**E-Stamp Phases Out Internet Postage to Focus on Web-Based Shipping and Logistics
E-Stamp will reduce its staff by approximately 30 percent -- or about 40 jobs -- and is redeploying its organization and resources toward shipping and logistics. As of the end of the third quarter this year, E-Stamp's cash and cash equivalents totaled approximately $40 million.
Robert Ewald, president/CEO, outlined details of the transition and thanked customers for helping to pioneer Internet postage in a letter to its 120,000 small-office/home-office customers.
"The business reality of operating in a highly-regulated environment -- where the postal service sets the rules, regulations and prices -- combined with the change in valuation models of Internet companies were key factors influencing our decision to phase out our postage business and leverage the greater opportunities presented by shipping and logistics," he said.
"We were growing in terms of the number of customers, but they were not purchasing as much postage as we had forecasted," Ewald said. "And we found that it was expensive to acquire customers, far more than we had anticipated."
Ewald added that phasing out its Internet postage business was in the best interest of its shareholders. In addition, he said E-Stamp found that many of its customers were doing both mailing and shipping -- and that shipping could bring the company more revenue per transaction.
"Over the past two quarters, E-Stamp has steadily been outlining a more aggressive move into shipping and logistics," Ewald said. "At the same time, we have seen less favorable results in our Internet postage business. We have therefore determined that our best course of action is to phase out Internet postage and redeploy our resources toward the greater market opportunity presented by our logistics solutions."
E-Stamp entered the logistics business in May when it acquired Infinity Logistics Corp. and Automated Logistics Corp., two Redwood City, CA-based e-commerce logistics companies. IL's key products included DigitalShipper.com, which integrates United Parcel Service, Federal Express, the U.S. Postal Service and most major small-package and freight carriers into one customized Web site. It also offers e-Warehouse, a warehouse management system that provides receiving, inventory, reporting and shipping capabilities. ALC provides E-Stamp with expertise in enterprise shipping and supply-chain management.
Customers for these shipping solutions include Oracle, Intel, Sony Music, SanDisk Corp., Symbol Technologies, iPrint and the California Department of Forestry. Two hundred customers use DigitalShipper, and three customers use e-Warehouse.
In order to facilitate a smooth transition for customers, E-Stamp has partnered with Neopost Online, the online services division of French postal equipment maker Neopost, to encourage customers to adopt Neopost's Internet postage solution, called Simply Postage.
Like E-Stamp Internet Postage, Simply Postage is an e-postage product that uses its own hardware, software, an Internet browser and a printing device to allow customers to print postage off the Internet.
"To enable our customers to continue enjoying the benefits of Internet postage, we encourage them to switch to Simply Postage, the Internet postage product of Neopost Online," Ewald said. "After reviewing all the industry vendors, we selected Neopost, which has a reputation for high-quality products and customer service, 70 years of experience in the postage industry and tremendous knowledge of this highly regulated environment."
E-Stamp ceased shipments of its Internet Postage starter kits on Nov. 24. Customers may continue to purchase postage until Dec. 31. E-Stamp will provide customer support and accept returns of postage and vaults through March 1, 2001.
Neopost Online, Redwood City, CA, currently has special offers available for all former E-Stamp customers who migrate to its Simply Postage products. E-Stamp customers will be notified of these special offers via e-mail and direct mail.
Ewald said the Postal Rate Commission's recent recommendation for the creation of a new classification and discounted rate for First-Class mail sent using Internet postage did not factor into his decision at all.
"We had hoped that the PRC would recommend a rate decrease for online postage," Ewald said. "However, what they did was recommend a new rate classification, and then offer the possibility of a lower rate, which could take much longer to be implemented. Frankly, we were disappointed with their decision."