A key player in the e-commerce shipping market has reached an important agreement with the U.S. Postal Service, ensuring its customers continue to receive the best shipping rates available.
Auctane, which counts among its brands ShipStation, Stamps.com, ShippingEasy, ShipEngine, ShipWorks, Metapack and Endicia, announced Wednesday that it had reached an enterprise-wide agreement with the Postal Service covering all its brands.
“This direct agreement between Auctane and the United States Postal Service will deliver tremendous value for our shared customers across the United States,” said Nathan Jones, CEO of Auctane. “For more than two decades, Auctane has proudly featured USPS in our high quality and innovative solutions for our customers. With this newly expanded USPS relationship, Auctane’s entire family of brands will continue to deliver the best shipping rates in the industry and will further improve the merchant experience for millions of users.”
The agreement is important as the Postal Service ended its reseller program Oct. 1. The reseller program allowed companies to resell Postal Service postage offerings (namely commercial rates) to customers. Basically the program helped lower rates for many small and midsize businesses that do not have the volumes necessary to receive the best rates from the Postal Service or FedEx (NYSE: FDX) and UPS (NYSE: UPS).
The reseller program, in a nutshell, allowed a third-party company to be given a commercial rate from the Postal Service and then sell that rate, with a margin built in, to the SMBs, for postal services. What the Postal Service did was cut out the middleman, allowing companies to reach agreements directly with the service.
In 2021, Auctane said its businesses facilitated over $200 billion in sales in the U.S. and delivered to over 90% of American households. Under the new agreement, Auctane will be able to offer its merchants and shippers USPS Connect e-commerce rates.
The agreement is in effect immediately and new rates are posted on Auctane’s platforms.
Postal Service undergoing changes
In August, the Postal Service asked the Postal Regulatory Commission for permission to remove its Parcel Return Service (PRS) from its product list as it continues to evaluate its service offerings. The service would still be offered through negotiated service agreements (NSAs).
There have also been announcements in the past few months of combined services, such as joining Retail Ground and Parcel Select Ground products, in which parcels weighing up to 70 pounds are shipped with two- to five-day transit times, with First Class Package Service (FCPS) which covers shipments weighing up to 1 pound. Both services have similar time-in-transit windows. There has also been an increase in shipping prices as Postmaster General Louis DeJoy seeks to trim losses and move the Postal Service closer to profitability.
The ending of the reseller program was first announced in July. In a statement to Linn’s Stamp News, David Partenheimer, a U.S. Postal Service spokesman, said it was decided to end the program after an internal review.
“The Postal Service undertook an evaluation of its reseller program and has determined that the program as currently structured is not resulting in the customer benefits and efficiencies that were originally envisioned, has caused difficulties in monitoring compliance with pricing and other terms and should be discontinued,” Partenheimer said in a statement.
Timed for the holidays
The timing of the Auctane agreement is perfect for brands and shippers looking to take advantage of the new holiday shopping season. Traditionally, Black Friday kicked off the official peak shopping season with Cyber Monday adding to the sales.
But, more and more, retailers are spreading out the shopping season, with Amazon (NASDAQ: AMZN), Walmart (NYSE: WMT) and Target (NYSE: TGT) already running special event online sales. This is causing shifts in the last-mile delivery market and brands are looking to reduce shipping expenses.
A survey, Holiday Shopping Trends Report: Winning Customers Despite Uncertainty, conducted by Auctane and Retail Economics for ShipStation and released last week, found that 91% of merchants said they expect business costs to be higher this holiday season, with 34.7% increasing the expense of delivery and another 26.2% extending delivery time frames in response. Another 10.1% are eliminating free returns, a particularly troublesome cutback for consumers purchasing apparel, which is returned at a much higher rate than other items.
Merchants of all sizes are expecting order volumes to rise this year, with 27% of small, 13% of medium and 11% of large companies expecting volume increases of 10% or more. However, the customer experience is still expected to be a key differentiator, and that includes both service and price.
“Inflation and economic uncertainty are forcing consumers to rethink their spending priorities this holiday season,” said Robert Gilbreath, general manager of ShipStation. “To combat this, merchants should proactively formulate a holiday season game plan. This includes reexamining and improving the experience they offer from the moment an order is placed online through last-mile delivery.”