What the Stamps.com acquisition could mean for e-commerce shippers
Thoma Bravo, a software investment firm, recently acquired Stamps.com, an online provider of mailing and shipping solutions in the US and Europe. The acquisition will likely help Stamps.com quickly transform its platform and services to address domestic and cross-border shipping needs in an evolving e-commerce environment.
“Today’s announcement marks a significant milestone in the history of Stamps.com and will provide us with a new and exciting platform from which we can continue to execute our global strategy driven by best-in-class software and technology solutions,” said Ken McBride, Stamps.com’s Chairman and CEO in a statement. “With the financial and operational support of Thoma Bravo, Stamps.com can continue to innovate and pursue growth opportunities to capture the expanding e-commerce shipping market and extend our position as the leading global multi-carrier e-commerce shipping software company.”
Indeed, long dependent on its exclusive United States Postal Service (USPS) relationship, the two parted ways in 2019. While USPS postage and labels are still available for purchase on the platform, Stamps.com company officials noted that “customers may see other carriers and service options.” A smart move particularly as USPS undergoes a redo of its own and is said to be scrutinizing agreements with partners and customers as it digs out from its significant debt.
In October 2020, Stamps.com announced a partnership with UPS in which Stamps.com customers would have access to UPS services with special discounts of up to 62%.
Currently, Stamps.com has carrier relationships only with UPS, USPS, and via its UK-based Metapack subsidiary which has over 400 carriers on its platform.
Going Global
Stamps.com outlined its 2021 strategy in its annual report. Even though Stamps.com said its strategy was subject to change, I somehow doubt much, if anything, will change particularly now that it has been acquired by Thoma Bravo and is going private.
I believe it’s because of their 2021 strategy that it agreed to be acquired - The money that Thoma Bravo will invest into Stamps.com will help it scale quicker than if Stamps.com opted to do it on its own.
Most notable in its strategy was its plan to transform its business into a global multi-carrier and e-commerce company. A step was made towards this goal in 2018 when it acquired Metapack. Metapack provides carrier options through its online platform. While it notes it’s international, its strength remains in Europe.
Don’t be surprised if Stamps.com adds carriers from different modes of transportations such as less-than-truckload, crowd-sourced providers and additional air service providers (other than UPS) as well as efulfillment options to its platform. - perhaps transforming it into a combination of a transportation management system (TMS) on steroids and a global trade management system (GTM).
A valuable lesson that many shippers learned last year was the need to diversify their shipping options, I’m sure Stamps.com took note of that trend. Also, for small and medium-sized shippers, there is also a need for a quick and easy-to-understand global solution for international shipping. Stamps.com could possibly be that provider - read on…. 👇
Stamps.com also plans to expand its features and functionality of solutions as part of its 2021 strategy and finally, this is where I expect to see Thoma Bravo’s financial assistance to really play an important part - Stamps.com plans to continue to offer services such as its consolidation services program, shipping with customer benefits such as free package pickup, loss-protection coverage, upgraded delivery speeds, enhanced tracking, simpler customs procedures, and other benefits. These value-added services will help Stamps.com set itself apart from an already crowded market plus, technology investments in AI, machine learning and more will be necessary as well.
Evaluation of Subsidiaries
But first, Stamps.com will need to evaluate its current holdings and perhaps consider consolidating or sell off some of its subsidiaries as it embarks on a transformation.
Under the Stamps.com umbrella, the following subsidiaries currently exist:
Endicia - Acquired in 2015 from Newell Rubbermaid, Endicia provides high-volume shipping technologies and services for USPS shipping.
Metapack - Acquired in 2018.
ShippingEasy - Acquired in 2016, ShippingEasy provides online multi-carrier shipping software that allows online retailers and e‑commerce merchants to organize, process, fulfill and ship their orders.
ShipEngine - Shipping API provider.
ShipStation - Acquired in 2014, provides shipping technology that can be integrated into shippers’ order fulfillment solutions.
ShipWorks - Acquired in 2014, offers multi-carrier shipping options and features including sending email notifications to buyers, updating online order status, generating reports.
How successful Stamps.com will be in this transformation remains to be seen. It may, perhaps, look to Pitney Bowes as guidance. Pitney Bowes is another company that has long been dependent on its relationship with USPS. However, it has undergone significant changes over the years to diversify while still maintaining a positive relationship with USPS.
In addition, Stamps.com will need to understand and be aware that partners such as UPS are also competitors while technology providers/startups are entering the market at a rapid clip. Stamps.com will need to act quickly and differentiate itself or risk being left behind.
- Cathy
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