How to Prepare Your Brand for the Shuttering of USPS' Reseller Program

The U.S. Postal Service’s (USPS) reseller program, which has been around since 1992 to offer discounted shipping rates, is about to be shut down and will impact e-commerce sellers at the end of this month. For the uninitiated, USPS resellers act as outsourced sales representatives for the Postal Service that work with some tech providers that recruit small-and-medium-sized shippers (SMBs), passing on commercial rates that are lower than the retail rates.

Therefore, some e-commerce players, knowingly or unknowingly, have relied on USPS resellers for USPS commercial shipping rates. Some merchants may have been taken aback by the recently announced elimination of the program set to take effect on Oct. 1 — right as peak/holiday shopping season kicks off. This comes amid a period of general uncertainty for supply chains and the overall economy.

My company helps tens of thousands of e-commerce merchants send millions of packages per year across the country and the globe. For the last three months, we’ve held extended calls with the USPS to provide a transition for affected platform partners and continue to provide the industry’s best commercial shipping rates for the direct merchants we serve.

Let’s first look at why the reseller program is going away and where things stand right now.

It’s a business-minded decision for the USPS. The agency was giving up billions in revenue to resellers it could be using to even out its bottom line. At the same time, the USPS’ decision will impact hundreds of thousands of merchants that rely on resellers for discounted pricing for their businesses. And now, resellers’ business models are going to collapse.

The good news is that while the ramifications are real, they're manageable for merchants that have their ducks in a row. Here are two steps they should take to do so:

Step No. 1: Find the right platform.

USPS resellers’ reason for existence was to help a merchant get access to commercially competitive shipping rates through their relationship with USPS.

With resellers going away, moving forward, USPS will offer commercial shipping rates directly via select technology providers. As such, it’s imperative for merchants to select the right software to ensure that they will continue to benefit from discounted rates. They should pay specific attention to the language they use about pricing to make sure they're getting the lowest possible rate.

The same is true for any business that uses a shipping API, such as third-party logistics or e-commerce platforms, online store builders, peer-to-peer marketplaces, and order returns platforms. You want to make sure that your technology partner is capable of supporting you in a post-reseller world.

Step No. 2. Analyze other shipping expenses.

Shipping costs are incredibly important to SMB retailers. According to a Shippo study last year, 58 percent of e-commerce merchants said the cost of shipping was the biggest challenge for their business. Our more recent research showed that the average percent spent on shipping across all product categories rose by 10 percent this year.

With this USPS shake-up, merchants might feel they don’t have control over their margins like they would going into a typical peak/holiday season. Therefore, they should look to cull other shipping-related expenditures, including evaluating packaging dimensions.

Let's say a brand's primary packaging is 14L X 11W X 3.5H, and it most often ships with USPS. This brand qualifies for USPS Priority Mail Cubic pricing — specifically “Cube 4." If it shaves half an inch off the width to 14 X 10.5 X 3.5, it will go from Cube 4 to Cube 3 pricing, which, by my team’s estimation, will result in 15 percent to 20 percent savings on shipping cost. Additionally, merchants should take care to avoid standard USPS compliance fees. For example, inputting the wrong package dimensions (or not including dimensions at all) can result in completely avoidable fees.

Indeed, small actions can save a lot. And there's a variety of different software available where merchants can more acutely analyze their shipping costs to help improve return on investment during uncertain times.

In closing, while the shuttering of the 30-year-old USPS reseller program may be catching some merchants by surprise, it doesn’t have to. They simply need to take a couple of key steps in the next few weeks and be ready for peak season.

Nima Elyassi-Rad is Head of Business Development at Shippo, a multicarrier shipping software provider for e-commerce businesses.