The United States Post Office is about to raise prices, slow down service, and cut costs by moving more mail and packages by truck, and less by air.
And they are going to charge more for their planned slower service.
USPS leaders hope these changes will make mail and package shipping times more predictable, and make the USPS more solvent (recall that the post office is funded through a complex and controversial mix of taxes and per-item costs).
We expect these USPS cost changes to raise our shipping costs roughly 50 cents per order on average.
Fifty cents may not seem like much compared to the price of our expensive wooden jigsaw puzzles, but it's a notable proportion of our profit margin.
We now offer free shipping on all orders (inside the US), so we will have to do some hand-wringing and careful analysis on costs and profit margin, but it's likely that sometime this fall, we'll have to raise prices a bit to pass those costs to you. So consider this a Dutch Sale - a term we coined in 2012 to mean a warning that prices are about to go up.
Most online retailers will face this problem - so expect to see online prices in general rise a percent or two in the next couple of months, as retailers try to pass this cost increase on to consumers.
Ironically, we expect one of the "winners" out of these changes to be Amazon, because they have a great network of warehouses across the country, so they don't have to ship individual orders far on average, and they have been building out their own shipping services (those Amazon trucks you see) as well as have the large-scale to make good deals with other shippers like UPS. All of that makes them less sensitive to USPS costs.
Amazon's large-scale logistics has led to huge value to consumers, though still slightly smaller sales than Walmart. But, these USPS price increases will probably make it even harder for smaller online businesses to compete with Amazon as we must either raise prices or lower profit to incorporate the higher shipping costs (though these changes are certainly not their fault).
We'll try to hold-off on price increases as long as we can, but this might be a good year to do a bit of early online shopping for the winter.
Here is an in-depth article on these USPS service changes from the Washington Post.