Shares of Stamps.com continued to plunge during Friday trading following the shipping company’s announcement during its earnings call that it’s ending its exclusive partnership with the United States Postal System.
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"We will no longer be exclusive to the USPS, and that's non-negotiable," CEO Ken McBride said during the Thursday earnings call.
That’s because the USPS did not agree to new terms of their partnership proposal -- “and of course that included financial compensation” -- McBride said. Instead, Stamps.com will embrace its partnerships with other carriers, including UPS, FedEx and Amazon.
“We would walk based on that alone because our customers can no longer survive on just USPS, and we don’t see that as a viable option for the next five years,” he said. “Right now as you know we are exclusive to the USPS in our sales efforts when we offer the stamps and Endicia solution in our sales process.”
While McBride said Stamp.com will still allow customers to print out stamps, he acknowledged it would likely have a negative financial effect for the next few years. He said he expects revenue to fall by up to 8 percent this year.
“The short-term financial impact we experience as we forego our shipping revenue share with the USPS will represent some short-term pain for us over the next few years,” he said.
Part of the reason for the termination of the partnership, McBride said, is because of Amazon’s foray into the delivery business.
“Amazon's track record of disrupting an industry is well established,” he said. “So their threat should be taken very seriously by every player in the shipping industry. We are setting our corporate strategy assuming Amazon will be a big global player in shipping.”