Royal Mail is the leading provider of postal and parcel delivery services in the UK. We deliver to over 230 countries and territories worldwide.
Stamps.com shares now only worth 20% of previous value
Stamps.com shares lost over half their value (again) on the announcement of lower revenue and earnings expectations for the rest of the year. On the news their share price tanked from around $83 to $40.
This is exceptionally bad news as the Stamps.com shares price already lost over half it’s value in February when it nosedived from a high of over $200 to trade at around $85.00. The result is that Stamps.com is now only worth about a fifth of the value they had at the start of the year.
Stamps.com decided to walk away from a deal they previously had with USPS seeing them earn commissions for each label they printed. They now say that USPS is renegotiating with around 125 resellers who are also likely to see lower commissions in the future. Stamps.com of course on walking away lost all their commissions and say that they are focusing on other carrier arrangements.
This doesn’t appear to be a one off situation, it’s also happening with Royal Mail in the UK who have decided to dump NetDespatch and nick all their customers insisting that they go direct through Royal Mail Click & Drop or through API connections. In the case of NetDespatch however it’s a truly bizarre situation as Royal Mail actually acquired NetDespatch so any commissions paid for labels produced stayed within the Royal Mail group of companies.
It’s worth pointing out that as Royal Mail are transitioning customers from NetDespatch to Click & Drop and API, their solution fell over on Friday afternoon – one of the busiest times of the week just as they are migrating new customers on to the system which doesn’t bode well for the future as even more customers are migrated.
The future for both NetDespatch and Stamps.com is unclear, especially so for NetDespatch who will end up being a Royal Mail owned company unable to print Royal Mail labels but still printing them for Royal Mail’s competitors.
Stamps.com at least have chosen the path that they are moving down which is to start charging their customers to cover operating costs of printing labels who can if they wish still print USPS labels. Their choice is to concentrate on other carriers ending their exclusivity with USPS but with their recent lowered revenue and earnings forecast it’s going to be a painful process.
If this proves to be an ongoing phenomenon that postal carriers around the world become more reluctant to pay commissions for third party label printing services then the companies involved in this business will have to seek new revenue streams. Stamps.com assert that working with alternative carriers will pay dividends in the long term and NetDespatch will have no option other than to do this also.
It’s likely that both companies will have to seek alternative revenue streams which could include powering solutions for carriers (either by printing labels or through offering white label solutions), or diversifying into alternative services, perhaps such as powering returns solutions.