Individuals who run an e-commerce business are constantly faced with the challenges of dealing with unsatisfied customers and a high return rate. Interestingly, the year 2020 has proved to be a year where parcels and packages’ shipping costs have risen astronomically.
E-commerce business owners would have to find a way to please their customers and maintain high revenue amidst increasing shipping costs. With USPS increasing most of its shipping fees to deliver packages, sustaining E-commerce businesses’ revenues has become even more daunting.
However, you can find inexpensive shipping options offered by USPS that are way profitable for your business than other competing brands in the industry. It is important to note how you can truly understand and manage rate changes of USPS in a bid to boost revenue and sustain growth.
Does USPS need to increase shipping costs?
The answer is an emphatic YES! USPS provides mailing service via different mailing platforms. For USPS to provide service for the American people, which includes parcels and mails to homes and offices in every nook and cranny of America, there is a genuine need for an upward review of shipping costs. Similarly, USPS requires substantial revenue to be able to meet up with some of its other obligations, such as:
- Operating and maintaining physical retail offices across the country.
- Payment of retiree benefits and pensions
- Funding for retiree health benefits.
Achieving all of these feats requires money, so USPS needs to adjust their shipping costs to meet the current realities.
The new postal rates for 2020
The need to remain in business and deliver unparalleled service is why USPS had to review shipping prices upwards. While some mailing services witnessed an increase in cost, some others, however, stayed the same. The new postage rates for USPS in 2020 was published on the 17th of January after the price changes were first announced in October 2019.
To get accurate details on the new rates based on the package, you can access their Costs and download the prices and SKU price list. Doing so can help you better understand how shipping costs work about zones and package qualities.
|Carrier||Class of Mail||Type of Package||Old Price||New Price||Increase|
|USPS||Priority Mail||Small Flat Rate Box||$7.90||8.30||$0.40|
|USPS||Priority Mail||Medium Flat Rate Box||$14.35||$15.05||$0.70|
|USPS||Priority Mail||Large Flat-Rate Box||$19.95||$21.10||$1.15|
|USPS||Priority Mail||APO/FPO Large Flat-Rate Box||$18.45||$19.60||$1.15|
|USPS||Priority Mail||Regular Flat-Rate Envelope||$7.35||$7.75||$0.40|
|USPS||Priority Mail||Legal Flat-Rate Envelope||$7.65||$8.05||$0.40|
|USPS||Priority Mail||Padded Flat-Rate Envelope||$8||$8.40||$0.40|
What went up
A host of USPS mail types saw an increase in rates, especially mailing types, commonly used by E-commerce business owners.
The price of a small rate flat box sent via priority mail moved from $7.90 to $ 8.00. On the other hand, a Medium flat Box sent as Priority mail moved from $14. 95 to $15.05. Similarly, a Regular flat Rate Envelope sent as Priority Mail moved from $7. 35 to $7. 75.
To mail a Large Flat rate box as Priority Mail under the USPS platform now cost $21. 10 from $19.95. Legal flat rate Envelope sent as priority mail moved from $7.65. Finally, the cost of mailing Paddled Flat Rate Envelope sent as a priority mail galloped from $8 to 8.40.
What is unchanged
USPS has left some of its mailings services charges the same. A number of the commonly used non-parcel mail costs remain unchanged. Postcard stamps and the fee for metered letters and flat still stays at $0.35. The first-class, Forever stamps charge, is unchanged at $0.15, while the extra ounce charges maintain its charge of $0.15 for every ounce. However, there is a slightly marked change in mailing International letters, which went from $1. 15 to $1.20.
The implications of price changes to E-commerce businesses and shippers
The upward review of prices by USPS would certainly affect you and your business. Note that customers are always seeking for the best deals available. So you would need to create a well thought out strategy that helps you better understand the significance of the increase in shipping costs and how you can insulate your business from the impact of a rate increase. By so doing, you are likely to maintain your earnings as well as keep your customers satisfied.
The rise in costs
The reality of increased shipping costs for USPS users in 2020 is crucial, so you must brace up for it. Note that the cost of delivering items from your store to your customer’s homes would witness a considerable increase in shipping costs.
Similarly, the cost of moving items from factories to retail shops and distribution centers would also be on the rise. Interestingly, increased shipping costs for this year 2020 aren’t limited to USPS alone as other competing outfits made increases.
It is pertinent to note that E-commerce business owners are required to draw out sound measures that would help them to mitigate the challenges of price increases in shipping costs. In reducing the impact of rising shipping costs on your business, you might choose to push up your prices to insulate against increasing costs.
This strategy implies that you would be passing the costs of increased shipping costs by jerking up your goods’ prices. On the other hand, you might want to weigh in on the possibility of reducing your profit margins to accommodate the rise in shipping costs. So the question is, how well do you manage the seeming conundrum? E-commerce business owners would have to be more dynamic in their approach to dealing with the soaring shipping costs if they are to stay in business.
The consequence of jerking up your price.
There would always be an instant reaction from your customers when there is an increase in your items’ price. An increase in the shipping cost of USPS has a massive effect on the general supply chain of products to stores and prices. An increase in your products’ price is likely to raise eyebrows from customers and even spark a backlash. Your ability to respond to the situation speaks volumes. You would need to have a solid explanation for customers on why prices need to go up. Depending on the product you are offering, customers should get a prior message notifying them of an impending price increase. With these, you should be able to manage the situation and appease dissatisfied customers.
Tips on how you can maintain your profit margins after an increase in shipping costs
You would need to act fast once there is an increase in shipping costs to ensure your business flow. The following tips can help you better understand the changes in shipping costs and how well you can manage them.
#1. Analyze the figures
Despite the increase in shipping costs, you can still maintain prices and not significantly drop in revenue. You need to look out for your standard order size, the zones you frequently deliver to, shipping costs, and box sizes. You can rely on top software to help you gather the data you need to work with.
#2. Consider infusing increased shipping costs into your price
One way E-commerce businesses have maintained patronage is by offering free or low shipping costs. You can maintain your free shipping delivery offer by slightly increasing your price to cover up for increased shipping costs.
#3. Work with FulfillMe
There are companies that you can partner with to help you manage your order fulfillment. FulfillMe is one such company that gets discount rates from carriers based on the huge volume of orders they ship. Working with FulfillMe guarantees you the opportunity of saving on shipping costs.
#4. Notify your customers before increasing prices
One mistake some store owners make is failing to alert their customers on an impending price increase in your goods. Notifying your customers way ahead of time before implementing an increase in prices is a way of fostering trust from customers. Transparency and integrity are virtues you must instill in your business to make your customers trust and believe you even when you tell them of an increase in your prices.
Increasing costs from USPS would certainly have an impact on your business. However, the strategies you put in place are key in determining how well your business wound performs.