Stamps.com: Maintaining a Leadership Position 479intended to meet. A competitive matrix is
shown in Exhibit 2.
But beyond the basic services, some dif-
ferences emerge. Stamps.com currently
offers the most comprehensive list of servic-
es, with the greatest versatility and options
for customization. However, both Endicia
and Pitney Bowes offer only slightly fewer
services, so these companies may be just as
appropriate for many customers. eBay and
Click-N-Ship are even narrower, but again,
may be sufficient for many customers.
The actual cost for postage from all five
providers is the same, and is also identical to
the postage charge if a customer uses an
offline postage meter or takes a letter or
package to the post office.
But in addition to that postage cost,
Stamps.com, Endicia, and Pitney Bowes all
charge a monthly fee for their service, which
essentially is a charge for accessing their soft-
ware. Stamps.com and Endicia currently
have essentially the same charge ($15.99 for
Stamps.com, and $15.95 for the expanded
Endicia service that most closely matches
Stamp.com), while Pitney Bowes currently
charges $18.99 per month. All of the paid
services offer a free 30- or 60-day trial, and
include promotional deals where new cus-
tomers can get a scale or other items. The
services are all on a month-to-month basis,
and can be cancelled—or switched—at any
time. Neither eBay nor Click-N-Ship charge
beyond the actual postage cost for their more
limited services.
According to a company presentation
posted on the Stamps.com Web site, the
company currently has 85 percent of all
online postage subscribers.
New Product Challenge
In 2004 Stamps.com received approval from
the USPS to conduct a market test of
Photostamps™, a new Internet postage prod-
uct that allowed customers to upload photo-
graphs or other digital images from their per-
sonal computers to the Stamps.com site,
select a color border and postage amount,
and then have sheets of 20 of those custom
stamps delivered to their homes or offices by
mail. Photostamps were the first customized
postage product ever sold in the United
States. The product was heralded as a way
for consumers to personalize their greeting
cards, invitations, birth announcements, and
other mail, and as a tool that businesses
could use to create a customized identity and
attract more attention with their mailings.
The test program was a big hit with cus-
tomers; more than 2.75 million Photostamps
were purchased during the initial trial period.
But there were some problems. Photo
stamps received negative publicity when cus-
tomers ordered stamps displaying images of
convicted spies Ethel and Julius Rosenberg,
Yugoslavian war criminal SlobodanDefinitions and Notes- Unique customers successfully billed at least once during
the quarter. - Customers who were successfully billed for the first time
during the quarter. - Customers who were successfully billed in the previous
quarter but not successfully billed in the current quarter, less
any recaptured paid customers from prior quarters. - Monthly cancellation rate calculated as [(Lost Paid
Customers)/(Prior Quarter Paid Customers + New Paid
Customers)] divided by 3. - Subscriber and Related Revenue include PC Postage
Service Revenue, Product revenue, and package insurance
(under Other Revenue); it excludes license fees and all
PhotoStamps revenue.
calculated as [Total subscriber revenue for the quarter/Current
Quarter Paid Customers] divided by 3.- A non-GAAP measure of PC Postage total sales and
marketing expenses plus PC Postage promotional costs (under
Cost of Revenues), excluding all SFAS-123R expenses starting
in fiscal 2006; for reconciliation between GAAP and on-GAAP
sales and marketing and cost of revenues, see the Company’s
prior 8K filings. - PC Postage Customer Acquisition Spend divided by Gross
New Registered Customers (signed up for Stamps.com account
& provided a verifiable billing method) acquired during the
quarter. - A non-GAAP measure excluding all SFAS-123R expenses
starting in fiscal 2006; for reconciliation to GAAP see the
Company’s prior 8K filings. - Non-GAAP Net Income divided by the fully diluted weighted
average share outstanding.
EXHIBIT 1 (continued) Stamps.com Performance and Metrics- Average monthly subscriber revenuer per paid customer