The United States Postal Service offers a number of flat rate boxes that may help online stores reduce shipping costs while improving shoppers' buying experience.
Shipping can be a significant challenge for online retailers. There are packaging materials to purchase, and carriers' fees and fuel surcharges to contend with. What's more, merchants must face large competitors who have negotiated special shipping rates or who have the financial wherewithal to lose money on some orders in order to increase market share.
For example, online and catalog retailer L.L. Bean recently announced free shipping on every purchase no minimums and no end date. L.L. Bean's move toward always-free shipping may well be a new trend. Here is the video from L.L. Bean's president, announcing the free shipping.
Zappos likewise offers frees upgrades and free return shipping on all orders, and Overstock gives new shoppers free shipping. When you cannot pass shipping charges onto customers, those charges can slash margins and leave very little room for profit.
The Advantage of Flat Rate Shipping
Among the various carriers available to North American online merchants, the USPS offers some of the most attractive options, especially with its aforementioned flat rate and prepaid flat rate boxes and envelopes.
Here are seven reasons to consider these services.
- Free boxes. USPS flat rate boxes are free. Merchants can simply order them free of charge and start shipping. The retailer will still need to purchase packing peanuts or similar cushioning material, but not having to pay as much as $1 per box can be a huge savings.
- Known costs. Although shipping calculators are very accurate, there are times when the actual shipping rate for a package exceeds what the merchant expected. Flat rate boxes, by their very nature, have a known cost.
- Priority delivery. The USPS flat rate boxes are Priority Mail, meaning that a package will normally be delivered in two or three days. Priority Mail packages also get special handling in the USPS system.
- No surcharges. The USPS does not add fuel, residential, or Saturday delivery surcharges to any shipment. In an era of rapidly rising gasoline prices, this is an excellent deal, especially when you consider that some carriers are charging fuel fees in excess of 13 percent.
- More addresses. The USPS delivers to more U.S. addresses than any other carrier. The service can ship to post office boxes, too. What's more, the USPS, including its flat rate boxes and envelopes, is the only way to ship to U.S. government addresses, such as military APO, FPO, or DPO.
- Greater security. Only the USPS is authorized to place packages in mailboxes. Plus, unlike some carriers that simply leave packages on the porch, the USPS will try to redeliver larger packages. Not abandoning packages may help prevent some kinds of purchase fraud or theft.
- Law enforcement protection. Flat rate USPS shipments are protected by U.S. federal law enforcement agencies, which may again contribute to lower fraud and theft rates.
USPS Flat Rate Shipping Prices
There are 11 different prices and packages that can be shipped via U.S. Priority Mail for a flat rate.
- 12 ½" by 9 ½" Envelope — $4.95
- 12 ½" by 9 ½" Padded Envelope — $4.95
- 15" by 9 ½" Legal-sized Envelope — $4.95
- 10" by 7" Gift Card-sized Envelope — $4.95
- 10" by 6" Small Envelope — $4.95
- 10" by 5" Window Envelope — $4.95
- 8 5/8" by 5 3/8" by 1 5/8" Small Box — $5.20
- 11" by 8 ½" by 5 ½" Medium Box — $10.95
- 13 5/8" by 11 7/8" by 3 3/8" Medium Box — $10.95
- 12" by 12" by 5 ½ Large Box — $14.95
- 12" by 12" by 5 ½ Large APO/FPO/DPO Box — $12.95
Example Rates: USPS Versus UPS
With the USPS flat rate boxes, "if it fits, it ships," (up to 70 pounds), making the service especially good for dense or heavy products. As an example of just what this might mean, TheChive website blogged about flat rate shipping early this month. The blog post's author shipped nearly 60 pounds of pennies in a flat rate box. The package arrived on time and in great shape for the flat rate price, a similar package shipped on another carrier would have been several times more expensive.
Below are several price comparisons, looking at USPS flat rate shipping versus United Parcel Service (UPS).
In the first comparison, I looked at shipping rates for 1, 3, and 5 pound packages that fit in the 8 5/8" by 5 3/8" by 1 5/8" small flat rate box versus an identical package shipped via UPS. In the examples, the packages are shipped from Caldwell, Idaho to New York, Orlando, Chicago, Dallas, San Diego, and Las Vegas. The UPS rate quotes are based on delivery to a residential address and include the company's current 7.5 percent fuel surcharge on ground packages and 13 percent fuel surcharge on air packages. This fuel surcharge will rise to 8.5 percent and 15 percent respectively on May 2, 2011. Also, it is important to note that these are the UPS' published rates directly from its website. UPS is known to give frequent shippers some discounts. But those discounts are not published and vary greatly based on geographic location and the merchant's negotiation skills.
Finally, remember that USPS flat rate boxes and UPS 2nd Day Air boxes are free to the merchant. For UPS ground shipments, the merchant will need to purchase a box at an additional cost, perhaps adding 50 cents or $1 to the merchants shipping investment.
In each example comparison above, if you could fit the item into the flat rate box, it would ship for much less. Also, compared to UPS ground shipments, the flat rate box should arrive more quickly most of the time.
In this next set of price comparisons, I looked at shipping a 5, 10, and 15 pound package in a USPS large flat rate box versus shipping the identical page via UPS. I used the same zip codes as above, aimed at residential deliveries. As above, the UPS rates listed here include fuel surcharges and were taken directly from the UPS website at the time of writing.
Although, UPS was much more competitive against the USPS flat rate box with these larger packages, flat rate boxes still offered the best value most often.
There are some exceptions, for extremely light but large items — imagine a pillow for example — flat rate boxes are usually not the best choice. For example, here is a comparison of the 1-pound large flat rate box and the identical item shipped via UPS.
In a competitive market where the trend is to offer free shipping to every customer regardless of order size, using USPS flat rate boxes can help merchants preserve margins. USPS flat rate boxes are also typically faster than ground shipping, potentially improving the shopper’s experience.