Stamps.com ends USPS partnership, stock plummets 50%

Company says Amazon disrupting shipping business

FreeImages.com/Sabine Simon

1992: Self-adhesive stamps are introduced nationwide. They were first tested in 1974.

Stamps.com says it is ending an exclusive relationship with the US Postal Service, sending shares of its stock plunging more than 50%.

The company says Amazon is disrupting the shipping business, and it needs to do shipping deals with postal service competitors going into the future.

Amazon has popularized two-day shipping with its Prime service, and Stamps.com says its customers demand two-day shipping guarantees. FedEx, UPS and DHL offer those guarantees. The Post Office doesn't.

"One of our nonnegotiable items is that ... we will no longer be exclusive to the USPS," said CEO Kenneth McBride in a call with analysts on Thursday evening. "USPS has not agreed to accept these terms or any other terms of our partnership proposal."

McBride said Stamps.com opted to discontinue its shipping partnership with the Postal Service so it 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."

USPS declined to comment on the news.

Stamps.com will still allow its customers print out stamps, but McBride said that decision to end the exclusive deal will cause "some short-term pain for us over the next few years."

He said that it now expects revenue to fall as much as 8% this year. Analysts forecast had forecast sales would grow by more than 16%. McBride said a key reason why Stamps.com made its decision to end the Postal Service partnership was Amazon publicly stating it will get into the delivery business itself.

"Amazon's track record of disrupting an industry is well established. So their threat should be taken very seriously by every player in the shipping industry," he said. "We are setting our corporate strategy assuming Amazon will be a big global player in shipping."

Shares in Stamps.com ended the day down 58%.

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