Stamps.com 2008 Annual Report Download - page 13

The success of our business will depend upon the continued acceptance by customers of our service.
We must minimize the rate of loss of existing customers while adding new customers. Customers cancel their subscription to
our service for many reasons, including a perception that they do not use the service sufficiently. Also customers may feel the
costs for service are too high, they may be going out of business, or they may have other issues that are not satisfactorily
resolved. We must continually add new customers both to replace customers who cancel and to continue to grow our business
beyond our current customer base. If too many of our customers cancel our service, or if we are unable to attract new customers
in numbers sufficient to grow our business, our operating results will be adversely affected. Further, if excessive numbers of
customers cancel our service, we may be required to incur significantly higher marketing expenditures than we currently
anticipate replacing these customers with new customers.
If we fail to effectively market and sell our services and products, our business will be substantially harmed and could fail.
In order to acquire customers and achieve widespread distribution and use of our services and products, we must develop and
execute cost-effective marketing campaigns and sales programs. We currently rely on a combination of marketing techniques to
attract new customers including direct mail, online marketing and business partnerships. We may be unable to continue
marketing our services and products in a cost-effective manner. If we fail to acquire customers in a cost-effective manner, our
results of operations will be adversely affected.
If we fail to meet the demands of our customers, our business will be substantially harmed and could fail.
Our services and products must meet the commercial demands of our customers, which include home businesses and offices,
small and medium sized businesses, corporations and individuals. We cannot be sure that our services will appeal to or be
adopted by an ever-growing range of customers. If we are unable to ship products such as items from our Supplies Store or
PhotoStamps in a timely manner to our customers, our business may be harmed. Moreover, our ability to obtain and retain
customers depends, in part, on our customer service capabilities. If we are unable at any time to address customer service issues
adequately or to provide a satisfactory customer experience for current or potential customers, our business and reputation may
be harmed. If we fail to meet the demands of our customers our results of operations will be adversely affected.
A failure to further develop and upgrade our services and products could adversely affect our business.
Any delays or failures in developing our services and products, including upgrades of current services and products, may
have a harmful impact on our results of operations. The need to extend our core technologies into new features and services and
to anticipate or respond to technological changes could affect our ability to develop these services and features. Delays in
features or upgrade introductions could cause a decline in our revenue, earnings or stock price. We cannot determine the ultimate
effect these delays or the introduction of new features or upgrades will have on our revenue or results of operations.
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Increases in payment processing fees would increase our operating expenses and adversely affect our results of operations.
Our customers pay for our services predominately using credit cards and debit cards and, to a lesser extent, by use of
automated clearing house (“ACH”) payments. Our acceptance of these payment methods requires our payment of certain fees.
From time to time, these fees may increase, either as a result of rate changes by the payment processing companies or as a result
in a change in our business practices that increase the fees on a cost-per-transaction basis. If these fees for accepting payment
methods increase in future periods, it may adversely affect our results of operations.
A decline in our ability to effectively bill our customers by credit card and debit card would adversely affect our results of
operations.
Our ability to effectively charge our customers through credit cards and debit cards is subject to many variables, including
our own billing technology and practices, the practices and rules of payment processing companies, and the practices and rules
of issuing financial institutions. If we do not effectively charge and bill our customers in future periods through credit cards and
debit cards, it would adversely affect our results of operations.
Third party assertions of violations of their intellectual property rights could adversely affect our business.
Substantial litigation regarding intellectual property rights exists in our industry. Third parties may currently have, or may
eventually be issued, patents upon which our products or technology infringe. Any of these third parties might make a claim of
infringement against us. We may become aware of, or we may increasingly receive correspondence claiming, potential