Stamps.com 2014 Annual Report Download - page 14

Table of Contents
Traditional Postage Meters
We compete with traditional postage meters offered by Pitney Bowes, Neopost, FP Mailing Solutions and Hasler in the U.S. market. Postage
meters offer customers a simple user interface and often work better in a higher volume mail preparation process since postage meters can add
postage after an envelope has already been stuffed and sealed, and can automatically weigh an envelope and add the appropriate postage.
Additionally, more expensive postage meters can add postage to envelopes at rates that are faster than postage can be added using our PC
Postage solution since we are limited by the speed of an office printer.
We believe that customers choose our mailing and shipping services over traditional postage meters because of our lower total cost of ownership
and/or the greater visibility and financial controls we provide and which are not readily available with postage meters. We believe customers
choose postage meters over our solutions because of the ease of use, speed, and/or convenience of those products.
Other USPS Approved PC Postage Vendors
We compete with other USPS approved postage vendors. Currently, there are two such vendors in addition to Stamps.com: Endicia, a group
within Newell Rubbermaid’s Office Products division; and Pitney Bowes.
Endicia offers software and web-based PC Postage services and integrations similar to our mailing and shipping services and integrations.
Endicia also offers a PC Postage NetStamps-like service in conjunction with Dymo (an affiliated company also owned by Newell Rubbermaid)
under the brand name Dymo Stamps. Endicia also offers a customized postage offering similar to our PhotoStamps service under the brand name
PictureItPostage. Endicia/Dymo’s strength lies within its Dymo brand printer/hardware offerings, where it dominates the home/entry-level
thermal printer market.
Pitney Bowes is the current market leader in the U.S. traditional postage meter business with revenues of $3.8 billion in 2014, offers software
and web-based PC Postage services and integrations similar to our mailing and shipping services and integrations under the brand name
pbSmartPostage. Pitney Bowes also provides the application programming interface (API) that facilitates the web shipping solutions available
through eBay and PayPal where sellers operating within those marketplaces may purchase USPS shipping labels in a convenient manner. Pitney
Bowes also offers a customized postage offering similar to our PhotoStamps service under the brand name Custom Postage from Pitney Bowes
through a partnership with Zazzle.com, a private U.S. company that specializes in manufacturing and marketing of custom products.
We believe that our customers choose our mailing and shipping service over that of other PC Postage vendors because of our superior user
interface and our larger breadth of features. For example, (1) we are the only mailing and shipping 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; (2) we are the only
PC Postage provider with an integration partnership with Amazon.com for international shipping for their Marketplace users; (3) we support
more address books than any other PC Postage software; and (4) we are the only company that offers customers the additional choice of our
Themed and Photo NetStamps labels. Based on USPS data and our estimates, we believe we have the highest number of PC Postage customers
of any PC Postage provider.
Private Carrier Technology Solutions
We compete with private carriers because customers that choose a private carrier such as UPS, FedEx, DHL, or any others instead of the USPS,
also do not use our USPS technology solution. When customers evaluate carriers, among other factors, they consider the cost and complexity of
the technology product needed to access a particular carrier’s services. In this case our services and products compete against the technology
solutions provided by private carriers such as, for example, UPS WorldShip, UPS.com, FedEx Ship Manager and Fedex.com. These private
carrier products are provided at no cost to the customer, and in many cases also include free implementation, free hardware such as printers or
scales, and free consumables and supplies.
We believe customers choose our products and services over private carrier technology solutions in order to utilize the package services of the
US Postal Service, as well as 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 private carrier technology solutions over our solutions when they decide to
utilize one of the private carriers instead of the USPS, as well as because of the additional free implementation, hardware or supplies the carrier
offers, the quality of the carrier’s sales and support organization, and/or the technical capabilities of the private carrier’
s solution. In some cases a
customer may choose both the USPS and a private carrier to meet their needs.
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