Saturday, January 9, 2010

Retail Pricing at Pack and Ship Stores - Is There a Better Way?

[note: this article is in response to the large number of new Facebook fans PA & Associates has garnered since last month; many of which are not commercial shippers, but retail consumers who will, from time to time, need to ship a package FedEx or UPS]

A few years ago, I was in a pack and ship store (the type of retail operation offers post office boxes/mail receipt, shipping supplies, ships packages FedEx/UPS, etc.) picking up some mail. At the counter was a delightful, elderly woman with one small, beautifully wrapped holiday package.

She approached the counter and the clerk asked if he could help her. She said, "Yes; I'd like to send this Christmas present to my grandson in Boise, Idaho. Can you tell me how much that would cost?". Recalling his sales training, the young man working the counter went right in for the kill, "sure -- I'm assuming since its a gift its valuable and you want to make sure it gets there, right?". Grandma replied, "yes, I would guess so". And with that, the clerk had the open door to scare the kindly old woman in the hazards of blindly handing Junior's package off to the black hole that is the US Postal Service versus sending the package through the highly-reliable and trackable service of a parcel package carrier.  The whole time, I'm eavesdropping while I pretend to sort the mail from my box.

She seemed very thankful that the clerk had taken such an interest in her and the package's well-being. After her crash course in parcel shipping, she was sold on the value of sending the package UPS. The clerk took the package from her and placed it on the scale. He called out the weight of the small box to her, "Looks like five pounds...from here to Boise would be $65". She seemed bewildered at the price, but knowing that it was important to have the extra care and handling of Brown on her side, she nodded her head. I just about had a coronary. It took everything in me not to come to her rescue, put my arm around her shoulders and escort her outside to safety -- and ship the package on her behalf at about a 90% savings.

To understand the independent pack and ship retail pricing, you need to know that FedEx and UPS provide three levels of pricing: daily rates, retail rates and discounted rates. Simply put, daily rates are undiscounted "list rates" offered to commercial shippers who have a daily UPS pickup. Retail rates are also undiscounted and provided to shippers that do not have a daily pickup with UPS -- in the past, these were also called counter rates. Retail rates are usually 13%, or so, higher than the daily rates. The remainder of the shippers have some carrier agreement in place with UPS and/or FedEx that provide some level of discount from the daily rate based on package volume and spend.

Independent pack and ship facilities -- those not part of the FedEx Office (formerly Kinko's) or UPS Store system -- usually use the retail rate and add a markup to the price. Remember that the retail rate is already 13% higher than the "list" rate published at or The "independents" frequently have discounts with UPS and FedEx and make a significant profit margin between the amount they charge their customers and what the carriers charge them.

Is there a better way?

For the average person needing to ship a package FedEx or UPS, here are some tips to reduce the cost:

  • If you're employer has a daily pickup and relationship with FedEx or UPS, inquire with your managers or mailroom about shipping the package for you (check with your Human Resources department about company policy). Offer to reimburse your employer for the shipment. If you use one of the "user defined" fields when you create the airbill to include your name or other identifying text, it will be quite easy to find that shipment in the billing data from the carrier for reimbursement.
  • Use the US Postal service -- although the tracking isn't as sophisticated as FedEx and UPS, they offer a number of options at a much, much lower rate. For example, Granny's box would have shipped for $4.95 using the Flat Rate Box (inclusive price, no surcharges, boxes and pickup are free).
  • And a tip for reducing the shipping fees for items you order online; look for an option to use your own account number (if you have one). Always try to send the package to a commercial address, such as your place of employment, if given the option. Online retailers will pass on the FedEx and UPS residential delivery surcharge to you when you state your home address as your delivery address.

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