Online Stamp Idea Fails To Stick

At first blush, it is one of those forehead slapping ideas that makes you wonder why you didn’t think of it first. Selling postage over the Internet seems like a killer application of e-commerce technology. So why isn’t everyone logging on to buy stamps?

Stamp of Disapproval

So far, E-Stamp and Stamps.com have managed to rack up sizeable financial losses — in the neighborhood of $20 million (US$) for each in the first quarter of this year — and acute disappointment among their investors.

San Mateo, California-based E-Stamp has watched its stock price fall below the embarrassing $2 level — down nearly 100 percent in eight months. Stamps.com, which is based in Santa Monica, California is also trading at an all-time low of $8. The stock once flirted with the $100 per share level.

The stumbling of the online stamp vendors is an e-commerce riddle that should keep executives, true believers and venture capitalists lying awake at night. If something that seems so right is apparently wrong, is there a big flaw in the grand scheme?

Wait a Minute, Mr. Postman

Few consumers spare much love — or even much like — for the United States Postal Service (USPS). Even though the post office provides a vital service, it has long been denigrated by the public.

Many people still think of it as a branch of the government, which may account for some of the negative attitude. Long lines and understaffed counters don’t help. One would think that the negative aura surrounding the post office would be enough to give online stamp purchasing a strong jumpstart.

To its credit, the USPS has tried to turn things around in the customer care arena, building new post offices that resemble retail stores, training its clerks to be more helpful, and rolling out its own online services, including stamp purchasing and electronic bill payment. It had to, after all, given the competition from UPS and other package carriers, as well as from its most threatening adversary, e-mail.

But no matter how pleasant the post office surroundings, stamp buying still rates high on the list of nuisance chores for most people — akin to dropping off the dry cleaning or picking up a gallon of milk. But there usually aren’t around-the-block lines at the dry cleaners or the convenience store. Queuing up at the post office can sap the productivity out of an entire business day.

It seems logical that anyone with a connected PC would prefer going online to standing in line to get stamps. So why are the postage e-tailers faltering? Of course, anything new will encounter some resistance. But since stamps have been available for purchase over the Internet for more than a year, that excuse is just about worn out.

Window Closing

A 10 percent surcharge may be keeping some people away from the postage Web sites, but what is a reasonable price for convenience? Those who have vested interests in online postage sales chalk up the consumer lethargy to the old saw that the public is slow to come around to new ideas.

Like most old saws, there is a kernel of truth in it, and it may be heightened when it comes to online stamp sales. That is because many analysts believe online postage may have only a brief window of time to make its mark — and its money — before technology completely eradicates the need for stamps.

As online bill payment grows, these analysts say, the need for stamps of any kind will drop sharply. And it may not take too long. According to the USPS, the $17 billion market market for first-class mail will drop for the first time ever in 2003 and will likely slide steadily southward after that.

So the time for selling stamps on the Internet is now. Even so, the public has not caught the fever.

Wave of the Future?

The issue is about a whole lot more than stamps. Electronic postage is the harbinger of a technology that will allow people to print out other online purchases — from concert and sporting event tickets to money orders and gift certificates. The underlying reluctance of the public to move to online stamp buying may be due to a deep distrust of the technology itself.

Once again, the speed-of-light pace of change on the Internet is both a blessing and a curse and it is something that cannot be overlooked when trying to understand the consumer mindset. Training people to buy stamps online means getting them to unlearn a time honored — albeit onerous — tradition.

And that is no easy task. It is the equivalent of throwing a longtime incumbent out of political office. Incumbents win not only because they have more money to spend, but because people must be compelled to change. The opponent might be better — maybe even a lot better — but in order to get voters to change course, you have to really light a fire under them.

Friendly Persuasion

That probably means making it easier to get started, for one thing, which could be accomplished by giving away the software — perhaps even some free postage — as a loss leader. Remember, people who pay Kozmos and its competitors to bring them a carton of milk don’t have to buy and install any software first.

Or it might take an all-out advertising blitz to jog customers out of their old routines. Stamps are a small-ticket item, so giving away 5 free with every 20 purchased would appeal to the bargain hunters who abound on the Web. And it might get people hooked.

Which is exactly what has to happen. It is not enough to say that something is convenient — it has to be proven. And as long as people are used to buying stamps the way their parents and grandparents did, the online alternative will never build sufficient momentum to reach critical mass. If too few people try it, a good idea is all it will ever be.

The fact that customers are resisting the opportunity to buy stamps at any hour of the day, from anywhere, without waiting in line — in an era when convenience reigns supreme — may mean that the stamp vendors should consider going back to the drawing board. Perhaps instead of winning customers with gentle persuasion, they need a wild and crazy gimmick.

At the very least, the struggle of the online stamp stores highlights an increasingly obvious fact of e-commerce life: Good sense has little power to change old habits.

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