Stamps.com: Maintaining a Leadership Position 477most of its competitive ammunition against
traditional postage meter companies like
Pitney Bowes and Neopost. The company
claims its service is much more economical
because it doesn’t require additional hard-
ware like a postage meter or scale
(Stamps.com regularly supplies a free postal
scale with payment for the first month of
service), and because its monthly fee is gen-
erally lower than the cost of renting or pur-
chasing a postal meter. While digital
postage, accessed with either a phone or
computer, makes it unnecessary to lug a
postage meter to the post office for loading,
Stamps.com points out that its service
requires no additional fees for resetting,
printing company logos or messages with the
postage, or purchasing special ink cartridges.
Stamps.com also advertises that customers
can cancel their service at any time, unlike the
long-term leases usually required for postage
meter rentals. These factors, along with the
ability to print the mailing address and
postage in one step, verify addresses and zip
codes online while the postage is being com-
puted, track expenditures through cost center
reports, and other features, have given
Stamps.com a considerable competitive edge
against these more traditional postage
approaches.
Milestones
During its early years Stamps.com experi-
mented with expanding its business with two
enhancements it ultimately rejected. In
October 1999, the company acquired iShip,
an online shipping company. iShip was sold
to the United Parcel Service (UPS) in May
- In February 2000 Stamps.com
formed a wholly-owned subsidiary called
EncrypTix to provide online event ticketing
as well as travel and financial services.
EncrypTix ceased operations in March 2001.
However, the company’s core business
continued to prosper during this time. In
April 2002, Stamps.com printed its 100 mil-
lionth Internet postage stamp, and in
September 2003 the company printed its
200 millionth Internet postage stamp.
Beginning in 1999, the company also formed
alliances with a number of partners, includ-
ing American Online, IBM, Office Depot,
Microsoft, and Quicken.com, to reach more
consumers and specifically target the Small
Office/Home Office (SOHO) market.
In October 2004, Stamps.com announced
it had achieved its first profitable quarter
(third quarter 2004). Recent performance
metrics are reported in Exhibit 1.INDUSTRY OVERVIEWCurrent Competition
Stamps.com has managed to eliminate two
of its early competitors; the E-Stamp
Corporation ceased operations in November
2000, and Neopost now relies strictly on a
telephone system to refill their postage
meters.
The USPS currently lists five vendors as
authorized online postage providers:
Stamps.com, Pitney Bowes Inc., eBay,
Endicia™, and Click-N-Ship®. The eBay
program is essentially a service provided to
customers who sell items on eBay’s Internet
auction site, and is limited to those transac-
tions. Endicia is a company that was found-
ed in 1982 to develop software products for
address verification and mail management.
They began offering Internet postage in- In October 2002 the U.S. Postal
Service introduced its PC postage program,
called Click-N-Ship.
The chart comparing the services offered
by the five providers demonstrates their sim-
ilarities and differences. All five providers
allow customers to refill their postage “bank”
and print postage 24 hours a day and seven
days a week. They all calculate postage accu-
rately for various weights and classes of mail
at their homes or offices, which was not pos-
sible prior to online postage. All five
providers also allow users to print an address
label with postage in one step, and all can be
used for domestic first-class postage for
parcels. Therefore, all five current providers
meet the basic goals that online postage was