USPS seeks e-commerce market share with Priority Mail price cut

USPS seeks e-commerce market share with Priority Mail price cut

The US Postal Service is moving to snap up market share in e-commerce shipping with a lowering of its business prices. The move should come into force on 7 September, subject to regulatory approval, and comes while rivals UPS and FedEx have been introducing new dimensional-weight pricing policies to charge for the size of packages as well as weight.

The Postal Service said it was looking to cut its Priority Mail prices for business customers including a 0.9% reduction for Commercial Base customers and 2.3% reduction for Commercial Plus customers on average.

Most of the price cuts will be targeted to attract ground volume in the six to 20 pound weight range, USPS told regulators.

The pricing changes will see Priority Mail rates for individual customers through post offices increased by an average of 1.7%, however.

Nagisa Manabe, the chief marketing/sales officer at USPS, said the Post Office was hoping to attract new business customers through the price cut.

She said: “Unlike others in the shipping industry, the Postal Service is not implementing any new dimensional-weight charges, continuing our commitment to deliver the best value for our customers.”

Commercial Plus pricing requires businesses to send at least 50,000 pieces a year. Commercial Base pricing does not have any volume requirements.

The Postal Service said the reduced rates would be available for customers using Click-N-Ship services, PC Postage products, permit imprints and mail meters that generate an Information Based Indicia and submit data electronically to the Postal Service.

Repositioning strategy

The pricing changes come as part of a broader strategy to position the Postal Service for the future, as more of a package delivery business. USPS is currently preparing for another phase of mail processing plant closures across the United States as it continues streamlining its letter business in the face of ongoing volume declines.

USPS said Priority Mail was one of its most popular shipping products, with 871m items shipped through Priority Mail last year generating $6.4bn in revenue during the financial year 2013.

Priority Mail customers are provided free insurance, an expected delivery day and flat-rate packaging options as well as regional rate boxes.

“With the Postal Service, there are no shipping surcharges. We deliver on Saturdays for no extra charge, we pick up packages for free, and we deliver shipping boxes and envelopes, also for free. Just a few more ways we help businesses get the most out of their shipping,” said Manabe.

US Postal Service shipping and package volumes have increased 8.4% year-on-year in the financial year to date (from the start of October 2013 to the end of May 2014), with revenue up 9.4% compared to the same period last year.

First Class Mail volumes have declined 3.8% year-on-year over the same period, with revenue down 0.4%.

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