This week, the U. S. Postal Service, UPS, and FedEx all raised their shipping rates.  While the USPS raised retail rates by an average of 3.9 percent (3.2 percent for customers), UPS Ground and FedEx Ground both raised their rates by an average of 4.9 percent.  In our latest, survey, we asked customers to tell us how these rate increases would affect their ecommerce program.

Most interesting is the rate at which merchants will be changing carriers due to the rate change; in particular the rate at which merchants claim they will be moving volume to the USPS (likely based on the USPS have the lowest rate increase).  Be sure to check out the rest of the survey questions to find out more about how shipping affects ecommerce merchants.


Will Merchants Change Carriers Based on Changing Rates?
Almost half (46 percent) of survey respondents stated these rate increases will influence which mail carrier they will use in 2011.


Two-thirds of respondents reported that they currently use more than one carrier.


Of the respondents that use more than one carrier, 50 percent have no intentions to change carriers based on the rate change.  For those that plan to change, the USPS is the carrier merchants are most likely to switch to.


Switching Costs

While more than half (52 percent) of respondents reported that there is little or no back-end work required to accomodate the rate change, 26 percent of merchants will need to perform at least one day of work due to the rate change.


In addition to rate change questions, we also asked a number of other questions for ecommerce merchants.  Here are some of the more interesting results:

How Do Ecommerce Merchants Determine Shipping Rates?

When asked how ecommerce merchants price their shipping charges, 44 percent of the respondents stated they utilize destination and/or weight based pricing.  40 percent stated they use flat rate pricing to determine their shipping charges.

While the zone/weight based pricing is generally a more accurate method, it is also much more complicated as it generally requires merchants to populate rate information for hundreds of zone/weight combinations and typically necessitates a system that allows for dynamic rate checks based on what customers have in their cart and what they have entered as a delivery address; to say nothing of the added complexity that more than one distribution center can add.


Customers Prefer Home Delivery

74 percent of respondents ship at least half of their packages to a home address.


Although FedEx ($2.50) and UPS ($2.45)  charge residential surcharges, only 12 percent of merchants have different rates for home/business shipments (USPS has no residential surcharges).

How Heavy Are Typical Packages?

83 percent of respondents reported that the majority of their packages weigh three pounds or less.  Only 4 percent typically ship packages over ten pounds.

This survey was sent to current customers that operate an ecommerce store.  The survey was conducted from December 16-21, 2010.

Click here for more information on the 2011 USPS Rate Change.

Thanks to everyone who participated in the survey!

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