for certain classes of mail that online sellers use to ship packages to customers. New pricing will go into effect Jan. 17, 2016—right after USPS’ projected 15.5-billion-mail-piece holiday season.

eCommerceBytes.com co-founder and editor Ina Steiner spoke to several affected e-commerce marketers, including Ross Gordon, CEO of subscription-commerce site MysteryTackleBox.com, who said his costs will jump 23.5 percent. Each month, MysteryTackleBox.com’s “tens of thousands of customers,” Steiner wrote, receive a package of fishing products, weighing between 12 and 15 ounces, through Parcel Select Lightweight class of mail.

"The proposed rate increases will reduce our current profit margin by about 20 percent, which is quite substantial," Gordon told Steiner. "If you include the approximately 10 percent increase we already saw last year, you can see that these rate increases have a pretty large impact."

Shipping experts cautioned sellers to prepare early. Katie May, CEO of ShippingEasy, suggested comparing shipping costs across carriers (e.g., USPS, FedEx and UPS), zones and weights. "Most online shipping software makes this easy with comprehensive reporting tools that allow historical analysis across all selling channels," May told eCommerceBytes.com. "If a seller offers free shipping on eBay, can the margins generated on that part of their product catalog absorb the rate increase? If not, will they need to increase their prices?"

Rafael Zimberoff, product manager for ShipRush, agreed that sellers need to take action immediately, but pointed to a bigger problem: the beginning of the end of Commercial Plus pricing, a program offered by the USPS that provides highly discounted postage rates for high-volume shippers. According to a previous request filed by the agency (Opens as a PDF):

The Commercial Plus price category has traditionally offered even lower prices to large volume customers. New for January, Commercial Plus prices as a whole will receive a 13.3 percent increase in order to bring these prices within three percent of Commercial Base prices.

The Postal Service's long-term goal is to eliminate the Commercial Plus category at some point in 2017 to reflect the industry standard of publishing only one set of commercial rate tables. Deeper discounting may still be made available to customers through negotiated service agreements.

What do marketers think of USPS’ latest announcement? Please respond in the comments section below.