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4 Tips to Soften Holiday Shipping Carrier Surcharges

October 14th, 2020

Online retailers are expecting Q4 2020 online sales to grow significantly this holiday season.  According to Deloitte, e-commerce sales should grow 25% to 35% in 2020 as more customers move their buying activity online due to retail store closures from the COVID-19 pandemic.

This increase in e-commerce sales during the 2020 peak period brings a huge demand for parcel delivery.  And with most of the increased parcel delivery going to residences, shipping carriers have announced holiday surcharges to help offset the added costs of delivering to a residence.

2020 Carrier Holiday Surcharge Summary by Carrier

USPS – starts Oct 18, 2020 through Dec 26, 2020

Holiday surcharges apply to all shippers who use Commercial Base Pricing (purchasing postage online).  Surcharges range from $0.25 for First Class Package Service, to $0.40 for Priority Mail and $1.50 for Priority Mail Express.

UPS Ground – starts Nov 15, 2020 through Jan 16, 2021

Holiday surcharges for UPS Ground ranges from $1 to $3 per package being delivered to a residence, depending on how much additional volume a shipper has compared to the amount of parcels shipped in February 2020 (last full month before COVID-19 surge).  The higher volume of packages, the higher the surcharge.  Important Note:  UPS will not apply 2020 Peak Season surcharges* nor will it increase its rates in Q4 2020 to customers on Stamps.com under the Digital Access Program.

FedEx Ground – starts Nov 2, 2020 through Jan 17, 2021

FedEx Ground is basing their holiday surcharges on specific parcel volume being delivered to a residence.  Shippers who ship over 35,000 packages per week average during November will determine when the surcharge is applied.   Holiday surcharges for FedEx Ground ranges from $1 to $4 per package, depending on volume.  

4 Tips to Lower the Impact of Carrier Holiday Surcharges

1. Use USPS First Class Package Service for all packages under 1 lb.

First Class Package Service is the cheapest shipping service among all U.S. carriers for packages under 1 lb.  The service provides delivery across the U.S. in 2-4 days including tracking for a maximum cost of $5.95 (includes holiday surcharge).  While the USPS has implemented a $0.25 holiday surcharge for 2020, $0.25 is much cheaper than the $1-$4 other carriers are charging.  If your package is being delivered to a residence and is under 1 lb., there is no better option than First Class Package Service.

2. Downsize your boxes if possible as DIM is more important than ever

With holiday carrier surcharges, it’s more important than ever to make sure your boxes are properly sized for the items they are delivering.  Make sure you are using the smallest possible package size that can provide safe transit for your product.  Shaving a few inches from the box size can equal big cost savings.  As an example – a 12″ x 12″ x 8″ box will have a DIM billable weight that is two pounds higher than a 12″ x 12″ x 6″ box.  That extra 2” in box size will cost $2 or more per package. 

3. Introduce Product Bundles to Increase AOV

A great e-commerce strategy to help increase average order value (AOV) is to introduce product bundles. Product bundling is when you couple together multiple products as a package deal that are often purchased at the same time.  A good example is when a person buys a new iPhone, they typically get a new phone case and possibly a longer charging cable.  Once created, bundles can be promoted on the core product page to help buyers find all the products they need quickly, and thus increase AOV. Plus, a higher AOV can help sellers lower the sting of extra holiday surcharges as you have more revenue to absorb the additional delivery costs. 

4. Offer Sales Promotions Before Holiday Surcharges Start

During the 2020 peak period, try to create sales promotions that will encourage buyers to make purchases earlier in the season, before the carrier holiday surcharges start. This is especially important if you provide free shipping since the additional shipping fees will either require you to increase your product price or you’ll need to lower your margin.  This strategy also helps kick off your holiday sales while ensuring your buyers have plenty of time to receive their packages before the holidays.

Carrier Surcharge Start Dates:

USPS – starts October 18
FedEx Ground – starts November 2
UPS Ground – starts November 15

*UPS reserves the right, it its sole and unlimited discretion, to apply Peak Surcharges to the UPS Digital Access Program or to otherwise change UPS’s pricing or terms at any time without notice.

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