9.8% Higher USPS Package Prices Could Hit E-commerce Marketers Hard

As reported by Target Marketing: 
USPS is asking for a 9.8 percent price increase on Priority Mail fees, despite its officials saying package-mailing growth is a focus as First Class mail volumes decline.
“The Postal Service also revealed plans to do away with Commercial Plus pricing,” adds Ina Steiner of EcommerceBytes.com, “and on the face of it, that could have a major impact on many small- and medium-sized merchants.”
If it goes into effect on Jan. 17, this first price hike on Priority Mail packages becomes reality just as FedEx and UPS up their shipping rates and fuel surcharges, Steiner notes in Monday’s post.
In its Friday announcement about the proposed price rise, USPS says the increases it requested the Postal Regulatory Commission approve don’t include changes on First Class mail costs.
“The postal service continues to provide excellent value and reliability for the shipping industry,” according to the USPS release, “along with convenient choices for consumers. The average Shipping Services price change is 9.5 percent, which results in an average shipping price of less than $5.50 per shipment across all shipping products. … The Postal Service continues to enable America’s e-commerce growth and enhance its portfolio of mailing and shipping solutions to best meet the evolving needs of our business and residential customers.”
USPS justifies the price rise to the PRC in its Friday filing.
“The changes we establish should enable each competitive product to cover its attributable costs,” USPS tells the PRC.
In 2017, USPS would also like to eliminate a discounting program called Commercial Plus.
“The move to do away with the Commercial Plus category could have a direct impact on eBay sellers,” Steiner writes. “As this page on its website explains, all eBay sellers who use eBay Labels to pay for postage and print shipping labels automatically get USPS Commercial Base pricing, but eBay offers Commercial Plus pricing to its Top-Rated sellers and those with an average of 300 transactions per month (Platinum, Titanium, Gold and Silver Powersellers). However, the USPS noted in its filing, ‘Commercial Plus customers may be transitioned to Negotiated Service Agreements (NSAs) for additional discounts.’ ”
USPS provides the PRC with a few details about its Priority Mail requests (Opens as a PDF):
  • Retail prices will increase an average of 8.6 percent. Retail Flat Rate Box prices will be: Small, $6.80; Medium, $13.45; Large, $18.75; and Large APO/FPO/DPO, $16.75. The regular Flat Rate Envelope will be priced at $6.45, with the Legal Size and Padded Flat Rate Envelopes priced at $6.45 and $6.80, respectively.
  • The Commercial Base price category offers lower prices to customers using authorized postage payment methods. The Commercial Base prices will increase 9.4 percent, on average. Commercial Base prices will be set at a 13.9 percent discount off of retail prices.
  • 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 3 percent of Commercial Base prices.

Ken Wood is the founder of LJM Consultants. LJM helps clients negotiate “Best in Class” UPS/FedEx agreements. LJM was recently named the “best parcel auditing company in America” and was also inducted into Inc. Magazine’s Top 500/5000 fastest growing companies in America for 2013. To learn how LJM Consultants can help your company get the parcel contract you deserve, call 631-844-9500 or email kenwood@myLJM.com.