Extended-form Case Study

Stamps.com: secular changes in a business model

Published on November 29, 2022   14 min

A selection of talks on Finance, Accounting & Economics

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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.
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

Stamps.com: secular changes in a business model

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