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Stamps.com Spurns USPS After Post Refuses To Grant Preferential Discounts

For years Stamps.com enjoyed preferential postage rate discounts negotiated under Negotiated Service Agreements (NSAs) with the USPS. Critics have complained that the NSA’s — which are designed to reward mailers who guarantee high volumes — were being exploited by Stamps.com, which doesn’t mail itself but provides an online postage service.

According to the Chicago Tribune, Stamps.com has countered critics with the claim that it promotes USPS higher volumes and is entitled to discounts. Up to a third of all Priority Mail shipments utilize Stamps.com to pay for postage.

Apparently the USPS did not agree.

Stamps.com’s negotiations to renew and enhance NSAs with the USPS apparently fell through, leading to the dramatic announcement on February 21 that Stamps.com would no longer enjoy preferential discounts. The reaction on Wall Street was swift: the stock’s value has fallen from a high of $200 a share to $91.

“We will no longer be exclusive to the USPS and that’s non-negotiable,” said Stamps.com CEO Kenneth McBride in a conference call following release of 2018 earnings.

Since NSAs are negotiated in private, details of the USPS position are not known. But McBride made it clear that the USPS gave it the cold shoulder.

“The USPS has not agreed to accept these terms or any other terms of our partnership proposal,” McBride said.

“So at this point we’ve decided to discontinue our shipping partnership with the USPS so that we can fully embrace partnerships with other carriers who we think will be well-positioned to win in the shipping business in the next five years,” McBride said.

Those partnerships include Amazon.com, FedEx, and UPS.

Does that mean Stamps.com, a company built on the Postal Service, will no longer provide customers with online U.S. postage?

“Note that our decision to discontinue our exclusive partnership with the USPS does not in any way impact our regulatory relationship with them or the products and services we are able to offer our customers,” he said in the conference call.

Bottomline: Stamps.com has lost a key source of revenue in which it received postage discounts when customers used its service. That revenue has been key to its stock’s meteoric rise.

And Wall Street now views the meteor as a falling star.

Related:

EXCLUSIVE: Stamps.com Under Scrutiny; Potential Impacts On Small Volume Shippers

Controversy Swirls Over Stamps.com Postage Discounts …

… Window Book: “It Killed Our Business”

Online Postage War: SendPro Takes On Stamps.com

GLAZER: Does Stamps.com Scrutiny Mean End Of Postage Discounting For Low Volume Shippers?

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