On July 5th, 2022, the United States Postal Service (USPS) announced that it is ending its decades long reseller program, beginning October 1, 2022.
The removal of the 30-year-old reseller program represents the latest in a series of decisions made by Postmaster General Louis DeJoy to improve the profitability of USPS. However, this change is likely to affect many eCommerce businesses that are using third party postage resellers like Stamps.com, Pitney Bowes, Shippo, ShipStation, EasyPost, and Easyship amongst others who have been offering these discounted prices to customers.
Postage resellers are actively trying to work with USPS to keep their rates as low as possible. However, there is a very high chance that they’re just not going to be able to do that, especially in time for the holiday season. That means you might be paying a lot more for USPS postage rates very soon.
This is a good time for your company to think about whether the third-party postage reseller you’re working with is working out. We may soon be moving from a world where postage resellers compete on service instead of price, and that’s very different than the status quo.
Here’s what you need to know.
Effective October 1, USPS is eliminating the discounted reseller program
When launched in 1992, the reseller program gave small businesses a chance to buy discounted postage that was otherwise only accessible to larger companies. Many businesses were able to access discounted rates via third-party postage resellers.
With the removal of this program, some third-party postage resellers will not have steeply discounted rates like before. Whether or not your postage reseller of choice will maintain discounted rates depends on a lot of factors. The most important one is whether your postage reseller will maintain a favorable relationship with USPS.
It’s tough to tell exactly what’s going to happen yet. For example, Easyship states that it “maintains direct and strong collaboration with its carrier network, including USPS. Easyship will continue to provide competitive, discounted rates and is working closely with USPS on pricing strategy during this transition.”
Meanwhile, Shippo “maintains a strong and collaborative relationship with all carriers and have always shared a desire to democratize e-commerce at all levels.” The company goes on to say that “this is a dynamic situation with ongoing updates expected over the next several weeks. Shippo will continue to transparently share new information as we have it.”
In other words, these companies are doing the best they can with the information they have. They’re going to try and provide lower discounts if they’re able to negotiate them with the USPS, but that may be quite difficult.
If you’re using a postage reseller like Stamps.com, Pitney Bowes, Shippo, ShipStation, EasyPost, or Easyship , you will likely notice higher USPS rates
To be very clear, postage resellers like Stamps.com, Pitney Bowes, Shippo, ShipStation, EasyPost, and Easyship may maintain their reseller status. Similarly, the price of packages to be sent via UPS, FedEx, DHL, and other carriers will not be affected. It’s not all bad news.
But given the relative lack of concrete information right now, it’s best to assume that you will start seeing higher USPS postage rates effective October 1. That means when the new month begins, really pay attention to what you’re paying on postage.
At the current time, we can assume three things to be almost certainly true:
- Third-party USPS resellers are trying to maintain their relationships as “preferred reseller status.”
- Your third-party postage reseller is still going to be offering discounted rates on USPS postage…
- …but the difference between those rates and the CPP rates is likely going to increase by a lot.
If you find that your reseller is no longer offering steeply discounted USPS postage rates and there’s no acceptable substitute, be ready to change vendors. Right now, for many resellers, discounted USPS postage is the most important draw. Even the threat of losing that should give you enough pause to be ready to make some changes based on your business needs.
Reconsider how you are purchasing postage
Effective October 1, if you use a third-party postage reseller, you should be ready to reevaluate the comprehensive value-add that your vendor of choice provides. We’re not just talking about rates here, either! Here are some questions you should be asking yourself:
- Will USPS rates still be discounted, and will they be guaranteed for the foreseeable future?
- If not, are UPS, FedEx, DHL, and other carrier rates more competitive compared to USPS?
- Is this platform easy to use?
- Does it integrate nicely with my eCommerce store and other systems?
- Does this platform provide other features which I really like?
- How is their customer service?
It’s not just about saving money, though that is important. Since this is a good time to re-evaluate vendors regardless , think about ranking your software’s quality based on a wide variety of criteria. The idea is to ultimately empower your business with a feature-rich, easy-to-use, cost-effective program. This is extra important now because of the high probability that third-party postage resellers won’t be able to compete as heavily on cost anymore.
The future of discounted USPS postage
Because the cost of discounted USPS postage is all but certain to move closer to regular retail rates, third-party postage resellers are going to need to compete on service instead of price in the near future. That means these companies are going to need to reevaluate their basic pitches. So what might that look like?
In some ways, the future may more closely resemble what you see with Shopify and Amazon. Both platforms act as the store front, inventory manager, postage reseller, and - via the Shopify Fulfillment Network and Fulfillment by Amazon - - effectively their order management system and fulfillment provider . Of course, the trouble with that is that you’re stuck on either the Shopify or Amazon ecosystem, making omnichannel/headless eCommerce order fulfillment a challenge. (Put simply, this approach doesn’t work well if you’re on Shopify, Etsy, eBay, and Amazon simultaneously).
If you need an omnichannel solution, Soapbox provides an example of what the future might look like. It is the best all-around solution available at the moment, billing itself as a one-stop, end-to-end fulfillment solution. That means it integrates with different storefronts to handle inventory management and order fulfillment in addition to providing reduced postage rates. We’re likely to see more companies like this spring up in the future.
A quick to-do list
If you’re in a hurry and just need some quick direction, here’s what you should do with this news:
- Pay attention to your USPS postage rates starting October 1.
- If your postage reseller isn't competitive anymore, consider switching.
- Remember postage resellers won't be able to compete on price as much, so try to find a feature-rich one.
- Consider all-in-one solutions like Soapbox.
The recent decision by USPS probably won’t break you. In fact, there are lots of good workarounds for your business. By paying attention to this news and being proactive, your business will be well-positioned to handle these coming changes to USPS prices and the 2022 holiday season!