Emeline WATTIN PART I - Strategic analysis: Porter’s 5 forces analysis :
CASE 5 – Stamps.com
Threats of substitute are moderate, between a high and a low threat.
First there is a threat coming form customers who can just go to a US post office and buy what they want there. The threat of substitute can come also from direct competitors such as Endicia.com and Pitney Bowes as they offer to customers the same kind of products and services. However we can assume that Stamps.com has a more improved products and services towards them. There is one product that cannot be substituted by another, it is the one of PhotoStamps. And Stamps.com has a great advantage with that innovative product. • Threats of entry of new competitors are low.
First, as explained in the case, to create a PC postage service, people need a USPS approval. No one can launch the service as he wants. And it takes probably a long time for someone to get this approval. There is a barrier regarding the legal challenge. There are lots of patents in that industry. So a firm can quickly sue you for « patent infringement » as it was the case with Stamps.com and Pitney Bowes. There are also structural barriers. To compete, the new firm will have to make hudge investment in research and development to create software that can have a chance to compete with those already made. Finally, the PC Postage industry is not a fragmented inustry as it is dominated by 3 companies and as one of them, Stamps.com has more than three quarters of market share. It is even more difficult for a new company to grab market share and to survive. The suppliers’ power can be considered as between moderate and high .
After research, it appears that PC Postage industry has only one supplier. When there is a supplier concentration in an industry, then these/this supplier(s) have power. The bargaining power of PC postage companies is then very low.
The customers’ power is relatively low....
Please join StudyMode to read the full document