Peddling postage over the Internet

Niche: The U.S. Postal Service has granted permission to two companies to sell stamps over the Internet.

November 30, 1999|By Mark Ribbing | Mark Ribbing,SUN STAFF

Caro Manokian, a 44-year-old transit engineer from Linthicum, went to Baltimore-Washington International Airport yesterday to catch an afternoon plane to Seattle. Before going to the gate for his United Airlines flight, Manokian sent his 6-year-old daughter, Ava, a holiday card decorated with a drawing of two polar bears.

A typical act of seasonal cheer, but there was something unusual about it: The stamp on the bright red envelope was not bought at a post office counter or vending machine, but was printed from the Internet. No lines, no hassle -- just a digitally generated bar code that will be read as valid postage on its journey to the hands of a little girl.

Manokian was the latest customer for a service that could change the way Americans send mail. In August, the U.S. Postal Service granted permission to two private companies to sell stamps over the Internet. According to technology research firm International Data Corp., the online-postage market could be worth more than $1 billion in four years.

"It's cool," Manokian said of the technology. "I don't have to go to the post office. I do a lot of mailing. With this, I could do it from home."

Manokian sent the card -- complete with adhesive, Internet-generated "to" and "from" labels -- from a tall, red-white-and-blue kiosk set up yesterday at BWI by Stamps.com Inc., one of the companies chosen by the Postal Service to provide online postage.

The Santa Monica, Calif., company is hoping that other travelers at BWI are similarly enthusiastic about its product. The airport is the first stop in a tour that will take the traveling kiosk to cities around the country.

The kiosk will be at BWI through tomorrow. Jeffrey L. Green, Stamps.com's vice president, said BWI was chosen for the kiosk's debut because the Baltimore-Washington area was found to have high concentrations of home-based and Internet-connected entrepreneurs, the kinds of people who make up the company's richest potential market.

But why set up the display in an airport? Because, these days, that's where such people can be found. "The businessperson travels often, particularly around Thanksgiving," Green said. "I thought this would be a good time to introduce potential customers to our service."

The company -- which normally levies a 10 percent postage premium -- is offering free postage at the BWI kiosk.

Green founded Stamps.com in September 1996 with two buddies at the University of California at Los Angeles's business school, Ari Engelberg and Jim McDermott. It was a project born of frustration: McDermott had wanted to send a batch of resumes before an 8 a.m. class only to find that the post office would not open until 9. He found it odd that one could write a letter and even print an address label on a computer, but then would have to schlep to the post office for the stamp.

Believing that they had found a lucrative niche, the three men began wooing the Postal Service in March 1997, seeking permission to send postage-ready stamps online. Now that this has been granted, Stamps.com has to watch its back. In addition to the other company chosen by the Postal Service, E-Stamp Corp., postal-meter giant Pitney Bowes Inc. is poised to enter the market early next year.

Like most other Internet businesses, online postage is fraught with up-front losses and uncertain payoffs. Stamps.com reported a loss of $14.4 million for its third quarter, which ended Sept. 30.

William P. O'Connor, an analyst with Fourteen Research Corp. in New York, said of the online-postage industry, "It's pretty hard to tell if it will start making money or if it's one of these [Internet] things where there's a lot of hoopla and they don't make any money."

B. Alex Henderson of Prudential Securities Inc. in New York took a more optimistic approach, noting the sheer size of the potential market. "There are 22 million businesses in the U.S., 1.5 million of whom have a [postage] meter," he said. "The rest of them are people who have to go to the post office to buy stamps. This is a solution that allows me to seamlessly go online and avoid having to deal with the post office."

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