If you’re an online seller who uses USPS, chances are good you print your postage labels online, possibly using a system operated by Stamps.com or one of its subsidiaries. But each vendor or marketplace seems to have their own rates they pass along to merchants.
Thanks to some sensational reports recently circulated that focused on Stamps.com and on the role of USPS resellers, there was more detail about how the USPS views discounted postage rates during last Thursday’s earnings call with Stamps.com’s top executives.
Stamps.com CEO Ken McBride accused some on Wall Street of circulating meritless theories about its business model and risks in order to capitalize on the negative impact on its stock price. He said traditionally, USPS has viewed Stamps.com as a technology partner, and as such, compensates Stamps.com for its role as a technology partner.
Stamps.com Chief Financial Officer Kyle Huebner explained that a significant number of Stamps.com’s largest customers have direct Negotiated Service Agreements (NSAs) with the USPS, and a lot of Stamps customers have direct CPP rates (Commercial Plus Pricing) rates from the USPS.
The reason the USPS partners with resellers is “in order to address the lower volume customers,” Huebner explained – not just to attract them, but to retain those lower volume shippers as well.
McBride said eBay relies on its NSAs with the USPS in order to make discounted Commercial Plus rates available to its customers, as do other online marketplaces, “which incentivizes companies to offer USPS as a solution in their marketplaces.” (Amazon and Etsy also offer USPS postage solutions to their sellers.)
Interestingly, he said, “Just last week, the USPS filed an amendment to an existing Negotiated Service Agreement at the Postal Regulatory Commission based on a discount below Commercial Plus Pricing that provides for discounts to continue even if the USPS does not maintain the Commercial Plus Pricing concept in 2017.” As we’ve reported, the USPS plans to phase out CPP pricing, while maintaining Commercial Base pricing.
McBride also said USPS reseller discounts have driven innovation in ecommerce, resulting in a significant number of new software solutions that are focused on USPS ecommerce shipping. “We are aware of more than 100 ecommerce software tools and multicarrier solutions available on the Internet that have had as part of their business model the ability to offer attractive USPS rate discounts,” he said.
During the call, Stamps.com announced its mailing and shipping revenue was $81.5 million in the second quarter, up 72% compared to Q2 of 2015. “USPS postage printed through our solutions was $1.2 billion in Q2, which is up 114% versus Q2 2015,” it revealed.
Of course, Stamps.com has acquired numerous rivals-slash-partners, and announced last week it had completed the acquisition of ShippingEasy, a web-based multi-carrier shipping solution for online merchants.
“Now that the acquisition is closed, we will start the process of leveraging our company’s collective resources and expertise and sales and marketing, customer, product development, and technology innovation to help accelerate their growth,” Huebner said.
You can find the Stamps.com earnings call transcript on the SeekingAlpha.com website.