Stamps.com have severed their exclusive relationship with USPS and paid the price as their share price plummeted by 60%, from around $200 to currently trading at around $85.00. This is a bold step with Stamps.com saying that ecommerce is demanding other carriers with better delivery promises.
Stamps.com are huge in the US – they are USPS’s largest shipping partner generating 5.5 billion in packages annually representing over 35% of all of their US domestic priority mail packages. About half all of USPS US domestic first-class packages and 30% of all of USPS international packages have labels generated through Stamps.com.
Stamps.com are betting big on Amazon becoming an increasingly important part of their portfolio as Amazon Logistics grows and wins more ecommerce packages that previously would have shipped with USPS and other carriers.
“As we look to the future of shipping, we no longer see an exclusive partnership with the USPS as the right strategy for Stamps.com. We have to align our organization to be well positioned as the significant changes in the shipping business at core over the next five years…
…Because if they don’t succeed in shipping their products to their customers, then their business won’t succeed and if their business doesn’t succeed, then we won’t succeed because we lose the customer. When our customers are offered services such as Shipping with Amazon, FedEx one way, UPS’s new products, Regional Carriers, Uber Shipping, Ship from Store, and everything else…
…We will no longer be exclusive to the USPS and that’s nonnegotiable. USPS has not agreed to accept these terms or any other terms of our partnership proposal. So, at this point we decided to discontinue our shipping partnership with the USPS so that we can fully embrace partnerships with other carriers who we think will be well positioned to win in a shipping business in the next five years.”
– Ken McBride, CEO, Stamps.com
There are some pretty bold statements in there and Ken McBride, CEO of Stamps.com laid out a strategy to bring MetaPack’s technology to the US to offer additional services and features.
You can listen to the full investor earnings call where the news was announced here.
What will this cost Stamps.com customers?
Stamps.com will continue to offer USPS products our customers where it makes sense but, with the end of exclusivity with USPS, in many segments of the business they will start bringing in the more competitive products from other carriers.
New 3% shipping volume surcharge
However, here’s the kicker, with the end of the USPS exclusivity agreement also comes the ending of Stamps.com revenue share partnership with USPS. In simple terms Stamps.com got a kickback from every USPS label they produced and now they won’t so you, the customer will have to pay. Stamps.com have already began to inform some customers that they will need to pay a surcharge of 3% of their shipping volumes to us in order to help to defray the cost of their shipping software since the USPS no longer is paying.
It remains to be seen if users will be willing to pay a 3% surcharge or if Stamps.com will bleed users in the short term. What’s certain is that the news won’t be welcomed by ecommerce merchants who see their margins squeezed at every turn, even if it means they’ll get a greater variety of carriers and better service levels in the future.
Just noticed how expensive USPS is to send from USA to UK. Just received a package which cost $24 (£18 ish) in postage. The same article sent the other way would be £7.10. Big difference!
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