The USPS filed its shipping rates for 2019, and it’s making some drastic changes that will impact online sellers. It’s not an across-the-board rate change, so some sellers will be impacted more than others, depending on what kinds of packages they’re shipping, how far their packages are going, and which services they use.
The impact for online marketplace sellers is magnified because sellers pay commission fees on selling price plus shipping costs – built-in fee increases for eBay and Etsy every year without them having to announce fee hikes!
Readers have already voiced concern in the EcommerceBytes Blog over the proposal to change First Class Package Service (FCPS) to zone-based pricing, with sellers in the middle of the country being impacted less than those on the coasts.
Not only are costs and complexity a concern, but some sellers said they will have to manually edit their ecommerce listings to reflect the new zone-based pricing.
As a reminder when reviewing changes: “Retail” prices are the rates you get when you visit the Post Office (or its Click N Ship online tool) to purchase your postage, while “Commercial” prices are rates you get when you purchase postage online through an approved provider.
First Class Package Service: Headed to the Zone
The USPS positions First-Class Package Service (FCPS) as a lightweight (less than one pound) offering primarily used by businesses for fulfillment purposes. Currently it only matters how much a package weighs to determine its cost, but under the proposed 2019 rates, it will also matter how far the package is travelling.
Zone 1 is within the same areas as the shipper, and Zone 8 is the farthest distance – coast-to-coast shipping – and therefore, the most expensive.
Overall, First-Class Package Service prices will increase 12.3 percent next year, with a 13.3 percent increase for FCPS-Retail and an 11.9 percent increase for FCPS-Commercial.
We found it helpful to look at the chart Stamps.com compiled last year showing 2018 rates for FCPS Commercial Base pricing, which are still in effect. You can see that a 1-ounce package currently costs $2.66, no matter where it’s going, while a package weighing 15.999 ounces currently costs $4.94 no matter its destination.
Looking at the proposed rates for 2019, that 1-ounce package would still cost $2.66 for Zones 1 and 2 next year, but it would cost $3.09 for Zone 8.
We got bleary-eyed comparing the current (weight-only) rates with the proposed zone-based rates, but Eric Nash of Stamps.com did some analysis to help us put the changes in perspective. He said Zone 8, which applies to packages going all the way across the country in either direction – is seeing a significant Commercial rate increase (up 43 cents for 1 ounce, up $1.43 for 13 ounces).
For no reason we could fathom, 13-ounce packages will be impacted the most, according to Nash. Yet at the same time, he noted that packages weighing between 15 to 15.999 ounces will see a smaller increase. For example, as mentioned above, a 13-ounce package to Zone 8 would cost an extra $1.43 in 2019. However, a 15.999-ounce package to Zone 8 would rise by 59 cents.
Obviously this added complexity makes it difficult for sellers to determine the exact impact of the 2019 rate changes.
A Silver Lining?
There is a silver lining, however, according to Krish Iyer of ShipStation: zone-based rates makes it easier for sellers to compare rates across services and across carriers.
“This means that sellers would be able to make “apples to apples” comparisons between First-Class Package Service, Priority Mail, and the competitive offerings of other carriers since you then have essentially the same zones and transits that can be compared all at once. A zone-based pricing model then also means that sellers will “cherry pick” certain zones for First-Class Package Service where the cost versus transit time is low versus other services, based on the needs of the recipient purchasing their product.”
Iyer said it was important to know which services to use based on a delivery NEED versus a “knee-jerk” reaction of using a default service level.
“A yearly cost increase/general rate increase (GRI) is an excellent time to look at your specific shipping needs and determine the right mix of carrier services,” he said, “which include not only transportation/shipping costs but also packaging and technologies used.”
Priority Mail: Be Sure to Buy Online
The USPS said that on average, Priority Mail rates will increase by 5.9 percent next year. Retail prices will increase an average of 6.6 percent, and Commercial Base prices (which are cheaper than Retail rates) will increase 3.2 percent on average.
Stamps.com’s Eric Nash noted that Priority Mail Padded Flat Rate Envelope, a popular option for ecommerce sellers, is increasing by $0.45 to $7.55, while also noting the decline in rates for medium and large flat-rate boxes.
The following chart shows the impact on Priority Mail flat-rate prices.
Stamps.com Observations about Other Priority Mail Changes
Nash called out some other key changes he said were worth noting:
Priority Mail Regional Rates
– Box A – Closer shipping zones (Zones 1/2 through Zone 5) are seeing bigger rate increases from $0.55 (Zone 1/2 = $7.65) to $0.61 (Zone 5 = $8.76). Farther zones are seeing smaller rate increase – going up by $0.26 (Zone 7 = $10.55) and to $0.40 (Zone 8 = $11.20)
– Box B – Other than Zone 1/2 where the increase is $0.64, the increase is relatively small at $0.08 (Zone 3 = $8.50), $0.03 (Zone 4 = $9.40) and zero increase for farther Zones 5-8.
Regular Priority Mail
– For a 1 lb. package, the rates are increasing between $0.28 (Zone 3 = $7.28) to $0.49 (Zone 8 = $8.25).
– Heavier weights for Priority Mail are going to see rate decreases. Between 11 lbs. and 70 lbs., all shipping zones are seeing lower rates compared to 2018. Cost savings range from $0.11 (11 lbs. Zone 1/2 = $10.67) to $1.37 savings (70 lbs. Zone 8 = $184.51) compared to 2018.
– For medium weight packages (4 lbs. to 10 lbs.), packages traveling to Zone 5 and higher are also seeing lowering rates compared to 2018, with costs being lowered by $0.17 (7 lbs. Zone 5 = $15.43) to $0.63 (5 lbs. Zone 8 = $20.40)
Priority Mail Dim Weight: Watch Out for Large Packages
The USPS is changing its dim weight divisor to make it in line with that of its rivals UPS and FedEx. Dimensional weight affects large but light-weight packages, a reflection that they take up room so should cost more than they would if they were charged based on weight alone.
USPS said that new for 2019, “dimensional weighting will be extended from Zones 5-9 to all Zones, and the dim divisor will be changed from 194 to 166. This change will eliminate the need for balloon pricing, the existing proxy for dim-weight pricing in Zones L-4.”
Lowering the divisor means higher fees for those packages.
Nash said most ecommerce packages are under 1 cubic foot. He did the math on a lightweight item being sent in a popular size Uline.com box measuring 6” x 12” x 10” (1920 cubic inches). With the current divisor of 194, the cost would be $36.32 for Priority Mail being delivered to Zone 8. With the new divisor of 166, the cost would be $42.20, which would increase the price by $5.88.
Hopefully this won’t impact many sellers; we’re not sure how UPS or FedEx rates would compare, it’s clearly worth taking the time to rate shop if you sell items that are impacted by dim weight pricing. One thing is painfully apparent: how do you explain to buyers why they’re paying over $42 for shipping a lightweight item?
Other Callouts
Stamps.com’s Nash shared some other changes worth calling out:
Media Mail
Media Mail rates are not seeing much of an increase for 2019. Rate increases range from $0.09 ($2.75) for 1 lbs. to an increase of $0.28 ($12.63) for 20 lbs.
Parcel Select Ground
– For Parcel Select Ground, parcels weighing between 3-18 lbs. traveling to farther zones (Zone 5-9) are actually seeing a rate decrease in 2019.
– Parcel Select Group is also seeing a rate decrease for all zones for parcels weighing between 21 to 70 pounds
First Class Package International Service
There are a lot of callouts for this service, we’ll just note that Nash said Canada is seeing a rise in rates that will mean a cost increase of 48 cents for packages weighing up to 8 ounces ($9.98) to $1.66 for packages weighing 4 pounds ($37.05)
Rates for many countries are not changing, including Mexico and Australia.
But Nash said heavier parcels that weigh over 2 lbs. traveling to Country Group 5, 6 and 9 are seeing a significant rate increase – that includes Western European countries (including UK, Germany, France, and Spain).
We expect Stamps.com and other postage providers to publish more analysis than we can include here. ShippingEasy published a blog post that includes the impact of Commercial Plus rates (for higher volume shippers).
Summing Up
Small sellers will continue to rely on USPS, which noted that, unlike its two major rivals, it does not add surcharges for fuel, residential delivery, or regular Saturday or holiday season delivery.
The PRC will review the proposed rates before they are scheduled to take effect on January 27, 2019. We’re not sure how they’ll rule on the *market-dominant* proposed changes that include a 10% hike in first class letter (the Postal Service wants to raise the cost of a Forever stamp from 50 cents to 55 cents, with a decrease in the rate for each additional ounce).
However, the USPS has far more leeway with raising rates for *competitive* shipping rates described here, and we expect the PRC to approve them. Keep an eye out for developments – we post news stories and blog posts on EcommerceBytes.com daily.
Here is a link to the USPS press release announcing 2019 rates. You can view the USPS Shipping Services filing price change tables on the Postal Service website, and you can view the Notice of Competitive Products on the PRC website (Docket No. CP2019-3).
Please let us know how the rates impact you by leaving a comment on the EcommerceBytes Blog.
Those who pay the shipping for buyers to try on their clothes will be forced to rethink what they are doing. You are not Amazon. Amazon does it to grab market share while the side benefit is driving ebay sellers who try to copy them, into financial doom.
As for the USPS, I wonder if they are charging Fedex and UPS more to finsh the delivery of their packages?
As for the rate changes for 1st class packages, you can’t say it doesn’t make sense to price things according to your costs. This is the way they do it for Priority, so what’s the problem? eBay making more for doing nothing more? True, but they have to charge their fees based on total amount of money spent by the buyer. If you don’t know why, you weren’t paying attention to the 1st 10 years of eBay. eBay could reduce their fees a little but it would be a small fraction of 1%. They could throw us a bone some other way.
I use the padded envelope a lot, but when possible, I slip the padded envelope and its contents into a regular flat-rate envelope.
I also use a small flat-rate box, this too fits into a regular flat-rate envelope to save on shipping cost.
I can see local marketplace selling like Facebook Marketplace and Craigslist getting more popular now. It may make more sense to drive to pick up an item then paying the shipping (also depends on how badly you want the item). I wonder how this is going to impact holiday shopping? Are mom and dad willing to ship all those gifts to their kids and grandkids living on the other side of the country? I live in PA. My kid will be living in WA later this year. Next year when Christmas rolls around, do I really want to ship my gifts out to him? Yeah, he’s my kid but lets think about this. I don’t work, my husband is retired….I’m on a tight budget.
I’m wondering how this is going to impact buyers. Are they willing to pay these exorbitant prices? It’s already gotten to the point that shipping is more than what the item was paid for! Commercial rate or not, it’s still a lot. I know I’m going to think twice about buying something online when I see that shipping rate. Do I REALLY need it?
I hope buyers can appreciate the fact that sellers are going to have to raise their prices to compensate for fees.
This just sucks on all levels.
Thank you for running this story, Ina. While it’s not information I want to hear, it’s better to know it in advance (USPS certainly never makes an effort to make such information known to me).
However, I do take issue with one suggestion you make, and I want to warn sellers against doing it (at least in some cases). That suggestion is to always buy postage online. Yes, the cost is cheaper. Of course, you need to figure in the extra cost of printer ink and other similar expenses, but still, most services would still be cheaper. However, as sellers likely know, as important as price is, it is rarely the only factor to consider. Several years ago, I printed a paid postage label online. I forget what service it was (first class, priority, etc.) but I remember that I paid extra to insure it. Everything was clearly detailed on my screen: the service, the insured value, the price I would pay, etc. However, as soon as I submitted payment and got my label, I had absolutely NO record that the package was insured, much less the value it was insured for. I immediately called USPS and was told that there is no record on my end but that USPS knows what the package was insured for. I asked how I prove it in the event of a dispute, and the USPS representative insisted that there would be no dispute – if the package was lost or damaged, I would be paid out. NOT SO FAST! I have had valid claims denied countless times. I appeal and have the appeal denied. I cannot count the number of times I have had to go to my congressional representative, Brendan Boyle, in order to facilitate the payment of a valid insurance claim that had been denied multiple times. When I explained this to the USPS representative, he seemed genuinely surprised, as though he had never heard of a claim being denied. I told him that when I go to congress and ask for assistance, they want documentation – not just my word. So what documentation do I have when I print online? NONE! Luckily, that package was delivered without issue, but since then, I have NEVER paid for an insured package online, and I would warn others against it. If you’re taking your chances shipping uninsured (which I sometimes do for items with a lower value), then weigh your options and if the price is less, by all means, print online. However, if you’re purchasing insurance, be aware that you will have NO RECORD of the insurance and will rely on the “good faith” of the USPS, which in many cases is non-existent.
Have you tried taking an image capture/doing a “print screen” as a record of the insurance being purchased? SImple enough.
@lessthanthreerecords I have definitely heard of USPS denying claims. Typically I’d suggest getting in touch with the Postal Regulatory Commission, glad you are having good luck with your Congressional Rep!
Re receipt – if you use a third-party vendor, I would think they could help you out. But if you print labels through an online marketplace, I could see how that could be problematic, though it shouldn’t be.
Feel free to email me at ina@ecommercebytes.com if you want to share more details privately, I’m happy to ask the vendor from whom you purchased shipping labels why there’s no documentation or receipt.
@Ina Steiner
@lessthanthreerecords
When I ship directly from the USPS website, my online records, under my “Shipping History”, shows the amount paid for insurance on each package.
On items shipped from within eBay, I can locate the insurance amount in my PayPal record, but not in the place you would expect. It is not under the “Your Payment” breakouts, but found above that, under the “Order Details” section.
It looks like this:
Order Details
ShipSvc:USPS Priority Mail,
Trk#:00000000000000
Postage:$7.35, Ins:$11.75
They don’t make it easy, but it’s there.
@227272 Thank you!!
You may know this, but the USPS website no longer offers Commercial pricing, while many marketplaces and vendors do offer discounted USPS rates.
Thanks, Ina, I really should explore whether I can export my USPS address book to a cheaper shipper — it’s really for that convenience that I am still there. . . .
These shipping costs are knocking out more and more small sellers. Long ago I gave up international shipping because it often cost more than the item I’m sending out….buyers don’t like to see that. The last thing I shipped internationally (and only because it was to a friend in Australia) cost her $40 for the item and $23.50 in shipping (for a little over a pound)! Makes no sense at all! Now, its happening with domestic shipping. Soon…I won’t be able to sell at all 🙁
(but in the meantime China still ships its junk literally free)….I just don’t get it!
Phew! No wonder Amazon is developing its own delivery service!
Time to bulk edit again. Shipping in our stores will go up 2.00. People don’t like it they are free to buy elsewhere. WE NO LONGER CATER TO THE BUYERS.
Good ole USPS Just LOST one of my most Special Creations.
The client is LIVID.
USPS crackdown on internal SABOTAGE is in order.
Albany hub is NOTORIOUS for “losing” stuff now.
I’m suspecting disgruntled political morons.