Stamps.com 2005 Annual Report Download - page 5

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product functionality. The Pro Plan, previously known as the Power Plan, will continue to be our entry level pricing plan, and Premier will be
our up-sell plan which provides a richer feature set at a higher price. Our current strategy also includes a renewed and intensified sales and
marketing focus to move upstream to address larger businesses. We plan to expand our corporate sales team as the need arises. We have also
dedicated a marketing employee dedicated to this area. We also plan to focus on the small and medium enterprise segment once we have a
multiple user product capability in place.
We plan to continue to invest in our mailing and shipping supplies business (our “Supplies Store”) in order to make our offering more
convenient for our customers. We ended the year with a catalog of approximately 160 stock keeping units (“SKUs”), up from around 86 SKUs
at the end of 2004, and we currently plan to increase the total number of SKUs to more than 500 by year end 2006.
Our current strategy in the PhotoStamps area is to continue investing heavily in growth throughout the year. We will continue to refine the
existing marketing strategies that were successful during 2005, and will work on identifying and optimizing new marketing strategies. We will
also continue focusing on building the business via partnerships similar to 2005.
Services and Products
We offer or have offered the following products and services to our customers:
• PC Postage Service. Our U.S. Postal Service-approved PC Postage service enables users to print information-based indicia, or
electronic stamps, directly onto envelopes, plain paper, or labels using ordinary laser or inkjet printers. Our service currently supports
USPS classes including First-Class Mail
®
, Priority Mail
®
, Express Mail
®
, Parcel Post™, Media Mail™ and Bound Printed Matter.
Customers can also add USPS Special Services such as Delivery Confirmation™, Signature Confirmation™, Registered Mail,
Certified Mail, Insured Mail, Return Receipt, Collect on Delivery (“COD”) and Restricted Delivery to their mail pieces. Our service
requires only a standard PC, printer and Internet connection. Our free software can be downloaded from the Internet or installed from
a CD-ROM. After installing the software and completing a registration process, customers can purchase and print postage 24 hours a
day, seven days a week. When a customer purchases postage for use through our service, the customer pays face value, and the funds
are transferred directly from the customer’s account to the US Postal Service’s account. The majority of new customers currently
signing up for our service pay a monthly convenience fee of $15.99. Our current customer mix includes monthly convenience fees
ranging from $4.49 to $24.99 or more based on individual pricing and promotions.
Stamps.com offers its customers three primary ways to print PC Postage. First, our NetStamps
®
feature enables customers to print
postage for any value or any class of mail or package on NetStamps labels. After they are printed, NetStamps can be used just like
regular stamps. Second, our shipping feature tab allows customers to print postage for packages on plain 8.5” x 11” paper or on
special labels, and to add electronic Delivery or Signature Confirmation at discounted prices. Third, our mailing feature tab is typically
used to print the postage and address directly on envelopes or on other types of mail or labels, in a single-step process that saves time
and provides a professional look. Our PC Postage services also incorporate address verification technology that verifies each
destination address for mail sent using our service against a database of all known addresses in the U.S. In addition, our PC Postage
services have been designed to integrate into common small business and productivity software applications such as word processing,
contact and address management, and accounting and financial applications.
• PhotoStamps
®
. On May 17, 2005, we publicly launched our second market test of PhotoStamps, a new, patented form of postage
that allows consumers to turn digital photos, designs or images into valid U.S. postage. For the first time ever, people can create
customized U.S. postage using pictures of their children, pets, vacations, celebrations and more. PhotoStamps is used as regular
postage to send letters, postcards or packages. The product is available via our separate website at www.photostamps.com. Customers
upload a digital photograph or image file, customize the look and feel by choosing one of ten different border colors to compliment
the photos, select the value of postage, and place the order online. Each sheet includes twenty individual PhotoStamps, and orders
arrive via U.S. Mail in a few business days.
Since the beginning of the second market test, PhotoStamps has been prominently featured in the national media: for example, in its
December 19, 2005 issue, BusinessWeek named PhotoStamps one of the best
2