PONY UP Act: USPS Could Be Paying for Late Deliveries
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Mail delivery has become increasingly unreliable, and lawmakers are taking action. Legislators have reintroduced the PONY UP Act, a bold legislative effort to address chronic delays in postal service by holding the United States Postal Service financially responsible for late deliveries. The proposal has sparked discussions across industries, particularly within the e-commerce sector, which relies heavily on timely delivery to meet customer expectations. If passed, the legislation could introduce new financial liabilities for USPS while reshaping the landscape for online sellers and consumers alike.
Understanding the PONY UP Act
Formally known as the “Penalizing Oversight Neglecting Your Universal Postal Service” (PONY UP) Act, this bill seeks to reimburse consumers for late fees incurred due to delayed USPS deliveries. Specifically, it would require USPS to cover penalties arising from tardy bill payments (e.g., that pesky $35 late fee when a credit card payment is not received on time) when the delay results from late mail service. The legislation is in response to many complaints about unreliable delivery service that has led to financial burdens for its users.
The regulation would apply to situations where a bill, notice, or payment was mailed with ample time to arrive before its due date but was delivered late. It also proposes an online and in-person claims process for reimbursement and an appeal mechanism for denied claims. Additionally, the legislation mandates annual reports on USPS delivery performance to improve transparency and oversight.
Why the PONY UP Act is Being Introduced
USPS has faced increasing scrutiny over delivery inefficiencies, particularly in rural areas, which have frequent delays. Audits have revealed significant lags in sorting and delivering mail. Reports cite instances of late medical payments, utility bills, and even time-sensitive shipments such as live poultry for agricultural businesses. These delays have led to growing frustration among consumers and businesses that depend on consistent delivery expectations for financial stability and operational continuity.
Legislators argue that the PONY UP Act will create a stronger incentive for USPS to prioritize service reliability. By attaching financial consequences to delivery failures, the bill aims to ensure that USPS meets its congressionally mandated six-day delivery obligation while providing relief to those negatively affected by missed service level agreements (SLAs).
Potential Impacts on E-Commerce
If the PONY UP Act becomes law, it could mean several things for the e-commerce industry, which relies heavily on USPS for daily business operations:
- Improved Delivery Performance: The prospect of financial penalties may push USPS to improve efficiency. Fewer delays translate to increased consumer confidence in delivery expectations for online purchases.
- Rising Shipping Costs: USPS may need to increase shipping rates to offset potential investments required to meet the expectations established by law. Those fees would be passed onto e-commerce businesses, pushing operational costs higher and creating margin pressure for merchants of small, light, and inexpensive items that are heavily reliant on USPS for affordable shipping solutions to turn a profit. They may be unduly forced to adjust product and pricing strategies and/or explore alternative carriers to remain viable.
- Greater Emphasis on Delivery Guarantees: Online retailers that depend on USPS’s Priority Mail and other expedited services may benefit from increased accountability, as USPS would be compelled to meet delivery SLAs. Late deliveries are rarely the result of late shipping. E-commerce businesses, as a whole, are very good at meeting their customers’ on-time shipping obligations. As the carrier’s delivery reliability increases, so does consumer trust, resulting in more online shopping and, thus, more growth and prosperity for the industry.
- Changes in Carrier Strategies: One e-commerce Seller told me, “Almost anything is better than USPS; I’m confident that a messenger pigeon is better than USPS.” As confidence in USPS increases, more merchants who had lost faith in the service and migrated to more reliable national carriers may reintroduce lower-cost USPS services to improve their profit margins.
Shipping and logistics are pivotal to the success of online retail, and any regulatory changes affecting USPS operations will inevitably profoundly impact the industry. Retailers and brands should monitor legislative developments and be prepared to adapt to potential cost increases or modifications to service levels.
Summary
The PONY UP Act is an effort to address longstanding issues with USPS delivery delays. It provides a mechanism for consumer protection while aiming to drive operational improvements. While primarily intended to target and remedy first-class mail service issues, its potential impact on e-commerce remains speculative. While increased accountability could enhance service reliability, shipping rate hikes could challenge Sellers dependent on affordable delivery options.
Written By:
Indy Pereria
Indy is the Head of People Operations at Cahoot, fosters innovation, develops recruitment strategies, and scales the company’s culture.
Up to 64% Lower Returns Processing Cost
2025 NMFC Changes for LTL Freight Shipments (Improved Classification)
The National Motor Freight Classification (NMFC) system was established in 1936 to standardize Less-Than-Truckload (LTL) shipping. It uses a uniform system for classifying commodities to ensure consistency and fairness in pricing and handling. The NMFC system is undergoing a significant transformation for the first time in decades. Starting July 19, 2025, the industry will begin a multi-phased shift to a predominantly density-based classification system to achieve greater clarity and efficiency for all stakeholders in the LTL supply chain.
Traditionally, the NMFC has evaluated freight based on 4 characteristics: density, stowability, handling, and liability. While comprehensive, this complex system leads to frequent misinterpretations and disputes between shippers and carriers (which can drag out for years). The 2025 update intends to streamline this process by using density as the primary means for classifying the vast majority of freight shipments, while the remaining 3 characteristics will be reserved for classifying only the more complicated commodities. Let’s look at each in more detail:
- Density refers to how much a shipment weighs compared to the space it occupies. Higher density typically results in a lower freight class and lower shipping costs because these shipments take up less space on a truck. For example, a small box of steel parts weighing 200 pounds in a small cubic space is denser than a large box of pillows weighing 200 pounds.
- Handling considers how easy or difficult it is to move freight. Heavy, fragile, oddly shaped, or hazardous items often require special handling, increasing the freight class and, thus, the cost. For example, a granite countertop may need extra care due to its weight and fragility, while a box of sand is easier to manage despite being dense.
- Stowability refers to how well the shipment fits in the carrier’s space (e.g., a 53-foot trailer). Again, size, shape, or transportation restrictions on certain items (e.g., hazardous materials) can make freight more challenging to load on a truck (think about a poorly played game of Tetris), leading to higher costs. For example, a shipment of pipes with irregular protrusions may leave unusable gaps in the truck. In contrast, neatly packed boxes fit more efficiently, allowing for the truck to move more items in a given move from point A to point B.
- Liability measures the risk associated with the goods, including susceptibility to damage, potential to harm other goods, perishability, and/or hazardous considerations. For example, a shipment of fresh produce is perishable and requires more careful handling and faster transit than a carton of vitamins, which is durable and lower risk.
Key Changes Coming in 2025
The new NMFC structure introduces several significant changes, notably the expansion of the density scale. Moving from 11 subprovisions to 13, the system now includes classes 50 and 55 for heavy, dense products. Approximately 5,000 commodity listings will be affected, with an estimated 3,500 single-class items moving to the new subcategories.
The updated classification system maintains all 4 of the transportation characteristics. Still, as noted above, it aims to simplify the classification process by defaulting to density-based classification when NO special handling, stowability, or liability concerns are known. In addition, products requiring special consideration will be marked with a new unique identifier, making it easier to identify freight that needs additional attention.
The transition begins with the public release of Docket 2025-1 on January 30, 2025, and the final implementation becomes effective on Saturday, July 19, 2025. Docket 2025-1 is the list of NMFC codes considered for class changes based on the new density scale (nearly 40%). Once the list is finalized, changes will be made before the effective date.
Impact on Shippers and Third-Party Logistics (3PL) Companies
The simplified system should make identifying the correct freight classes for most shipments easier but still rely on accurately measuring and reporting “handling unit” dimensions and weight (pallet length, width, height, and weight) used to calculate density. In short, Shippers and 3PLs can multiply length x width x height in inches, divide by 1,728 to convert cubic inches to cubic feet, and then divide the shipment weight by the cubic feet to determine pounds per cubic foot (PCF). Don’t forget to include the ~6-inch height and ~30-pound weight of the pallets. Carriers will still remeasure/reweigh and reclass/rebill for underreported shipment details.
Preparing for the Transition
To prepare for these changes, organizations should:
- Train Personnel: Educate staff on density calculations and measurement techniques. Providing training in advance will help reduce errors.
- Start Now: Begin creating shipments with accurate dimensions and weights now (if it’s not already being done), so it becomes second nature and prevents tendering delays later.
- Assess Current Shipping Pricing: Evaluate historical shipment pricing and contact carriers to identify areas where the updated density-based classifications might affect pricing.
- Implement Reliable Processes: Establish workflows to ensure every shipment is measured, weighed, and documented correctly before leaving the dock. Documenting shipments early could help resolve disputes more quickly.
Summary
While the initial transition may present challenges, the long-term benefits of modernizing the NMFC system may be considerable. The simplified, standardized approach should reduce classification errors (and thus, disputes), improve and quicken communication between parties, and create a more efficient LTL shipping workflow. Future dockets beyond 2025-1 will continue to refine the system, particularly for freight with specific handling, stowability, or liability requirements. Guidance on the timing of future dockets (NMFC improvements) has not been announced.
Written By:
Indy Pereria
Indy is the Head of People Operations at Cahoot, fosters innovation, develops recruitment strategies, and scales the company’s culture.
Up to 64% Lower Returns Processing Cost
Amazon FBA Reimbursement Changes Threaten Seller Payouts Starting March 2025
Amazon recently announced that Fulfillment by Amazon (FBA) fees would be frozen for 2025 in the US, and no new fees would be introduced. But in classic Amazon sleight of hand, they’ve made a move that allows them to stay true to their word while still improving their bottom line.
Starting March 10, 2025, Amazon will implement changes to its Fulfillment by Amazon (FBA) Inventory Reimbursement Policy, specifically, how they will pay out claims for lost or damaged inventory. The new plan is to start reimbursing Sellers the Manufacturing Cost for each item rather than the current reimbursement rate equal to the Amazon Sale Price. Manufacturing Cost is defined as the cost of sourcing a product from a manufacturer, wholesaler, or reseller, excluding expenses like shipping, handling, and customs duties. Some estimate that this change could slash reimbursements by as much as 60% on average, posing a substantial loss for FBA Sellers that rely on their new condition inventory to make new sales and earn new customers. The policy page will be updated to reflect the changes after the policy goes into effect in March.
Unfortunately, there is little that can be done other than to take prompt action between now and the transition date to maximize the reimbursements owed under the current policy.
The New Calculation
Amazon offers two ways to determine Manufacturing Costs:
- Amazon Estimates: Amazon will determine cost based on a comprehensive evaluation of comparable products sold by Amazon and competitive Sellers.
- Seller-Provided Costs: Starting January 2025, sellers can configure their manufacturing costs through a new “Manage Your Manufacturing Cost” page in the Inventory Defect and Reimbursement Portal. Amazon reserves the right to ask for proof to validate the amount.
It’s worth noting that the new payout rate applies to items that are lost or damaged before the item is sold on Amazon’s store. Items that are lost or damaged after a customer places an order will continue to be reimbursed at the Amazon Sales Price minus applicable fees.
While Amazon now offers automatic reimbursements for eligible items to save Sellers the time it takes to submit a claim, this new payout rate represents a substantial financial change. Thus, keep a keen eye on inventory status and submit claims promptly, or risk losing the opportunity to collect reimbursement at the current 2024 rate and safeguard entitled revenue.
The Losses Add Up
Some reports estimate that reimbursements can account for 1 – 3% of most Sellers’ revenue. With payouts dropping by 60% or more, even smaller Sellers stand to lose tens of thousands of dollars annually—more if they sell in high-value categories or products prone to pre-fulfillment damage.
New Administrative Burden
Sellers must now provide (and continuously manage) accurate manufacturing costs on new Seller Central screens to avoid discrepancies and limit inevitable disputes with Amazon. The alternative is accepting Amazon’s determination of value, which will not likely be a favorable number.
Time-Sensitive Claims
Reimbursement claims for lost or damaged items must be filed within 60 days of the reported loss or damage. Delays in filing claims could result in missed reimbursements.
To maximize recaptured value, Sellers should take the following steps:
- File Claims Before the Deadline: Sellers must prioritize filing eligible claims ahead of the March 10 deadline to receive reimbursements based on the Amazon Sale Price.
- Use Tools and Technology: Advanced auditing tools, such as those provided by GETIDA, can automate most identification and submission work. They can also help identify overlooked claims, ensure compliance, and maximize reimbursements.
Optimize Manufacturing Cost Reporting
Starting January 2025, Sellers should:
- Use the “Manage Your Manufacturing Cost” page to input accurate costs.
- Regularly review and update cost data to reflect market changes.
- Prepare necessary documentation to support cost claims to expedite the reporting updates.
Summary
Whether you’re a veteran at this and have ample experience regularly submitting claims or haven’t gotten around to it yet, Amazon’s upcoming FBA Inventory Reimbursement Policy changes will hurt Sellers through reduced payout amounts–to tens of thousands of dollars on average. We shouldn’t be surprised that Amazon announces no FBA fee increases for 2025 but then reduces payouts that will dramatically affect the bottom line of its third-party Sellers. Different sides of the same coin. But predictable. And there’s no shortage of stories going further back.
All e-commerce retailers should diversify their fulfillment strategies and have FBA alternatives in place when Amazon exercises its whim and throws its “partners” under the bus again. It’s a matter of when, not if.
Learn more about Cahoot e-commerce order fulfillment services to protect your business from monopolies like Amazon.
Written By:
Indy Pereria
Indy is the Head of People Operations at Cahoot, fosters innovation, develops recruitment strategies, and scales the company’s culture.
Up to 64% Lower Returns Processing Cost
Amazon Warehouse Workers Across 8 Facilities Now On Strike
Labor tensions between Amazon and its workforce have escalated in recent years as allegations of unsafe working conditions have been made public, along with a growing interest among employees to unionize and organize labor under a collective bargaining agreement to improve workplace safety and align compensation with current market rates. After Amazon allegedly failed to respond to a Teamsters request to “come to the table” by Dec 15, 2024. The Teamsters approved a strike and 7 out of 10 unionized facilities took to the picket line representing the “largest strike against Amazon in U.S. history,” targeting major delivery hubs in New York, Georgia, Illinois, and California.
Thirteen (13) months after sending an open letter to Amazon CEO Andy Jassy in June 2023 regarding investigations into the working conditions at the e-commerce giant’s facilities, (and a call for Amazon employees to come forward with stories), the Senate Health, Education, Labor, and Pensions (HELP) Committee led by Chair, Senator Bernie Sanders, of Vermont (I), published a report titled “PEAK SEASONS, PEAK INJURIES: Amazon Warehouses Are Especially Dangerous During Prime Day and the Holiday Season—and the Company Knows It”.
The report describes just how bad the rate of recordable injuries is (10 out of every 100 workers) and goes on to indicate that 10% is more than double the industry average injury rate over the last seven years. If all injuries reported by employees were considered, (not just the ones required to be submitted to OSHA), the injury rate is closer to 50%! It’s no wonder employees in many facilities have been wanting to unionize and negotiate better working conditions, despite Amazon’s well-publicized efforts to thwart unionization attempts.
Workplace Safety Concerns and Senate Allegations
Amazon faces sharp criticism from workers and drivers alike over its workplace safety practices. The HELP Committee’s investigation uncovered alarming data regarding the company’s warehouses. The report alleges that Amazon prioritized productivity over safety, creating a “uniquely dangerous” environment. Internal company studies, such as Project Elderwand and Project Soteria, identified that high rates of repetitive motions led to elevated injury risks. The latter study even showed that injury rates dropped when speed-based disciplinary measures were temporarily suspended during the pandemic (i.e. when allowed to work at a slower pace, risk for injury went down).
Despite these findings, Amazon reportedly rejected safety recommendations that would reduce productivity, alleging that the company manipulates injury data to obscure risks. Additionally, workers reported being discouraged from seeking external medical care, and some were terminated while on approved medical leave.
Amazon has dismissed these findings as outdated and selective examples unrepresentative of the whole. The company cites improvements in workplace safety and claims a 28% reduction in incident rates since 2019. However, these assertions have done little to deter criticism from lawmakers and labor organizers.
Amazon Workers Path to Unionization
Unionization efforts at Amazon gained meaningful momentum in 2022 when workers at the Staten Island, NY warehouse voted in favor of organizing labor. Then in June 2024, the Amazon Labor Union (ALU), which led the Staten Island push, successfully affiliated with the International Brotherhood of Teamsters (IBT), consolidating the movement and enabling more resources to further their goals. The new partnership also enabled the ALU to leverage the Teamsters’ extensive resources to target multiple facilities simultaneously. Today, the Teamsters represent approximately 10,000 Amazon workers and contractors across warehouses, delivery hubs, and air facilities.
Financial Context and Broader Implications
As the second-largest private employer in the United States, Amazon’s practices have far-reaching implications for workplace standards in the online retail and logistics sectors. Internationally, Amazon’s labor policies have also come under scrutiny. For example, German workers represented by the United Services Union announced strikes alongside the American workers to show support and solidarity.
Summary
The strikes last week represent a critical juncture in the ongoing labor struggle between Amazon and its workforce. While the coordinated pickets disrupted some fulfillment and warehousing operations, Amazon asserts that on-time delivery remains unaffected. Participation levels varied, with some sites seeing dozens of picketers while others reported normal activities. The Teamsters claim “thousands” of members are currently on strike and have vowed to expand their efforts, threatening to picket additional facilities if their demands continue to be ignored.
Meanwhile, legislative efforts, including Senator Sanders’ proposed Warehouse Worker Protection Act and Protecting America’s Workers Act, aim to address safety and accountability issues at companies like Amazon. If passed, these proposals would increase transparency around work quotas and impose stricter penalties for safety violations.
Amazon’s resistance to unionization reflects broader tensions in a digital economy where traditional labor protections often clash with new business models. And as organized labor continues to push back against one of the world’s most influential companies, the outcome of these unionization and labor strike efforts could reshape labor relations far beyond the e-commerce and logistics industries, potentially extending to manufacturing and other assembly line-like workflows.
Written By:
Indy Pereria
Indy is the Head of People Operations at Cahoot, fosters innovation, develops recruitment strategies, and scales the company’s culture.
Up to 64% Lower Returns Processing Cost
UPS Announces Astonishing SurePost Rate Increases for 2025
UPS SurePost is a hybrid delivery service that integrates UPS’s network with USPS’s extended final-mile reach and capabilities. It’s a partnership between two competitors playing to each of their strengths to achieve greater cost efficiency, and it’s set to undergo notable changes in 2025. In particular, the primary benefit of SurePost, the lower cost of getting packages into the hands of their intended recipients, will see a substantial rate hike and service modifications in 2025, marking a profound shift in what ecommerce shippers have come to expect from the service. Understanding these developments is crucial for merchants to adapt their operations and optimize margins next year.
Key Changes to UPS SurePost Rates in 2025
Starting January 13, 2025, packages weighing 1 to 9 pounds will see a 9.9% price increase, while those weighing 10 to 70 pounds will increase 5.9 to 7.1%. Additionally, surcharges for deliveries to less densely populated areas will increase dramatically. The Delivery Area Surcharge (DAS) will rise 61.8% to $6.15, and the Extended Delivery Area Surcharge will climb a whopping 69.4% to $8.30. These changes reflect the broader trend of rising costs of last-mile delivery services.
In addition to these changes, the U.S. Postal Service will discontinue the allowance of dual shipping labels starting January 1, 2025, as it looks to increase its network’s efficiency and gain more direct customers for USPS Ground Advantage Services, which has a faster delivery SLA than SurePost by ~2 days on average. This will limit UPS’s package routing flexibility which currently allows them to decide which agency will deliver the package to the doorstep much later in the sortation workflow. Now, shippers must use labels that indicate the responsible final mile delivery agent when the package is accepted for processing.
Comparisons Across National Carriers
UPS’s SurePost fee changes align with what we see in the broader shipping industry. USPS will increase rates for its Parcel Select service by an average of 9.2%, depending on where the package enters the postal network, while its Ground Advantage service will rise by 3.2% for commercial accounts. FedEx is implementing various surcharges and rate adjustments, including a new $1.50 inbound processing fee, expanded fuel surcharges to include address correction and dangerous goods, and implementing their own DAS price increases. So, although UPS’s SurePost increases are significant, they reflect all the national carriers’ efforts to address rising operational costs and align pricing with market demands.
Implications for E-commerce Merchants
All shipping rate hikes pose challenges for e-commerce businesses, particularly those with razor-thin margins that rely on lower-cost carrier services to operate profitably. In many cases, the increased shipping costs trickle down to the consumer through higher pricing because online retailers cannot shoulder the entire burden. We may eventually observe altered consumer spending behavior, forcing Sellers to find new opportunities to reduce costs and return the business to healthy and sustainable margins.
Strategic Adjustments for Merchants
Several strategies could be employed to help reduce shipping costs:
- Shipping Cost Analysis and Carrier Negotiations: Conduct a detailed shipping cost analysis to identify order distribution across the product catalog and which SKUs, customers, regions, channels, etc., will contribute to increased cost. Use the data to adjust the carrier/service mix, matching delivery date promises with carrier/service SLAs and pricing. Identify opportunities to negotiate carrier contracts to reduce shipping costs in other areas, such as different package sizes, weights, variances, zones, and alternative delivery services, to minimize the impact of the new rate changes (or explore alternative carriers and services in particular, regional carriers that are trying to compete with the large national carriers to gain market share).
- Shipping Optimization: Leverage technologies such as next-generation shipping label software for AI-assisted rate shipping, automatically creating optimal shipping labels and optimizing fulfillment across inventory locations (in and out of the ‘network’).
- Free Shipping Adjustments: Retailers offering free shipping may either need to raise minimum order thresholds to balance customer expectations with the new financial realities or, as mentioned above, intelligently merge the new overall expected transportation cost into the complete product catalog pricing to minimize or offset the financial burden.
- Packaging Optimization: Review packaging (boxes, mailers) and void fill (air cushions, paper) pricing and optimize for smaller packages and less void fill where possible. Also, shift to less expensive padded mailers. Use intelligent cartonization software to pack shipments efficiently to reduce carrier shipping costs and packaging waste. Negotiate with packaging suppliers and consider taking larger deliveries less frequently or pre-buying supplies to take advantage of volume/commitment discounts.
Summary
As carriers adjust to ever-rising costs by updating their fee structures and passing costs on to their customers, e-commerce brands and retailers must also determine how to manage the rising costs by cutting elsewhere or passing all or part of the costs further to their customers.
The last-mile delivery space is continuously evolving as new solutions are brought to market and innovations applied to existing technologies and services continue to mature. There are a dozen prominent regional carriers that could help reduce shipping costs for some percentage of shipments. Or, consider partnering with fulfillment experts to distribute the high-volume inventory and capture meaningful margin savings by shipping orders from warehouses closer to the customer.
In any case, one thing is clear…costs continue to rise year after year, and the solution isn’t one-dimensional. To stay competitive and grow a successful online commerce business, there needs to be a fundamental shift in how e-commerce order fulfillment and reverse logistics are managed.
Written By:
Indy Pereria
Indy is the Head of People Operations at Cahoot, fosters innovation, develops recruitment strategies, and scales the company’s culture.
Up to 64% Lower Returns Processing Cost
How AI Agents Will Transform Ecommerce Order and Inventory Management Systems
Knowledge workers have their work cut out for them. The advent of Artificial Intelligence (AI) Agents represents a revolutionary leap in technological innovation and will transform how businesses operate across every sector. They are highly specialized applications built from a foundation of Large Language Models (LLM) and Natural Language Processing (NLP) capabilities (think ChatGPT or Llama by Meta AI), but instead of just returning an answer from a huge database of content built from webpages in the public domain, they can understand private, proprietary data and then “act” on the initial result to complete a workflow or achieve an outcome. These AI agents also leverage machine learning models to optimize various processes within ecommerce systems.
“Act” is the key word. AI Agents take autonomous action on the user’s behalf to complete the task or achieve the desired outcome. So, knowledge workers will either need to learn to harness the power of AI to 10X their output (or the output from the tools at their disposal), or AI agents will take over those jobs at a fraction of the cost. Being able to understand how these new tools work and marshal them in the right direction will be critical to gaining an early edge in the retail market and then staying there.
Ecommerce Order and Inventory Management Systems are already starting to incorporate AI agents to evolve these SaaS platforms into back-office powerhouses (unlike anything that has come before) that will do a better job, do it faster, and achieve lower overall costs for the business. Examples include:
1. Best-in-Class Demand Forecasting
Predict demand with remarkable accuracy. Merchants have historically used unsophisticated data analysis tools and methods that led to unreliable forecasts, but typically some kind of guesses were better than no guesses at all. But modern Inventory Management Systems (IMS’s) using AI agents can analyze many millions of historical sales data points, current inventory on hand, and real-time market trends and supply chain issues to make intelligent forecasts to avoid stockouts and tying up capital in overstock.
2. Automatic [Humanless] Procurement
AI agents can automatically create Purchase Orders with vendors at precisely the right time based on current inventory on hand using demand forecasts that include vendor lead times and transit times that consider real-time ocean freight availability, holidays such as Chinese New Year, weather conditions, port strikes, etc.
3. Optimize Fulfillment Costs
Modern AI-enabled shipping software takes the thinking out of shipping label creation by removing the human and creating the optimal shipping label in the smallest packaging (box, mailer) that will deliver the order safely and on time, every time. It tells the warehouse staff which packaging the label was created for and tracks the packaging quantity on hand with reorder points. AI-assisted Order Management Systems (OMS’s) can monitor weather conditions and assign orders to fulfillment centers that are more likely to deliver them on time. See how much you can save.
4. Eliminate Returns and Reclaim Revenue Faster
It’s critical to manage returns effectively (especially for the highest return rate categories such as women’s apparel), and frequent shoppers/returners typically represent the customers with the highest lifetime value. So it’s important to take care of them. If an exchange or store credit is declined by the customer and a return is the only option, groundbreaking new returns technologies such as the Cahoot Peer-to-Peer Returns Solution are already eliminating returns altogether by enabling the return to be graded, approved, and quickly shipped by the customer—but not back to the warehouse. The shipping label delivers the item directly to the next customer, saving merchants significant money and time. AI detects the product’s condition by picture and automatically lists acceptable items at an open box discounted price, all without human oversight.
5. Dynamic Pricing Strategies
AI agents can monitor competitor pricing and compare it with unique and repeat page views, sell-through rates, and unit quantity available to make real-time pricing adjustments that convert the sale while maximizing profitability and remaining competitive. Add a real-time discount incentive if an item is added to the cart. And, these personalized interactions not only drive sales, but also foster loyalty.
AI Glossary for Ecommerce Sellers
Agentic AI – AI systems capable of autonomous decision-making and action-taking to complete workflows without human intervention.
Artificial Intelligence (AI) – The simulation of human intelligence in machines, enabling them to learn, reason, and solve problems.
Chatbots – AI-driven virtual assistants that engage with customers, answering queries and processing orders independently, and enhancing the speed of customer service.
Computer Vision – AI technology that enables machines to interpret and analyze visual data, often used in automated product recognition and return processing.
Deep Learning – A subset of machine learning that uses neural networks to process vast amounts of data and improve decision-making over time.
Dynamic Pricing – AI-powered pricing strategies that adjust in real time based on competitor pricing, demand fluctuations, and customer behavior.
Generative AI – AI models, such as ChatGPT or Llama, that create human-like text, images, or other content based on patterns in existing data.
Large Language Model (LLM) – A type of AI model trained on massive datasets to understand, generate, and process human language. LLMs power chatbots, content creation, and decision-making in AI-driven systems.
Machine Learning (ML) – A branch of AI that enables systems to learn from data, identify patterns, and improve performance without explicit programming.
Natural Language Processing (NLP) – AI’s ability to understand and generate human language, crucial for chatbots, search optimization, and automated customer interactions.
Predictive Analytics – AI-driven forecasting models that analyze past and real-time data to predict future demand, trends, or customer behavior.
Reinforcement Learning – An AI training method where models improve by learning from feedback and rewards, often used in logistics and order fulfillment optimization.
Robotic Process Automation (RPA) – AI-driven software that automates repetitive tasks such as data entry, order processing, and inventory updates.
Smart Inventory Management – AI-enhanced systems that optimize stock levels by analyzing sales trends, supply chain disruptions, and lead times.
Supply Chain Optimization – AI-driven analysis of logistics, vendor performance, and demand forecasts to reduce costs and improve efficiency.
Z-Score in Inventory Management – A statistical measure used in AI-driven stock calculations to quantify the risk of stockouts and determine optimal safety stock levels.
Summary
Agentic AI is here, and the transformative power of the technology extends way beyond mere automation rules and logic trees. Some people are worried about how this new technology will replace jobs, and they should be. But it can’t take over all higher-level jobs. At least in the near term, people are still needed to build and direct the agents to work on the problems that will improve business outcomes.
It’s an extremely exciting time in history, and particularly for the ecommerce industry. As ecommerce businesses embrace these advancements and the powerful tools that emerge (such as the Order and Inventory Management agents described above that can dig deep into the data and deliver precise forecasting, intelligent automation, and lower operational costs), they will not only streamline their operations but also build the agility needed to thrive in an increasingly complex and competitive industry.
Frequently Asked Questions
How does AI improve ecommerce order and inventory management?
AI enhances order and inventory management by leveraging advanced machine learning models to automate procurement, optimize fulfillment costs, and provide highly accurate demand forecasting. AI-powered systems analyze real-time data, market trends, and logistics variables to ensure businesses maintain optimal stock levels while reducing costs.
Can AI help reduce ecommerce returns?
Yes, AI-powered return management solutions can assess product conditions through images, automate grading, and even facilitate peer-to-peer returns, eliminating unnecessary warehouse processing. By dynamically adjusting pricing and providing personalized recommendations, AI also minimizes returns by helping customers make better purchasing decisions.
What role does AI play in ecommerce shipping and logistics?
AI optimizes shipping by determining the most cost-effective delivery routes, selecting the best packaging for safe transport, and dynamically adjusting order fulfillment locations based on real-time weather conditions and demand trends. This leads to lower shipping costs and faster deliveries.
How does AI enable dynamic pricing strategies in ecommerce?
AI continuously monitors competitor pricing, consumer demand, and inventory levels to adjust prices in real time. This ensures competitive pricing while maximizing profitability. AI can also trigger personalized discounts when a customer adds an item to their cart, improving conversion rates.
What are the key benefits of AI in supply chain management for ecommerce businesses?
AI-driven supply chain management improves demand forecasting, automates procurement, enhances logistics, reduces operational costs, and mitigates risks from supply chain disruptions. These efficiencies translate to higher profitability, faster delivery times, and improved customer satisfaction.
Written By:
Indy Pereria
Indy is the Head of People Operations at Cahoot, fosters innovation, develops recruitment strategies, and scales the company’s culture.
Up to 64% Lower Returns Processing Cost
Are Free Customer Returns Coming to An End?
The era of free ecommerce returns is undergoing increasing scrutiny as many retailers reassess and adjust their return policies as they face mounting financial pressures, environmental concerns, and changing consumer behaviors. Once a hallmark of customer convenience, free and unlimited returns became the cornerstone upon which customer trust and loyalty was earned and purchases derisked. Now, these retailers are part of a growing trend where about 40% of retailers are now charging return fees, up from 31% in 2022, according to Narvar research. This shift could redefine the industry, marking a pivotal moment in the relationship between online shoppers and retailers.
The Financial Burden of Returns
Returns have become one of the most challenging financial burdens in e-commerce. Projections for 2024 suggest U.S. retailers will endure losses exceeding $100 billion annually due to returns, contributing to an estimated $890 billion global economic impact. Processing returns often incurs costs surpassing 30% of the product’s original price, encompassing transportation, restocking, and operational expenses. Seasonal and rapidly obsolescent items, as well as items damaged in transit, further exacerbate these losses and erode profitability, compounding the financial strain.
The rapid growth of ecommerce through the pandemic has intensified this issue, but now that the online shopping rate is returning to the mean, the returns rate hasn’t followed suit. Categories such as apparel and electronics are particularly affected where sizing issues and unmet expectations drive higher returns.
The Environmental Impact
Beyond financial implications, the environmental impact of returns is staggering. In the United States alone, returned goods generate an estimated 9.5 billion pounds of landfill waste annually and contribute 24 million metric tons of carbon dioxide emissions. Many returned items cannot be resold as new, often ending up in liquidation channels or being discarded entirely. This unsustainable cycle is prompting retailers to factor eco-friendly considerations into their return strategies.
Evolving Returns Policies
To mitigate these challenges, retailers are tightening return policies. Strategies include shorter return windows, fees for mail-in returns, and restocking charges. Leading brands like American Eagle, DSW, and H&M are at the forefront of these changes, signaling a departure from lenient practices of the past (see a larger list of retailers charging e-commerce return fees in December 2025, which is by no means exhaustive, at the bottom of this article). Even Amazon started charging $1 for certain return types.
Some retailers are also exploring innovative solutions to mitigate return rates. Technologies like augmented reality (AR) and virtual try-on tools aim to improve purchasing accuracy, reducing the likelihood of returns. Enhanced product descriptions, interactive sizing guides, and AI-driven recommendations are further helping customers make more informed choices.
Another emerging trend is the adoption of “returnless refunds,” where customers are allowed to keep items that are not economically viable to process as returns. While this reduces logistical costs, it raises questions about waste and sustainability, as well as abuse by bad actors, highlighting the need for balanced approaches. But there are very real instances where the “Keep It” approach makes sense. Low-cost/low-margin items, for example. Or, when there are sanitary concerns and items cannot be resold; such as food, undergarments, and pillows.
Avoid Policies That Are Too Strict
Many online stores are simultaneously making their return rules stricter to stave off returns fraud. They might ask for proof of purchase, shorten the return window, or create tough return conditions. While this sounds like a good way to prevent financial losses, it often backfires.
Customers really care about how easy it is to return things. If a store makes returns too difficult, many shoppers will simply stop buying from that store. These practices may be intended to deter wardrobing and bracketing that lead to returns without question, but they frequently alienate customers by failing to account for shopping histories and past loyalty. Plus, people get frustrated when returns are complicated, take too long, or seem unfair. Even customers who used to love a brand might walk away if they have a bad return experience. And inconsistent policy enforcement undermines trust and deters repeat purchases, even among previously loyal customers.
The good news is that stores can protect themselves from fraud without pushing customers away. The best approach is to use smart technology to understand different types of customers, monitor patterns, etc. Some shoppers return items more often than others, but that doesn’t mean they’re trying to cheat the system. By creating flexible return policies that treat loyal customers well, stores can actually make more money in the long run. The key is finding a middle ground. When stores get this right, customers feel valued and are more likely to maintain brand affinity.
Aligning Customer Expectations and Merchant Realities
While consumers remain attached to the convenience of free returns, their expectations are gradually adapting to new retail realities. Surveys reveal that flexibility and transparency are more valued than free returns. Clear communication about return policies, quick refund processing, and multiple return options are becoming critical components of the post-purchase experience, and ultimately, customer satisfaction. And when return fees are employed, the key is to make them reasonable; perhaps introduce them slowly and increase them over a long period of time.
Retailers are also leveraging behavioral insights to enhance return strategies. The “refund effect”, where customers receiving swift refunds are more likely to make additional purchases, is a key consideration. By optimizing refund processes such as offering incentives for exchanges, or offering gift cards that have a slightly higher value than the original purchase to keep the item, rather than return it, retailers can retain customer loyalty while mitigating costs.
A Balanced Approach
The future of ecommerce returns lies in finding equilibrium between consumer convenience and economic sustainability. Retailers are expected to continue refining policies, potentially introducing tiered return structures where loyal customers or higher-value purchases receive more lenient terms. Technologies that predict return likelihood based on purchase history or provide real-time feedback during the buying process may further reduce return rates.
Environmental sustainability will also play a more prominent role in shaping returns strategies. Partnerships with recommerce platforms, investments in circular economy initiatives, and improvements in reverse logistics can help align business objectives with environmental responsibility.
A Sustainable Path Forward
The e-commerce return ecosystem is not collapsing but evolving toward greater efficiency and balance. Retailers are navigating a delicate path, aiming to uphold customer satisfaction while safeguarding profitability and addressing ecological concerns. The era of unrestricted, free returns is giving way to a more nuanced model that prioritizes thoughtful consumption and sustainable practices.
As this transformation unfolds, the key to success will lie in innovation, transparency, and adaptability. By embracing these principles, retailers can forge stronger connections with consumers while fostering a more sustainable and economically viable future for e-commerce.
Table 1. Returns Fees Charged by Well-Known Retailers in December 2024.
| Retailer/Brand | Returns Fee |
| Abercrombie & Fitch | All customers: $7.00 |
| American Eagle Outfitters | All customers: $5:00: (excluding specific categories) |
| boohoo | All customers: $6:00 |
| Dillard’s | All customers: $9.95 |
| DSW | Non-Members: $8.50; Gold or Elite members: Free |
| H&M | Non-Members: $5.99; H&M Members: $2.99 |
| JCPenney | All customers: $8.00 |
| J.Crew | All customers: $7.50 |
| Kohl’s | All customers: Kohl’s does not pay return shipping costs |
| Macy’s | Non-Members: $9.99; Star Reward Members: Free |
| Oh Polly | All customers: From $2.99 for store credit to $9.99 |
| PrettyLittleThing | All customers: $7.00 |
| REI Co-op | All customers: $7.99 |
| Saks Fifth Avenue | All customers: $9.95 |
| T.J. Maxx | All customers: $11.99 |
| Urban Outfitters | All customers: $5 |
| Zara | All customers: $4.95 |
Written By:
Indy Pereria
Indy is the Head of People Operations at Cahoot, fosters innovation, develops recruitment strategies, and scales the company’s culture.
Up to 64% Lower Returns Processing Cost
Amazon’s New Shipping & Delivery Policies, Key Changes and Their Implications
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6 minutes
Amazon continues to set the pace for customer satisfaction and delivery expectations. As we approach the latter half of 2024, Amazon is rolling out significant changes to its shipping and delivery policies that will impact Sellers across the platform. These updates aim to enhance the customer experience by ensuring faster, more accurate delivery times while also providing tools and guidance for Sellers to meet these new standards. Let’s dive into the key changes and what they mean for Amazon Sellers.
The Importance of On- Time Delivery
Amazon’s focus on fast and accurate delivery is not new, but it’s becoming increasingly important to the marketplace operator. It’s well known that the delivery speed and reliability of the delivery date expectation set during checkout are major factors in customers’ purchasing decisions. To meet this expectation, Amazon will be rigorously enforcing a new on-time delivery rate (OTDR) policy that will directly affect Sellers’ ability to list products on the marketplace.
Starting September 25, 2024, Sellers will need to maintain a minimum 90% OTDR without promise extensions to continue listing seller-fulfilled products on Amazon.com. This policy change underscores the importance of reliable shipping practices and puts the onus on Sellers to meet customer expectations. For optimal performance, Amazon recommends maintaining a 95% or higher OTDR for all seller-fulfilled orders.
It’s worth noting that this policy doesn’t apply to Fulfillment by Amazon (FBA) orders where Amazon is responsible for meeting delivery promises. However, for Sellers managing their own fulfillment, this change could have significant implications.
Updates to Transit Time Settings
To help improve OTDR and the reliability of delivery date promises made to customers, Amazon is reducing the number of transit days allowed for both Standard and Free Economy shipping options in shipping templates.
Some Sellers may have already noticed an update to the transit time requirements which became effective August 25, 2024. For Sellers shipping from the continental United States (excluding Hawaii, Alaska, and US territories), the maximum transit time allowed for Standard Shipping has been reduced to 5 days, while Free Economy shipping will have a maximum of 8 days.
There’s an important caveat for media items such as books, magazines, and DVDs. These products will continue to have a maximum transit time of 8 days for Standard Shipping. Sellers should pay close attention to their product categories to ensure compliance with these new transit time limits.
For those offering Free Economy shipping, Amazon has already adjusted max transit times in shipping templates from the previously allowed 5 to 10-day range to the new 4 to 8-day requirement. While no action is required from Sellers, they continue to have the option to disable Free Economy shipping if they prefer not to offer this service within the new timeframe.
Introduction of Automated Handling Time
Perhaps the most significant change for many Sellers will be the introduction of Automated Handling Time (AHT), set to take effect on September 25, 2024. AHT will use historical shipping data to set more accurate handling times for each SKU based on how long a Seller has typically taken to ship it in the past. For new products without historical data, AHT will default to the manually configured handling time.
This automation aims to provide customers with faster and more accurate delivery date estimates, potentially leading to increased sales for Sellers. However, it also means that Sellers will need to consistently meet these handling time expectations to maintain an acceptable OTDR. AHT will automatically take Order Handling Capacity into account (the maximum number of orders that have been fulfilled in the past 90 days) and adjust delivery promises to reflect longer handling times accordingly; the objective is to avoid overburdening Sellers with shorter handling times that cannot be met.
This feature will be automatically enabled for Sellers who currently have a handling time gap of 2 days or more compared to their actual shipping performance (Sellers can find their current handling time gap here). AHT is already available in the Order Handling Settings for Sellers that want to test how the new setting will affect their fulfillment workflows in advance of the September 25th obligation.
It’s important to note that handling time only considers business days, excluding weekend days unless weekend operations are intentionally enabled in Order Fulfillment settings.
AHT for Seller Fulfilled Prime Orders
For Prime orders that have one-day or two-day delivery expectations, the same-day handling time will continue to apply. Prime orders with standard delivery will default to a one-day handling time, unless a same-day default handling time is configured at the account-level, in which case, Prime orders with standard delivery would have a same-day handling time.
Exceptions and Protections
Amazon recognizes that certain products, such as custom-made and/or personalized items, certain media, and heavy or bulky goods, may require more flexible handling times. Sellers can request exceptions for these types of SKUs, allowing them to set manual handling time overrides. However, it’s important to note that exempted SKUs will not receive OTDR protection from late deliveries. OTD protection will be available to provide a safety net for Sellers as they adjust to the new policies.
To qualify for OTDR protection, Sellers must meet three conditions:
- Have Shipping Automation (SSA) enabled on the relevant shipping template. SSA helps set accurate delivery dates through automated transit time calculations based on preferred shipping services. (Learn More)
- Have AHT enabled on their account. (Learn More)
- Purchase “OTDR protected” Standard Shipping services through Amazon Buy Shipping
Preparing for the Changes
With these significant updates, Sellers should take proactive steps to prepare:
- Review current shipping practices and identify areas for improvement.
- Get familiar with the new transit time and handling time requirements.
- Consider enabling Automated Handling Time if it’s not already active to analyze how the required changes will impact business operations and workflows before the September 25th deadline.
- Evaluate product catalogs to determine if any items might qualify for handling time exceptions. Contact Seller Support and request that a ticket is created to have Handling Time exceptions applied to the list of SKUs.
Looking Ahead
Meeting customer expectations for fast and reliable order delivery is more crucial than ever. Amazon’s new policies reflect this reality, pushing Sellers to optimize their fulfillment processes or risk losing visibility on the marketplace. While these changes may present challenges, they also offer opportunities for Sellers to streamline their operations and potentially increase sales through improved delivery promises. Staying informed and continuously monitoring performance will help Sellers to ensure continued success on the Amazon marketplace.
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Neighborhood Forest Partners with Cahoot to Make Earth Day a Little Greener
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Cahoot fulfillment announced today that it is partnering with Neighborhood Forest for the second straight year to efficiently distribute trees to children around the U.S. for Earth Day.
Neighborhood Forest is a non-profit with a simple mission: give every child the priceless joy of planting and watching trees grow. By doing so, they help beautify neighborhoods, put a dent in our carbon footprint, and instill a sense of magic, wonder, and love for the planet in our little ones. They have helped children plant over 100,000 trees since their inception in 2010, but this year will be special: they’re gearing up to give out a record 50,000 trees across 46 US states, Alaska, and Canada!
Source: Neighborhood Forest
Their growth is inspiring, but it also comes with a challenge. How can they efficiently distribute so many trees across the entire nation with a lower carbon footprint? After all, the carbon emissions from transportation are considerable, and we want to absolutely minimize them to support Neighborhood Forest’s mission.
Environmental, social, and corporate governance (ESG) is becoming increasingly prominent in today’s world as forward-thinking leaders and brands seek to help solve the world’s most pressing challenges. According to Bloomberg, ESG investment has exploded in the last five years, growing more than 10x from $144 billion in 2016 to $1.64 trillion in 2021. Limiting emissions to protect our environment is a core principle of ESG leaders.
Cahoot fulfillment services should be on the shortlist for brands that recognize the importance of ESG.
Cahoot’s innovative nationwide fulfillment network dramatically cuts down the distance that packages need to travel for their final mile shipping, the least efficient part of the logistics process. By strategically placing inventory across the country, businesses and non-profit organizations alike can deliver items quickly while using sustainable and low-cost ground shipping. This makes Cahoot the perfect partner for Neighborhood Forest, because we minimize the cost and emissions of distributing trees for Earth Day.
Cahoot Founder and CEO Manish Chowdhary elaborates, “At its heart, Cahoot makes ecommerce and shipping greener. Ground shipping produces 85% less CO2 emissions and costs up to 50% less than air cargo. It’s a win-win for the planet, the merchant, and the end consumer whenever we optimize an order!”
With more than twice as many trees set to go out this year than last year, those emissions savings add up quickly.
Vikas Narula, Founder of Neighborhood Forest, added, “We love Cahoot! They have helped us with very large, complicated logistics, fulfillment and shipping problems, which have greatly enabled us to scale and grow our operation exponentially. Best of all, we’re doing it affordably and sustainably. I don’t know where we would be without Cahoot..”
It may have been fate that brought Cahoot and Neighborhood Forest together – Katie Strand used the word “cahoots” in her fantastic “I Love Trees” song that was dedicated to trees, Neighborhood Forest, and Earth Day.
Want to get involved with a fantastic organization that’s dedicated to helping make our planet greener? You can sign up to get trees from Neighborhood Forest here, and help them fund the tree delivery here.
ABOUT CAHOOT
Cahoot provides eCommerce order fulfillment services that power nationwide 1-day and 2-day deliveries at the lowest cost by design. Cahoot offers lower fulfillment fees because it enables merchants to fulfill for other merchants. Despite the low price, Cahoot’s service offers the highest SLA in the industry thanks to its top-class merchant fulfillment partners and robust software. Contact Cahoot to learn more about how they can boost your store’s profitable growth.
ABOUT NEIGHBORHOOD FOREST
Neighborhood Forest was founded in 2010 by Vikas Narula. When he was a college student in the early 1990s at Maharishi International University (Fairfield, Iowa), he learned of a free tree project started by David Kidd of Ohio. Vikas and his college friends adopted the program and gave away tens of thousands of trees to schoolchildren across southeast Iowa. What began with four schools in Minneapolis has grown to over 800 schools, libraries, and youth groups in 46 states across America and Canada. Neighborhood Forest’s goal is to reach every child in North America and, eventually, the world.
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How to Prepare for 2020 Recession: 14 Strategies for Ecommerce Businesses & Online Sellers
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What Ecommerce Companies and Marketplace Sellers Can Do Now to Prepare for the Upcoming Slowdown in 2020
The US economy has been in an expansion period for 11 years, the longest time in the history of the nation. Recessions are cyclical and come back every number of years. Around half of the nation’s business economists predict a recession in the US economy by the end of 2020. And for the first time since 2008, on July 31 this year, the Federal Reserve slashed interest rates as a precautionary measure to reduce 2020 recession risks.
Another early warning signal of a possible 2020 recession is fewer freight shipments across the country. The Cass Freight Index is showing a decline in goods shipped via truck, rail, and air from growing at 7.2% in June 2018 to a drop of 6% in June this year after consistently slowing down since last year. This downturn is different from that in 2015 and 2016 because it’s not caused by oil-related freight but an overall decline across methods. The economy is also showing a slowdown of GDP growth to 1.8% in Q1 2019 versus 3.1% the previous year. Such contraction is consumption also an early indicator of a possible recession. Economic output in Germany, the world’s fourth-largest economy, contracted in the second quarter, according to a report on Aug 14, while a report on factory output in China, the second-largest economy, came in lower than expected.
To add to the deepening global economic slowdown, the U.S. will impose a 10% tariff on the remaining $300 billion worth of imports from China on “certain articles”, originally slated to take effect Sept. 1, now delayed to Dec. 15. These include cell phones, laptops, some toys and some footwear and clothing. Retail executives on earnings calls have warned about the effects of these tariffs on their businesses, noting the potential for eroding margins and higher costs being passed on to consumers.
Last two recessions started the downfall of departmental stores while e-commerce was still in a growth stage. Online sellers have enjoyed unprecedented growth during the economic expansion while the departmental stores continued to struggle. The next recession will test the now widespread online businesses for the first time as the marketplaces are becoming saturated.
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