Every business needs to know its operational cost to calculate its operating budget. E-commerce entrepreneurs like dropshippers especially need to know their budget to run efficiently. Because of this reason understanding the shipping cost is vital. Every year shipping carriers change their rates due to fuel and labor costs, and every year, businesses recalibrate their shipping cost.
The new changes will directly impact how you calculate shipping strategy and pricing strategy. We here at Dropship US work with dropshippers and provide them with a platform to succeed. Because of our place in the dropship nation, we know about all the sector developments and thought we should let you know the recent US shipping rate changes and how you can calculate your cost of shipping for 2021. So without any further delay, let’s begin!
The New Shipping Rate ChangesMajor shipping carriers have all updated their shipping rates in 2021 for the retail market. Shipping carriers like USPS, UPS, and DHL Express have all made changes in their US shipping rates along with changes in shipping rates in Canada, with changes in Australia expected later in the year. While the rates are fixed, it might change if you negotiate with the carriers, so make sure you try it. Now let’s check out the changes:
Changes In USPS
USPS announced that it would be updating its shipping rates, and the changes will be effective from January 24th, 2021. However, USPS continues to be one of the most cost-effective shipping options in the US. Here are the changes that might impact your business:
- The first class package service on Shopify will allow businesses to save around 64% in retail rates. It is one of the most common and popular options for shipping packages up to 16 oz.
- Shopify offers fantastic value for money with their Advanced and Plus plans and uses Priority Mail Cubic pricing, where you might be able to save 88% on shipping costs alone.
- The Priority Mail retail rates for USPS have increased by 3.6%, so make sure you check all the options out there.
- The retail rates for Priority Mail Express were also updated by 2.5% overall. However, you might be able to bring down the cost of shipping with some good old negotiating.
- From 2021 all the packages that come to 130” or more when adding the length and girth will incur an additional Large Package surcharge of 100 dollars.
- International shipping charges for USPS are changing in 2021 as well. For USPS, the international shipping costs are determined through distinct groupings of destination countries. You can find all the sets on this USPS page. In 2021 all the retail and other rates will be changing for all international mail classes. You can learn about the changes on the 2021 update page.
Remember that the changes go into effect on January 24th, so if you haven’t updated your shipping cost yet, you should do it immediately to know your cost of shipping and flesh out your operational cost.
Changes In UPS Shipping Costs
UPS changed its shipping rates at the tail-end of last year, with the changes taking effect on December 27th, 2020. All of UPS’ published rates went up about 4.9% from last year. You can find all you need to know about UPS Shipping rate changes here. Here are the changes you will see:
- You might be able to get a wide range of discounts. From 52% off UPS® Ground shipments, up to 62% off UPS 2nd Day Air® service and UPS Next Day Air ® service to around 74% off UPS Worldwide Expedited® service. So make sure your packages are eligible.
- Effective from January 10th, additional handling charges will be added for any package with a combined length plus girth dimension of 105” or more.
- UPS updated its cost of VAT, Delivery Confirmation, & other charges. So check them out in this updated UPS notice.
- There are changes in the ZIP code where the UPS surcharges will. Find out more here. The changes will include a host of different surcharges like Delivery Area Surcharge, Extended Area Surcharge, and Remote Area Surcharge. So check out the changes before you update your shipping costs.
- UPS is expanding their services in 2021 with a wide range of pickup options and convenient drop-off locations.
- You can arrange for UPS drivers to pick up your shipments daily, weekly, or upon request to find your most convenient option. Find out more here.
- You can also choose to drop off your packages at one of their expanding list of drop off locations. Find out more here.
New developments in the trade have impacted US shipping rates along with the cost of international shipping. This is why UPS updated all its charges. Make sure you check all of it out to calculate what your new cost of shipping should be.
Changes In The DHL Express Shipping Costs
DHL, too has updated its shipping rates. Effective from January 1st, 2021, DHL will be charging differently, which will increase the DHL Express Worldwide shipping service by 4.9%.
You might also be able to negotiate free pickup services for your packages. Find out more here. Now that you know all the changes let’s talk about how you can calculate and optimize your shipping cost.
Calculating The New Shipping Cost & Optimizing Strategy
When it comes to calculating the new shipping cost, you first need to decide which approach you want to go with for your business. There are three main types of shipping strategies you can follow. They are:
- Calculated shipping rates
In the following passages, we will talk about the possibilities of what you can do for each approach. So let’s check them out.
One thing you can do is remain uncaged even when the changes go into effect. What that will mean is that you eat the additional shipping cost. But before you do that, find out about your margins and whether or not you will be able to remain profitable. Another thing you can do is increase the product price. Your frequent customers, however, will notice the change, and it may impact your purchase frequency. We believe at this juncture, the best option for you is to introduce free shipping minimums. With this, your customers will need to reach the order value to get the free shipping option.
Flat rate shipping
With the changes, as we said, you will need to bite the extra cost of shipping for the last option if you don’t make any changes. Or you can adjust the value ranges for your flat shipping rates. Simply offer higher shipping rates for small orders and lower ones for big orders. If you are already offering varying shipping rates, you need to update the rates.
A simple solution is to increase the product price to ensure you maintain your current profit margins. If you don’t offer varying flat shipping rates, then you can change the shipping price altogether. Remember that shipping cost is one of the biggest reasons you see cart abandonment, so make sure you know what you are doing when calculating your shipping cost.
When you are using a calculated rates provider and do nothing, your website will show updated shipping rates. Always remember that abandoned carts usually happen when the shipping cost is too high. So to mitigate the cost for the customer, you can lower your product price. But be careful about choosing a lower price rate for your products. Make sure you select a shipping rate that ensures your margins are sustainable.
So there you go, that’s all you need to know about the new shipping costs and upgrades in US shipping rates. Make sure you use the knowledge wisely and calculate a sustainable shipping strategy for your business. Remember, making the right decision when determining your cost of shipping might seem complicated, but it isn’t.
All you need is some research, and that’s it. If you are a dropshipper in need of a platform and information on shipping, please feel free to contact us. We here at Dropship USA work with entrepreneurs and provide them with websites that are geared for success. And with that being said, that’s all we have for you today. Let us know in the comments below what type of shipping strategy you use, and hit us up on our socials if you see any shipping rate updates. We will come back with something new for you soon. Until then, see ya!