Stamps.com Discontinues Exclusive Partnership With USPS

In Thursday’s earnings call by Stamps.com, CEO Ken McBride revealed numerous strategic changes the company is undergoing in 2019 to better serve the eCommerce market.

The most significant change is that Stamps.com is discontinuing its exclusive partnership with the USPS.

“And 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.”

Ken McBride, CEO Stamps.com

This is a significant shift in the company’s strategy, especially considering that Stamps.com processes about 35 percent of all domestic USPS Priority Mail packages in the US.

Stamps.com also processes 30 percent of all international USPS outbound packages and 50 percent of all USPS domestic first-class packages.

USPS Long Term Problems

McBride offered several issues that seem to have forced the company to make this decision.

  • 2-Day Delivery is the standard consumers expect today when ordering online and USPS offers no guaranteed 2-Day service which many Stamps.com customers are asking for.
  • USPS bureaucratic government oversight hampers rapid adjustments to the needs of the fast growing eCommerce industry.
  • As USPS continues to accumulate losses, Stamps.com does not seem certain the post office will put the investment into package operations to expand its logistics network.

Stamps.com believes that UPS, FedEx, DHL, and a host of regional carriers in the US are far better positioned to service the growing eCommerce industry.

In the view outlined by McBride, it seems Stamps.com has lost faith in the USPS ability to keep up with a fast changing shipping marketplace.

“And we now plan to turn our significant assets such as our technology and product development, our salesforce, our significant marketing budget and our marketing organization towards the focus on partnerships with the carriers that will help our customers succeed over the next five years. We’re going to align ourselves with the carriers that we think are going to be the winners in the shipping business.”

Ken McBride, CEO Stamps.com

USPS Services To Continue

Before sellers panic, Stamps.com will continue to offer USPS products to their customers.

“We will continue to bring USPS products to our customers where it makes sense but in many segments of the business we will start bringing in the more competitive products from other carriers. We are currently in discussions or already have partnerships with all of the major incumbent private carriers and we’re also in discussion with many of the new entrants into the U.S. shipping business.”

Ken McBride, CEO Stamps.com

But it is clear from the statements made in the earnings call, Stamps.com is going to bring more products to its customers from private carriers.

Because the revenue sharing agreement between Stamps.com and the USPS is now ended, some customers may receive notices they will have to pay a surcharge of 3 percent on their shipping volume.

This surcharge will be necessary to defray the cost of providing the shipping software as the USPS under the previous agreement was paying for the software.

As part of its strategy to offer more competitive shipping options to its customers, Stamps.com will bring to the forefront its multi-carrier offerings from ShipStation, ShippingEasy, ShipWorks, and MetaPack.

Stamps.com plans to aggressively drive the revenue of the private carriers where they already have revenue share agreements in place.

In turn, this could mean lower negotiated rates for some Stamps.com customers that may normally not qualify for deep discounts by the private carriers.

Amazon SWA Part Of The Future?

One company that is not a logistics company but that was mentioned often in the earnings call is Amazon.

“…we are going to work with Amazon, we want to work with Amazon in our multi-carrier solutions. We want them to be one of our portfolio of 40 carriers in the U.S.”

“We want them to be one of our portfolio of 450 carriers worldwide and like we said, we would expect over the next five years that Amazon is going to become a significant force in the shipping business.”

“They’re going to do so by coming in with very aggressive pricing and so we have to bring that solution to our customers. They need that solution.”

Ken McBride, CEO Stamps.com

McBride further said part of the decision to make the change was that Amazon came out last month and for the first time declared they are competing in the shipping market.

Stamps.com expects Amazon to be successful at logistics as they are building out a delivery network specifically for eCommerce.

It appears, Stamps.com believes Amazon’s logistics offering could eventually replace some of the USPS products.

Better Longer Term Position For Stamps.com

As mentioned, some sellers may find they will have to pay a surcharge on their shipping volume when using USPS products because of the termination of Stamps.com’s exclusive partnership with the USPS.

However, it appears Stamps.com has a comprehensive plan for this strategy shift and they will aggressively work on bringing new solutions to their customers that can better serve the needs of eCommerce today.

In a world where guaranteed 2-Day shipping is the norm, and without the USPS being able to offer a product to compete at that level, this strategy shift seems to make a lot of sense.

READ MORE: ShipWorks Launches New Workflow Features to Make Shipping Easier


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