Is Flat Rate Shipping the Best Option?

November 13, 2019


FedEx and USPS have offered flat rate shipping for several years and now UPS has thrown its hat into the ring with its recently introduced UPS Simple Rate. UPS describes the service as a rate shipping option designed to help small and medium-sized businesses (SMBs) “streamline and simplify their outbound processes” by enabling businesses to ship by UPS 2nd Day Air, UPS 3 Day Select and UPS Ground services to anywhere in the U.S. for a flat rate – no weighing and no worrying over the DIM rate factor. Instead, as a number of industry analysts have noted, flat rate shipping lets shippers know upfront what the shipping costs are going to be.

Is this a really smart way of shipping? Well, it depends. UPS Simple Rate is available to account and non-UPS account holders however discounts and promotions do not apply to Simple Rate shipments.

As noted by Shippo’s Director of Demand Generation when comparing USPS’ flat rate option to its Priority Mail, “A good rule of thumb is to ship small, heavy packages via Flat Rate, and large, lightweight items via Priority Mail.” Indeed, this is the general consensus when deciding to use any flat rate shipping service. But, according to our Vice President of Analytical Solutions, Melissa Runge, flat rate services are not an advantageous or cost competitive option for larger shippers.

UPS’ recent partnership with Stamps.com along with its Digital Access Program will likely be targets of UPS’ new flat rate service. The UPS Digital Access Program helps e-commerce platforms provide a comprehensive suite of order management, fulfilment and delivery services to simplify logistics complexity.

It will be interesting to watch the competitive dynamics between the three flat rate service providers. Although FedEx launched its One Rate option in 2012 in a move against the USPS services, Runge said in a recent Atlanta Business Chronicle interview, “many of our clients were not aware there was even a flat rate option with FedEx.” She further explained that FedEx's option hasn't gain market share because of its zonal distribution requirements, a lack of ground service, and the need to use FedEx shipping packaging. Since the UPS announcement, however, FedEx has lifted its branded packaging requirement.

As always, there are a number of service options available to shippers. Be sure to compare each one of them to determine costs as well as strategic fit to one’s business.

 

Share this article:

Blog Posts

  • Categories

Is Flat Rate Shipping the Best Option?

November 13, 2019


FedEx and USPS have offered flat rate shipping for several years and now UPS has thrown its hat into the ring with its recently introduced UPS Simple Rate. UPS describes the service as a rate shipping option designed to help small and medium-sized businesses (SMBs) “streamline and simplify their outbound processes” by enabling businesses to ship by UPS 2nd Day Air, UPS 3 Day Select and UPS Ground services to anywhere in the U.S. for a flat rate – no weighing and no worrying over the DIM rate factor. Instead, as a number of industry analysts have noted, flat rate shipping lets shippers know upfront what the shipping costs are going to be. Is this a really smart way of shipping? Well, it depends. UPS Simple Rate is available to account and non-UPS account holders however discounts and promotions do not apply to Simple Rate shipments. As noted by Shippo’s Director of Demand Generation when comparing USPS’ flat rate option to its Priority Mail, “A good rule of thumb is to ship small, heavy packages via Flat Rate, and large, lightweight items via Priority Mail.” Indeed, this is the general consensus when deciding to use any flat rate shipping service. But, according to our Vice President of Analytical Solutions, Melissa Runge, flat rate services are not an advantageous or cost competitive option for larger shippers. UPS’ recent partnership with Stamps.com along with its Digital Access Program will likely be targets of UPS’ new flat rate service. The UPS Digital Access Program helps e-commerce platforms provide a comprehensive suite of order management, fulfilment and delivery services to simplify logistics complexity. It will be interesting to watch the competitive dynamics between the three flat rate service providers. Although FedEx launched its One Rate option in 2012 in a move against the USPS services, Runge said in a recent Atlanta Business Chronicle interview, “many of our clients were not aware there was even a flat rate option with FedEx.” She further explained that FedEx's option hasn't gain market share because of its zonal distribution requirements, a lack of ground service, and the need to use FedEx shipping packaging. Since the UPS announcement, however, FedEx has lifted its branded packaging requirement. As always, there are a number of service options available to shippers. Be sure to compare each one of them to determine costs as well as strategic fit to one’s business.  

Share this article:

Blog Posts

  • Categories