UPS teams up with Stamps.com to reduce friction for shippers

Dive Brief:

A new partnership between UPS and Stamps.com allows the postage seller's users to receive UPS rate quotes and discounted shipping through Stamps.com's platforms. Previously, shippers would need to obtain rates from UPS directly, Nick Basford, vice president of global retail and e-commerce strategy at UPS, told Supply Chain Dive.
The partnership is part of UPS' Digital Access Program, publicly launched Monday, which seeks to simplify logistics for small and medium shippers through partnerships with digital e-commerce players."[Shippers are] more and more looking for the whole of the shipping relationship to be a part of a broad software platform that they are using to power their e-commerce business, their webshops, their connectivity to their automation systems and their warehouse management systems and even to their payment programs," Basford said.
Shippers who source UPS shipping services through a Stamps.com platform will receive a discount of up to 55% off of daily rates, which is dependent on shipping volume among other factors. Such shippers may also be exempt from some fees and surcharges.

Dive Insight:

UPS and its competitors have long been searching for the silver bullet that will stoke brand loyalty among small and medium shippers. As e-commerce weaves its way into the fabric of modern consumption, large shippers use their size to negotiate large discounts. Smaller shippers, with less weight to throw around in negotiations, generally offer better margin business to carriers.

Stamps.com is the company behind e-commerce platforms ShipStation, ShippingEasy, ShipWorks, Stamps.com and Endicia. It has 740,000 subscribers across these platforms, many of which are considered smaller shippers. As e-commerce shipping speeds up, they may seek to move away from USPS and toward more premium services. Stamps.com ended its exclusive partnership with USPS early in 2019, naming a lack of 2-day service as part of the reasoning.

"Now you almost have two-day shipping as a norm and you have very, very strong growth in demand for next-day shipping ... Guaranteed speed is a big need now and that's what we're doing for e-commerce companies here with Stamps," said Basford.

UPS and Stamps.com have been working a collaboration for months, said Basford. The Digital Access Program is the umbrella for this partnership, along with recently announced collaborations with Shippo and Shopify. Basford described the program as a commercial model and a data model.

"It defines how we exchange data, which is a complicated agreement that we have with these organizations as well as then the pricing model," he said, adding more announcements are to come.

A recent UPS white paper lays out possible future partners across e-commerce functions, including web shopping carts and checkout and payment processing. E-commerce has moved into a new phase, which the carrier deems the "P latform Economy" where sellers are not necessarily retailers and they build their businesses on a suite of digital services or platforms.

With this move, UPS is looking to integrate shipping into these platforms to reduce friction for merchants. "Now, it is completely embedded with the platform and its seamless," said Basford.