Whats gone wrong with Stamps.com? When $2 bn in market value gets wiped off in a single day, it is definitely a concern for investors. What triggered the loss was the company ending its tie up with USPS. The reason for the company ending this partnership seems valid to start with. 2 days guaranteed shipping has become the norm in the Industry. While most major logistic providers guarantee some kind of early shipping, US Post doesn't. However the main reason the Company provides for terminating its contract with USPS is Amazon's foray into eCommerce delivery.
Whether this move will be a long term gain or pain for Stamps.Com remains to be seen in this fast moving business. Will the nimble agile private players be able to totally disrupt the major Govt run logistics business with their strategic forays?
What is Stamps.Com
A favorite small cap stock among Wall Street analysts, Stamp.Com provides online mailing and shipping, logistic services, primarily partnering USPS. Now that partnership seems to be at an end. Stamps.com allows one to print postage stamps, shipping labels, calculate exact postage value, takes care of insurance, all the while avoiding the trip to the post office. With all the associate work in posting / shipping taken care of, one just needs to schedule a pick up or drop the mail.
With the partnership with USPS over, the company will need to rethink many aspects of the business.