Stamps.com 2004 Annual Report Download - page 6

Download and view the complete annual report

Please find page 6 of the 2004 Stamps.com annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 64

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64

4
y Direct Mail. In this channel we send direct mail pieces to prospective small business, small office, and
home office customers. We purchase targeted prospect lists from third parties or obtain prospect lists
from partners.
y Remarketing. In this channel, we remarket our service to former customers. Our remarketing efforts
are generally focused on the new features which may relate to the reasons former customers stopped
using our service. We utilize e-mail and regular mail to communicate new features of our products to
our former customers.
y U.S. Postal Service Account Managers. In this channel, we work to utilize the nationwide U.S. Postal
Service Account Manager network to market and sell our services to end customers. We market to the
account managers by attending regional and national meetings and forums, and participating in local
vendor calls.
Competition
The following is a summary of our current direct competitors in the PC Postage industry:
Endicia.com Endicia.com is a small private US company that launched a software-based PC Postage
service commercially in 2000. The company also sometimes goes by the names Envelope Manager Software, or PSI
Inc. Based on data available in late 2004, we believe that Endicia.com has approximately 5% of all PC Postage
subscription customers.
Pitney Bowes, Inc. Pitney Bowes is the current market leader in the U.S. traditional postage meter business,
with approximately $5.0 billion in fiscal 2004 revenue. Pitney Bowes launched a software-based PC Postage product
by the name of ClickStamp Online in April 2000. Based on data available in late 2004, we believe that ClickStamp
Online has less than 10% of all PC Postage subscription customers. In addition, in the third quarter of 2004 Pitney
Bowes appeared to discontinue marketing ClickStamp Online at a monthly fee of $4.99, and to begin marketing an
entirely new PC Postage offering by the name of ShipStream for a monthly fee of $18.99. During 2004, Pitney
Bowes also began offering an Internet-based service for printing a single label for use in shipping a package that
does not require a monthly subscription fee.
We believe that customers choose Stamps.com’ s Internet Postage service over that of other PC Postage
competitors because of our more complete and sophisticated overall service offering. Some examples of this include
the following: Stamps.com is currently the only PC Postage company that offers the ability to print postage that has
no expiration date and no destination address and can be used just like postage stamp (our feature NetStamps);
Stamps.com is the only PC Postage service that is tightly integrated into Microsoft Office for use with Office’ s
mailing capabilities such as mail merge or envelope printing; Stamps.com supports more address books than any
other PC Postage service. Based on data available in late 2004, we believe that more than 85% of all PC Postage
subscription customers are Stamps.com customers.
We also compete with traditional postage meters, such as those offered by Pitney Bowes. We believe that
customers chose the Stamps.com Internet Postage service over traditional postage meters primarily to save money.
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. We also believe
that Stamps.com’ s Internet Postage service offers superior capabilities to postage meters in certain areas, such as the
ability to integrate tightly with small business productivity applications, and the ability to easily monitor and track
USPS packages.
We also compete with traditional methods of accessing U.S. postage, such as postage stamps, U.S. Postal
Service retail locations, and U.S. Postal Service online services such as Click-N-Ship. All of these methods are
typically available with no additional markup over the face value of postage. We believe that customers choose our
service over these methods of accessing postage in order to save time, or because of the breadth of the services we
offer.
Overall, we may not be able to maintain a competitive position against current or future competitors as they
enter the markets in which we compete. This is particularly true with respect to competitors such as Pitney Bowes,
which has greater financial, marketing, service, support, technical, and other resources than us. Failure to maintain a