In the fiercely competitive world of ecommerce, retailers are constantly seeking ways to meet sky-high customer expectations for fast, free, and reliable shipping. Consumers have become accustomed to the bar set by Amazon Prime, and expect all online purchases to arrive on their doorstep within a day or two at little or no cost. In fact, a staggering 88% of shoppers now expect free shipping when ordering a certain dollar amount online, according to Jungle Scout‘s 2023 Ecommerce Consumer Trends Report.
Meeting these demands is a huge challenge for small and midsized ecommerce businesses trying to compete with retail giants. The high costs and complexity of nationwide last-mile delivery make it difficult to balance speed and affordability. Major carriers like FedEx and UPS have steep surcharges and fees for residential deliveries, and most retailers can‘t afford to build out their own logistics networks.
Faced with these challenges, many online sellers are turning to an innovative solution: regional parcel carriers that partner with the U.S. Postal Service for cost-effective last-mile delivery. One of the pioneers of this model is OnTrac, a West Coast-based carrier that has been working with USPS since 2014 to offer fast, economical ground service to ecommerce shippers.
How the OnTrac-USPS Partnership Works
Founded in 1991, OnTrac has grown into the premier regional parcel delivery company in the Western United States, serving eight states that are home to over 65 million consumers:
- California
- Arizona
- Nevada
- Oregon
- Washington
- Utah
- Colorado
- Idaho
Within this territory, OnTrac has built an extensive network of 19 distribution centers and a fleet of over 1,400 trucks, capable of reaching the majority of the population with ground service in 1-3 days. However, the carrier recognized that building out its own last-mile delivery infrastructure to every residential address would be prohibitively expensive and inefficient.
Enter the U.S. Postal Service. USPS visits over 150 million homes and businesses across the country six days a week, and is legally obligated to serve every address regardless of location. The postal network‘s unmatched density makes it the perfect partner for final-mile residential delivery.
In 2014, after several years of piloting, OnTrac launched a program called DirectPost in collaboration with USPS. Here‘s how it works:
- Ecommerce retailers tender packages to OnTrac, which picks them up or receives them at a regional sorting hub.
- OnTrac consolidates the packages and transports them across its regional network, "zone skipping" to get them as close as possible to their end destination.
- Packages are handed off to USPS at the nearest Sectional Center Facility (SCF), Network Distribution Center (NDC), or Destination Delivery Unit (DDU).
- USPS handles the final delivery to the customer‘s door, PO Box, or other address.
By leveraging this unique partnership, OnTrac can offer shippers 1-3 day ground service to residential addresses across the West at rates competitive with USPS Commercial Plus Pricing. Packages receive a USPS tracking number and are scanned by both carriers at each step for end-to-end visibility.
Benefits for Ecommerce Retailers and Consumers
The OnTrac/USPS DirectPost service offers some compelling advantages for online sellers and their customers:
- Speed – Packages are delivered to most of the Western U.S. population in 1-3 days, often 1-2 days faster than FedEx or UPS Ground.
- Cost – Rates are based on weight and distance, with no residential or rural delivery surcharges that can add $4 or more with other carriers. This helps ecommerce businesses keep their shipping costs low.
- Flexibility – There are no volume minimums or commitments required, making DirectPost accessible to shippers of all sizes.
- Reach – USPS last-mile service reaches every address, PO Box, and military location that OnTrac doesn‘t serve directly, with Saturday delivery included.
- Tracking – Customers can check delivery status on either the OnTrac or USPS tracking websites, with both carriers scanning packages at each touchpoint.
- Insurance – $100 of shipping insurance is included at no extra charge on every package, with additional coverage available.
The end result is an economical, reliable way for ecommerce retailers to meet customer expectations for fast and free or low-cost shipping. Offering 1-3 day delivery as a free option can significantly reduce shopping cart abandonment rates. According to Baymard Institute, 48% of U.S. shoppers have abandoned an order because extra costs like shipping were too high.
Major online retailers have recognized the value of OnTrac DirectPost for reaching Western customers. Newegg, one of the largest electronics ecommerce sites, states that "DirectPost is a fast, reliable way for our customers to receive their orders" and offers it as a free economy shipping option. Another example is Overstock.com, which says that "OnTrac specializes in regional shipping and has partnered with the USPS for final delivery."
How DirectPost Stacks Up to the Competition
OnTrac‘s DirectPost service is part of a broader trend of regional carriers collaborating with USPS for final mile delivery. By focusing on a specific geographic area, these carriers can provide faster, more flexible service than the major national shippers at a lower cost. Here‘s how DirectPost compares to some competing services:
| Service | Delivery Area | Transit Times | Rates | Min. Volumes |
|---|---|---|---|---|
| OnTrac DirectPost | Western U.S. | 1-3 days | Varies, no residential fee | None |
| GLS Postal Select | Western U.S. | 2-4 days | Varies, no residential fee | None |
| LaserShip | Eastern U.S. | 1-3 days | Varies by zone, no fee | None |
| UPS SurePost | Nationwide | 2-7 days | Competitive w/USPS | None |
| FedEx SmartPost | Nationwide | 2-7 days | Competitive w/USPS | None |
As the table shows, OnTrac‘s transit times are on the faster end, particularly for shipments within the West Coast states that are its core market. Its rates also tend to be very competitive, since costs are based on USPS‘s zone-based pricing without typical carrier surcharges.
While national services like UPS SurePost and FedEx SmartPost also utilize the USPS last mile network, their delivery windows are much wider since packages often have to travel across multiple regions before entering the postal stream. The regional carriers offer more predictable delivery times for their coverage areas.
Potential Drawbacks and Considerations
As with any shipping service, there are some potential limitations and tradeoffs to be aware of with OnTrac DirectPost:
- Geographic restrictions – The service is only available for shipments originating and delivered within OnTrac‘s 8-state region. Shippers outside this area would need to use another carrier or transport packages to OnTrac‘s network.
- Delivery speed variability – While most DirectPost shipments are delivered in the 1-3 day window, actual transit times can vary based on the distance between the origin and destination and the specific days of tender and delivery.
- No guaranteed delivery dates – Unlike OnTrac‘s Express services, DirectPost does not include a money-back guarantee if the package is delivered after the expected date. The final delivery is in the hands of USPS and outside of OnTrac‘s direct control.
- Limited tracking visibility – After OnTrac hands off packages to USPS, they will typically receive fewer scans and tracking updates than when the parcels are in OnTrac‘s network. USPS‘s tracking may not be as detailed or frequent as the major carriers‘.
- Parcel size and content restrictions – Because packages go through the postal stream, they need to meet USPS size, weight, and content regulations. Items classified as hazardous materials, exceeding size limits, or requiring special handling may not be eligible.
Despite these considerations, the benefits of fast, cost-effective delivery for the vast majority of ecommerce shipments seem to outweigh the drawbacks for many online retailers. As the industry continues to evolve, regional carrier partnerships like OnTrac DirectPost are becoming an increasingly popular way to navigate the challenges of ecommerce logistics.
The Ecommerce Shipping Landscape in 2023 and Beyond
It‘s clear that the explosive growth of online shopping in recent years has put tremendous pressure on retailers and carriers to optimize their shipping networks. U.S. ecommerce sales reached a record $870 billion in 2021, according to the Census Bureau, and are expected to top $1 trillion by 2023. That‘s a lot of packages that need to get to customers‘ doors quickly and affordably.
At the same time, consumer expectations are higher than ever. The Amazon Prime effect has conditioned shoppers to believe that free, fast shipping should be the norm. In a 2022 survey by Ernst & Young, 47% of consumers said they expected orders placed by noon to qualify for next-day delivery, and 64% said they were more likely to make an online purchase if the retailer offered delivery speed options.
Meeting these expectations is an enormous financial and logistical challenge, especially for small and mid-sized retailers without the scale and resources of Amazon or Walmart. The major carriers have continued to raise their shipping rates at a rapid clip, with both FedEx and UPS increasing prices by 6.9% in 2023 while also expanding surcharges for residential deliveries, peak periods, and large packages.
Regional carriers like OnTrac have stepped up to provide a more flexible, cost-effective alternative through unique partnerships with the U.S. Postal Service. By combining their focused local delivery networks with the national reach and mailbox density of USPS, these carriers offer a win-win for ecommerce shippers and customers craving affordable 1-3 day delivery.
"The growth of ecommerce is driving demand for fast, reliable home delivery services," said OnTrac Chief Commercial Officer Mark Magill in a 2022 interview. "This is why we developed our USPS partnership for final-mile delivery years ago, to help our retail and ecommerce customers meet those expectations without breaking the bank."
Looking ahead, the macro trends driving ecommerce growth and shipping demand show no signs of slowing down. Retailers will need a diversified, decentralized mix of national, regional, and local delivery services to optimize their supply chains and maintain customer loyalty. Leading regional players like OnTrac and its DirectPost product are well positioned to play a key role in the ecommerce shipping ecosystem for years to come.
