Stamps.com is buying yet another shipping service for online merchants, announcing Monday it will pay $55 million to acquire ShippingEasy. It’s the fourth such acquisition for the company since 2014.
Stamps.com intends for ShippingEasy to operate as a wholly-owned subsidiary led by its existing management team – the same strategy it utilized when acquiring Endicia last year. The Endicia acquisition for $215 million had regulators scrutinizing the deal for antitrust issues under the Hart-Scott-Rodino Act, but the deal was allowed to go through in the fall.
Stamps.com’s two competitors say the further consolidation is not great for online merchants as options for online merchants continue to dwindle. Pitney Bowes EVP & President of Global Ecommerce Lila Snyder said the acquisition continues to be a trend of Stamps.com to compete with their most important clients and partners.
Shippo cofounder Simon Kreuz went further, referring to the acquisitions as leading to a monopoly situation. He said, “Since Stamps.com already owns Endicia (Dazzle), ShipStation and ShipWorks besides its own flagship brand, we have to assume it will start consolidating the users into some of these platforms, which will cause significant pain for the affected users. Ownership of so many platforms by one company hurts the industry and sellers.”
As Kreuz pointed out, aside from his own company and Pitney Bowes, every other platform runs Stamps.com or Endicia in the background. That’s because the USPS limits access to its programs – both companies are PC Postage providers, as is Pitney Bowes. It wasn’t until this year that Shippo was able to integrate with USPS ePostage directly.
ShippingEasy CEO Katie May said about 15,000 customers actively use the company’s service on a monthly basis, and said the service connects to Endicia Label Service for access to USPS services. It’s a cloud-based shipping label printing software that allows ecommerce businesses to print discounted shipping labels and process orders faster and supports USPS, UPS, FedEx, DHL Global Mail and most international consolidators.
We asked May if ShippingEasy’s dependence on Stamps.com was a factor in whether to negotiate with it on the acquisition, since Stamps.com could pull ShippingEasy’s access to the technology?
No, she said – that was not a factor. “We are one of Endicia’s top customers and we have a significant contract with them.” The reason for the deal, she said – it accelerates ShippingEasy’s ability to build more, faster.
“Stamps.com backs us in doubling down on our commitment to save online sellers time and money on shipping, under the ShippingEasy brand and with our unique service delivery,” May said. “We think there is a huge opportunity for us to accelerate the growth of the ShippingEasy platform to solve more pain points for online sellers – and we believe that Stamps.com is the best partner to help us get there faster.”
She called Stamps.com strategic, aggressive, and smart. “After spending time with them, we were confident that ShippingEasy would realize its vision faster with Stamps.com than alone.”
May also outlined her plans for the company, which will operate independently with the same leadership and team. “ShippingEasy is intent on solving more online seller pain points. We started with shipping and streamlined both the time and cost of shipping and fulfilment over the last 3 years. We are not done. We will add inventory management capabilities later this month and more related features in the second half.”
“We think there is a huge opportunity for us to accelerate the growth of the ShippingEasy platform to further simplify what happens after an order is received,” she said.
The transaction is expected to close in early July, subject to standard closing conditions. In addition to the cash price, Stamps.com will distribute performance-linked equity awards to key members of ShippingEasy management that could result in the issuance of a maximum of approximately 87 thousand shares of Stamps.com common stock if targets are met.
Stamps.com chose not to comment for this story beyond pointing to its press release. In the release, Stamps.com CEO Ken McBride was quoted:
“The acquisition of ShippingEasy represents a significant strategic investment in our e-commerce shipping business. E-commerce driven package shipping is our fastest growing segment and this acquisition will allow us to continue to accelerate our growth in this area. ShippingEasy adds an outstanding solution to our portfolio of products which will allow us to serve the needs of more customers, and will allow us to continue to solidify our leadership in e-commerce shipping.”
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Article updated on 6/21/16.