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Posted By: Akshay Vazirani

UPS and FedEx are in the process of hiking up their rates. The situation is getting pretty heated between them as well as the retailers that use UPS and FedEx. Be it an eCommerce website or a retail store, each type of business wants to earn their customers business by offering free shipping. But as UPS and FedEx increase their prices, what is the eCommerce industry going to do? The recent and continued price hikes have posted a very vast risk to the free shipping policies that most retailers and online stores have started. How will you deliver on your promise to customers without going into loss yourself? FedEx and UPS are now going to employ the principle of dimensional weight pricing, which means that they will charge a package according to its weight as well as size to weight ratio.

The best option available as of right now is the USPS. Although the USPS too have increased their prices, they operate in such a way that it has afforded them an edge over the private shippers. For example , it not only provides delivery service on Sundays, but one can send a shipment on Sunday a well. This may be a feature that attracts some of businesses to come to USPS rather than FedEx or UPS. They are only slightly cheaper, but have less surcharges and taxes, as compared to FedEx and UPS. This adds up quickly and does make a lot of difference to both the retailer as well as the end customer. USPS may be as reliable as the others, which is something that does not hurt them.

As we approach the holiday season, some retailers may be increasing product prices to cut down losses on shipping rates due to the free shipping being offered. This may not bode well eCommerce players that sell commodity based items.

Is your business going to switch providers? Do you offer free shipping to your customers? What will you do when the new rates and shipping calculations for into place?

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