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Hello, I'm Professor
Michael McDonald.
I'm a professor of finance at
Fairfield University in
Fairfield, Connecticut.
Today I'd like to
talk to you about
a really unique business
case involving a company
called Stamps.com and
the secular changes
that they faced in
their business model.
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Now Stamps.com, as
the name implies,
cells postage and postage
software through its website.
Unlike what you might expect,
where you might think
of this company as
selling primarily to consumers,
instead, the firm actually
primarily caters to small
business customers,
that are looking for
a way to easily send
letters and especially packages.
Now it's important to note
that letter volumes in the US,
for anybody who's been
paying attention,
have been flat for years.
If anything, they're actually
declining a little bit,
but package volumes, due to
e-commerce, are growing
at a very steady rate.
In the US, the
Postal Service sends
only a fraction of the
packages that are out there.
Major competitors for shipping
these packages are groups like
UPS and FedEx among others.
Now the US Postal Service,
unlike in some other countries,
say Great Britain as an example,
is not really a private company.
Because it's
dependent on Congress
to authorize most of
its major actions,
it can't really take
decisive action to adjust
its business model.
For that reason, anybody
who is paying
attention knows that
the US Postal Service is in
at least a little
bit of trouble.
Depending on what your view is,
that could be as much
as a lot of trouble.
What does this mean
for Stamps.com?
What do you think
would be happening
to the Stamps.com business?
Well, this chart shows
