In 2016 small and medium business owners have uncovered the value of the ecommerce business model. Selling goods online increases reach, reduces inventory complications and expenditures, and avoids the ongoing cost and upkeep of a physical retail location. With the online consumer base consistently growing, ecommerce is here to stay.
While ecommerce has generally proven to be more convenient and cost efficient, it is currently facing a challenge that, if ignored, could curb the ecommerce advantage.
Shipping is the backbone of ecommerce; keeping shipping costs down and quality up are crucial factors in maintaining profitability and retaining customers. Herein lays the challenge for ecommerce business owners – shipping rates are on the rise.
Effective as of January 17th 2016, USPS has increased their shipping rates. This is indicative of a year over year problem that has shown a consistent rise in shipping costs across the board.
Data from Amazon below illustrates this situation in the industry. Although their shipping revenue has increased consistently, the gap between shipping cost and shipping revenue is growing, and this is likely also impacting your bottom line.
Source – Worldwide; Amazon; 2006 to 2015
How to keep shipping costs down with rising rates?
So far ecommerce properties have been using commercial base pricing, such as the USPS Commercial Plus Pricing, to keep shipping rates down. These commercial pricing packages give businesses a cheaper rate as a reward for how much shipping they use.
Unfortunately, the USPS shipping rate increases have extended to the USPS Commercial Plus Pricing option. This can impact your ecommerce business three ways.
- First Class Service Commercial Plus Pricing has been eliminated. This has been the best option for shipping lightweight packages. Vendors who primarily have lightweight shipments will have to change to higher costs and/or reduced service.
- Commercial Plus Prices have a less favorable rate. Meaningful savings will require large orders, having less benefit to small and medium business.
- Restricted access to Commercial Plus and Commercial Base pricing. Greater volume will be required, in some cases, to receive discounted shipping.
There is still something you can do. Signing up for packages like Commercial Plus requires signing up, registering, filling out forms, and hoping you are accepted for lower rate. But there are other options.
A third party shipping service, like Shipgooder, allows you to find the lowest rates and take advantage of commercial pricing with no signups needed. This makes for a more profitable, and less complicated shipping process.
Shipgooder provides live shipping calculation to ensure you get the best price while still using trusted shipping services. You are able to compare and select the best rates immediately. It also gives you access to a wide variety of shipping services and discount pricing without having to go through additional sign ups or approvals.
By taking advantage of services that allow you to minimize your shipping cost, you will maximize the profitability, maintaining your edge in the competitive world of ecommerce. Contact us today to make sure you’re getting the most value out of your ecommerce business.