Stamps.com 2014 Annual Report Download - page 12

Competition
As a result of our 2014 acquisitions of ShipStation and ShipWorks, the number of companies with which we compete has expanded. We
compete with all of the alternate ways that consumers and businesses may access the services of the US Postal service, including retail mailing
and shipping locations, USPS online products, USPS software solutions, traditional postage meters, and other USPS-approved PC Postage
products. We also compete with other multi-carrier products, eCommerce products with shipping capabilities, shipping technology products
available from private carriers, package manifesting systems, and large enterprise software solutions with shipping functionality such as
transportation management, warehouse management, or enterprise resource planning systems.
Retail Mailing and Shipping Locations
The majority of our customers use our PC Postage service as an alternative to visiting USPS or other retail locations. The USPS owns and
operates approximately 32 thousand retail post offices across the United States. Many of the USPS retail post offices also feature a USPS kiosk
for self-serve mailing and shipping services with more convenient access and over extended access hours. The USPS authorizes thousands of
additional contract post offices, community post offices and village post offices which allow third parties to operate post offices that are not
owned by the USPS, such as those available in Hallmark stores. We also compete for mailing and shipping customers with alternatives such as
postage stamps and prepaid USPS shipping labels available at grocery stores and at discount chains (such as Costco). We also compete with
USPS mailing and shipping services available at small business mailing and shipping centers such as UPS Stores or FedEx Offices, and those
available inside office supply stores such as Staples and Office Depot. Further, we have not been approved to offer our customers “Forever”
postage rates which are rates that do not ever expire and do not require extra postage following a postage rate increase.
We believe customers choose our products over retail mailing and shipping services because of the convenience of our solution, the breadth of
features that we offer, and the quality of our support organization. We believe customers choose retail locations over our solutions because of the
additional fees that we typically charge, the convenience of utilizing a retail location, and/or the preference for a Forever postage label.
USPS Online Products
We compete with online services available at USPS.com. Users of USPS.com are able to print shipping labels with the same postage discounts
that we offer, and using similar tools that we offer. But the services and features available at USPS.com are provided without service fees,
creating a disadvantage for us because we typically charge service fees in our business model. The services at USPS.com also integrate well with
other USPS online services such as package tracking, post office locators, and other USPS services. Additionally, USPS.com accepts PayPal for
payment of postage but we are not approved to do so. USPS.com also now features a mobile application for more convenient customer access to
USPS services.
USPS services are also integrated directly into web shipping solutions available through eBay, PayPal and Amazon.com. Sellers operating
within these marketplaces may purchase USPS shipping labels in a very convenient manner as part of the standard checkout flow. In all of these
online marketplaces, customers can print postage for shipping without paying a monthly service fee like we typically charge. These solutions
also feature USPS package rate discounts that are similar to ours, and in some cases superior to the discounts we are approved to offer
customers. eBay in particular has offered its sellers USPS-approved postage rates that are lower than the rates other online USPS providers are
approved to offer. For postage payment these web shipping solutions use the USPS’s electronic verification system (eVS), the USPS’s solution
branded ePostage; or another approved USPS PC postage vendor.
We believe customers choose our products and services over USPS online products because of the capabilities and performance of our products,
the breadth of features that we offer, and the quality of our support organization. We believe customers choose USPS online products to meet
their shipping needs over our solutions because of the additional fees that we may charge, the convenience of using one of these online products,
and/or the package rates which may be superior to the package rates we are able to offer.
USPS Software Solutions
We compete with USPS private-labeled downloadable software and API (application program interface) solutions which are offered under the
brand names Click-N-Ship for Business, Click-N-Ship for Business Pro, and USPS Web Tools. These solutions are targeted at higher volume
business users or partners and include enhanced features for higher volume customers compared to those available at USPS.com. For postage
payment these solutions utilize the USPS’s electronic verification system (eVS), or utilize the USPS’s solution branded ePostage, which are two
similar systems for providing access to USPS shipping without needing PC Postage. eVS and ePostage offer more convenient solutions to
higher-volume shippers with certain advantages we cannot offer such as: (a) labels can be printed “offline” without requiring an internet
connection; (b) labels are not charged to a customer’s account until they are inserted into the mail stream; (c) eVS/ePostage labels do not expire
and can be used at any time; (c) eVS/ePostage labels do not need to be saved and submitted for refunds; and (c) eVS/ePostage labels are able to
support newer USPS features such as package intercept and re-routing, or certain USPS returns products. Additionally, all USPS software
solutions are made available to customers with no additional monthly or transaction fees, and they may also be offered with discounts on the
postage rates that are superior to the discounts that we are able to provide to our customers.
We believe customers choose our products and services over USPS software solutions because of the capabilities and performance of our
products, the breadth of features that we offer, and the quality of our sales and support organization. We believe customers choose USPS
software solutions over our solutions because of the additional fees that we may charge, the convenience of using one of these software products,
and/or the package rates which are offered to the customer and which may be superior to the package rates we offer.
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