Stamps.com 2004 Annual Report Download - page 5

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Customer Value Proposition
We believe that customers use our service primarily to save time and to save money. Our service saves
customers time in a number of ways. First, our service allows a customer to apply postage to letters or packages at
home or at the office, avoiding the time that would ordinarily be spent traveling to the post office. Second, our
service has the ability to generate mass mailings quickly and easily, in a single step process. Finally, our service
saves customers time because of its ability to integrate seamlessly with most small business productivity
applications such as word processors, financial applications and address books.
Our service saves customers money in many ways. First, the software automatically cleanses all addresses
so postage is not wasted on undeliverable-as-addressed mail. Second, it avoids wasted postage by calculating the
exact amount of postage that is needed depending on mail class, mail form, weight and distance to the destination.
Third, the software provides the ability to track and control postage expenditures in a small office using cost codes.
Fourth, customers using our service to ship packages with electronic Delivery or Signature Confirmation save
approximately $0.40 - $0.50 per package compared to using comparable services at a retail post office. Finally,
Stamps.com’ s service fees are up to 80% less than the total cost of a traditional meter, where users must pay for
monthly rental fees, postage purchase surcharges, expensive ink cartridges, and proprietary labels.
Customers also cite several other additional benefits in using our service, including the following examples.
First, customers say that Stamps.com mail is more professional looking than stamped mail. Second, our service
provides the ability to send US Postal Service packages with Hidden Postage™ which disguises the actual amount
paid for postage—a useful feature for eCommerce companies who may not want the end customer to have actual
shipping cost information. As a final example, our software can help a business reduce its customer support costs by
automatically generating and sending package delivery status emails to its customers.
Marketing of Internet Postage
Our Internet Postage service is currently targeted primarily at small businesses and home offices. We have
marketed, and plan to continue marketing, our Internet Postage service in several ways, including the following:
y Web Partner Channel. In this channel, we work with strategic partners in order to leverage their web
site traffic and customer base to distribute our Internet Postage software. These partnerships provide a
link to our Internet Postage service from several different places on the web. For example, we have a
partnership with Microsoft that makes our software available for download from the Office Update
section of their website—a site that many small businesses visit in order to update their Microsoft
Office products.
y Software Partner Channel. In this channel we bundle a copy of our software or a marketing brochure
with a partner’ s software product, in order to cost effectively gain distribution to the partner’ s existing
or prospective customers. We currently have partnerships with companies who offer small business
productivity software, financial software or Internet services, such as Elibrium, Peachtree, EarthLink,
and others.
y Hardware Partner Channel. In this channel, we make a copy of our software available along with a
partner’ s hardware device. We have partnerships with companies who offer printers that are used by
small businesses, and label makers that can print Internet Postage. We currently have this type of
partnership with Dymo and others.
y Retail Partner Channel. In this channel, we make a copy of our free software or a marketing brochure
available at a partners’ retail location. We currently have partnerships with companies who sell office
supplies and computer equipment, such as Office Depot and CompUSA.
y Online Advertising. In this channel, we partner with key players in the online marketing industry to
advertise our service in various ways across the Internet. In June 2003 we launched our online media
initiative and experienced continued success in 2004 using several online mediums.
y Affiliate Channel. In this channel, we utilize the traffic and customers of smaller web sites and other
businesses or individuals that are too small to qualify for a partnership directly with Stamps.com. Our
affiliate channel is currently managed by a third party. We offer financial incentives for these small
businesses and individuals to drive traffic to our web site. We currently have approximately 2,500
affiliates in our program.