Any entrepreneur who ships worldwide has experienced the battle of shipping carriers first-hand. When choosing the best carrier for the job, the decision usually comes down to the big three: FedEx vs UPS vs USPS based on the price, delivery time, and reliability.

We look at the strengths and weaknesses of each carrier and what you need to do to negotiate the best possible deals. You don’t want to miss our high-level look at shipping and the strategies for shipping around the world with the most reliable and lowest cost carrier.

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(With your hosts Andrew Youderian of eCommerceFuel.com and Bill D’Alessandro of RebelCEO.com)

Andrew: Today I’m talking about something that everybody that’s got a store has dealt with, has kind of dove in deep for better or for worse on, and that is shipping carriers; USPS, UPS, FedEx. And it may not be the sexiest topic in the world to talk about, but it gets pretty sexy when, if you’re using the right guys, you can increase your profits 30-40%. So it’s an important thing to talk about.

Joining me to dive in is Mr. Bill D’Alessandro from Rebelceo.com. Bill, how’s it going, man?

Bill:: Going well. Thanks for having me on.

Andrew: Yeah.

Bill: I have spent the last couple of months negotiating hard with all of the carriers since we just opened our warehouse here in North Carolina. So I’m up on this stuff.

Andrew: Do you have like a little back room where they come in, and you lead them into this dark room and good cop/bad cop style and just lock them in until you get the rates you’re looking for?

Bill: Yeah, I just club them over the head.

Andrew: Do they actually swing by seriously?

Bill: Oh yeah, absolutely. Yeah, they come by. They’ve got reps in person. Sometimes they come by unannounced because they’ve got a coverage area. So my UPS guy comes in a lot, and then the Postal Service, this is one of the things that took me aback about the Postal Service. They have sales reps, which it never really occurred to me because I just thought that they were a government utility. But there are sales reps for the Postal Service that will come into your warehouse and help you evaluate which boxes you’re using and which class of service you’re using, just like a UPS sales rep would. And try to get you to spend more with the Postal Service. So it’s exactly great. You can negotiate rates with them. We can talk all about it.

USPS Strengths

Andrew: Very cool. We’ll get into all this stuff. So let’s dive into it, the three carrier smack-down. Let’s get into the details. So, Bill, I figured we could start out with good old Uncle Sam’s USPS, the U.S. Postal Service. Of course, most people know this, but it is an entity run by the U.S. government. Maybe just do a simple strengths/weaknesses for all these guys. USPS, they’re fantastic for anything lightweight, and they’re going to be a killer choice. Oversized, especially with a lot of the dimensional weight changes that happened about a year ago now with UPS and FedEx. I found they’re cheapest for international shipments, at least, smaller ones. And those are the big three things. We’ve changed over probably early this year. I think we mentioned in an episode in the past from doing a ton of UPS to almost exclusively doing USPS because the savings were substantial.

Bill: Yep. That’s been my experience too. We ship out of our warehouse here about 90% of our packages are Postal Service packages. For the specific reason you mentioned, lightweight is especially one of them because we sell a lot of face creams and single bottles of shampoo and things like that. Let’s put some quantification around what lightweight means. Typically in my experience, it’s two pounds or less. The Postal Service is pretty damn hard to beat price-wise and service level-wise. You can use first class mail and priority mail, under two pounds, and it’s going to be there in two to three days anywhere in the United States for a couple bucks essentially. Even UPS and FedEx will tell you point blank they can’t compete. They don’t want to. They can’t make any money in those packages.

Andrew: They’re like, “We don’t have a taxpayer base that can subsidize us. We can’t compete on this.”

Bill: They say that. They say that straight to your face. They go, “We’re unsubsidized. We have to make a profit. We’re not competitive on it.” I mean, they’ll take those packages, but it’s more expensive. We do ship some international Postal Service because it is dramatically cheaper. I mean, you can get stuff overseas for $10-15 versus FedEx is going to be 30 bucks or UPS would be 30 bucks. But my trouble is with the Postal Service when you ship international with the Postal Service, they basically take it to the foreign country and hand if off to the local Postal Service in that country. And then you are subject to all of the reliability or lack thereof of the international government variety Postal Service. So I tend to, if I ship Postal Service internationally, we lose, just gone, theft, whatever it may be, 3 to 5% of packages that we ship Postal Service internationally.

Andrew: Yeah. It’s interesting that you talk about that. But yet, I think it’s still a fair point. You still use it, and I think a lot of times when you’re comparing which carrier to use, obviously you want the best service and the cheapest cost. But sometimes, even if one service has a little bit lower reliability like in the USPS in a lot of cases, if they’re dramatically cheaper and it comes to the point where the savings you make, that you see based on using them, allow you to spend two or three extra packages completely out of pocket per month and you still come out way ahead, it’s a no-brainer to keep doing it.

Bill: That’s exactly how I feel about it. Yeah, we’re going to lose some packages, but net-net, the ones we have to reship aren’t costing us as much as it would cost to send everything UPS, for example.

Andrew: In terms of another strength for USPS, is going to be their delivery time, at least in terms of economics. Of course, you can get anything overnight if you’re willing to pay for it, of course, but a couple things go in USPS’s favor. The first one is Saturday. I mean, Saturday is a business day for the USPS in transit. And so, just by default if you’re shipping something three day mail on Friday, if you ship it UPS, Saturday one, Monday two, and Tuesday is three. It’ll get there Tuesday, whereas UPS, you know it’s not going to get there until the next day, until Wednesday because they don’t work on Saturdays unless you’re paying extra.

And secondly, two to three day priority like you were talking about, and it can get real expensive again it’s different, but for most items a lot of times it’s a lot cheaper than, let’s say, UPS three day or their second day air service. And it’s gotten more reliable too, which is cool.

Bill: They changed, I think, it was two to three years ago. They changed priority mail where they give you a guaranteed time frame when you ship the package based on zip code. So when you ship the package you’ll see now it prints on the labels, one day priority or two day priority or three day priority. So we sell shipping by class of service on our websites, not exact carrier and method. So we’ll sell two day shipping, and if we need to we’ll send it UPS, but oftentimes two day shipping just goes priority mail. And the Postal Service gets it there in a couple of days. We pay $5, and the customer paid $19.99. We talked more about that in the free shipping episode, about how to structure that.

USPS Weaknesses

Andrew: Yeah. So definitely USPS has got some awesome, awesome strengths if you know how to use them correctly. But, of course, it’s the USPS. They’ve got some downsides too. First one, I’ll just throw it out there, Bill, and maybe let you take it from here if you’ve got any stories or experience. But the tracking I have found is…UPS will say, “It’s in the warehouse in the northwest corner being attended to by Lavon at this moment.” You know exactly where it is, right? USPS says, “Currently your package is in the western half of the United States,” and that’s about all you get.

Bill: Right, right. It’s a little weak, and also like the delivery confirmation is a little bit tough because UPS, I found the drivers will actually take it to the door a lot of times, especially in apartment complexes. We have problems with if we ship with Postal Service that people call and go, “I never got my package” and they’re like, “It’s not with the manager.” I’m sure it’s somewhere in the building. Whereas UPS and FedEx typically like hop in the elevator, go up to the unit, and leave it right at the door. You get better delivery confirmation, I found too, with the private carriers.

Andrew: Speaking of delivery stuff not getting there, USPS, a lot of times if you hop on the phone, and this is