Stamps.com 2012 Annual Report Download - page 11

We believe that our customers choose our PC Postage service over that of other PC Postage competitors because of our superior user interface
and our larger breadth of features. For example, we are the only PC Postage service that is tightly integrated into the native capabilities of
Microsoft Office for use with Office’
s mailing capabilities such as mail merge and envelope printing; we are the only PC Postage provider with
an integration partnership with Amazon.com serving their Marketplace users; we support more address books than any other PC Postage
software; and we are the only company that offers the additional customer choice of our Themed and Photo NetStamps labels. Based on USPS
data, we have the highest number of PC Postage customers of any PC Postage provider.
Based on USPS data and on our own estimates, we believe that PhotoStamps is a leading brand in the USPS’
s customized postage program.
When compared to competitive offerings, we think PhotoStamps offers the best product and overall customer experience in the industry.
PhotoStamps was also the first commercially available customized postage product, and we believe it has the best brand recognition among its
competitors.
Other Competition .
We also compete with traditional methods of accessing US postage, such as postage stamps, USPS retail locations, and
USPS online services such as Click-N-
Ship (though we provide the electronic postage for that USPS service), and those available through
eBay/PayPal. All of these methods are typically available with no additional markup over the face value of postage. We believe that our
customers choose our service over these traditional methods of accessing postage because of convenience and the capabilities and features that
are not available through these traditional methods. We believe customers choose traditional methods over our solutions as a way to obtain
postage without paying additional fees above the face value of postage. In our high volume shipping solution we also compete with alternatives
to the USPS for package services such as FedEx and UPS.
Industry Overview
Business Market Size
Our PC Postage mailing and shipping service is currently targeted primarily at U.S. small offices, home offices, small businesses, enterprises and
high volume shippers, and within these segments we target both mailers and shippers. We believe the number of businesses that we can serve
with our current products are as follows: (1) 22.6 million sole proprietorships; (2) 4.6 million small businesses with 1 to 9 employees (typically
using our single user Pro service); (3) 1.2 million small businesses with 10 to 99 employees (typically using our Pro or our multi-
user Premier
service); (4) 109 thousand medium and large businesses with 100 or more employees, which represent 1.5 million separate locations (typically
using our Enterprise service). In addition we believe there are approximately 24 million non-
income generating home offices such as those used
for corporate after-
hours work or telecommuting, that we can service with our current solutions. Finally, we also can serve (typically through
our enhanced promotion online advertising channel) the individual consumer market. Data provided herein is based on statistics provided by the
U.S. Census Bureau.
US Mail Volume
According to the USPS Fiscal 2012 Annual Report, the total USPS revenue was $65 billion during its fiscal year ended September 30, 2012. Of
this amount approximately $46 billion was represented by mail classes that are addressable using our current solution (First Class, Priority Mail,
Express Mail, Media Mail, Parcel Post, international mail, and special services). The $46 billion in postage is comprised of (1) $28.7 billion in
First Class mail (2) $11.5 billion in package and shipping services (3) $2.8 billion in international mail and (4) $2.8 billion in other mailing
services. We believe that some portion of this $46 billion is a potential market for purchasing and printing postage using PC Postage.
Based on the USPS Fiscal 2011 Household Diary Study, consumer-to-
consumer personal correspondence mail volume was approximately 4.4
billion pieces per year (0.6 billion personal letters, 1.9 billion holiday greeting cards, 1.2 billion non-
holiday greeting cards, and 0.6 billion
other). We also estimate that an additional 5.3 billion pieces per year are sent between businesses and consumers as first class primary business
advertising mail, and an additional 6.5 billion pieces per year are sent from businesses to consumers as First Class correspondence mail. We
believe that consumer-to-consumer and business-to-consumer advertising mail are two potential markets for use of PhotoStamps.
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