A local Internet company is starting to put its stamp on online retailers.

Stamps.com Inc. has traditionally considered its core market to be small businesses and people who work out of their homes. The Marina del Rey-based company’s subscription service allows customers to print postage stamps on adhesive paper in their home or office. Stamps.com markets its service as a time-saving alternative to waiting in line at the post office.

But recently the company began moving into a new market: individuals and small business people who sell items on Internet retailers such as eBay, Amazon, Google Checkout and Yahoo Marketplace. Earlier this month, Stamps.com announced new software that the company claims will streamline the postage process for those who do much of their business on such retail sites.

Stamps.com is being particularly aggressive in trying to capture eBay users: It’s offering them free shipping through the end of the year if they subscribe to Stamps.com’s service by then.

It’s a significant step for Stamps.com, which has seen its stock price falter as its traditional market of small businesses has been crippled by the recession.

“This is an evolution of our product,” said Chief Executive Ken McBride. “The e-commerce area is one we haven’t tackled yet in terms of building better integration. Now we should see better penetration of our product into that market.”

Stamps.com does not have a deal with Amazon, eBay or other Web sites. Instead, it is trying to appeal to the individuals and small businesses that are heavy users of those sites, such as small manufacturers and retailers. Stamps.com is using direct mail and Internet ads to reach them.

The push could be an encouraging signs for shareholders, who have seen Stamps.com shares fall from a high of almost $39 in 2006 to about $9 recently. The company’s annual net income also declined: In 2006, it reported a profit of $16.5 million compared with $10.2 million in 2008.

The recession has been particularly tough for small businesses, which have cut back on services including Stamps.com’s, said George Sutton, managing director at Craig-Hallum Capital Group LLC in Minneapolis, who follows the company.

As its core business has been squeezed, the company has tried to compensate by branching into a growth sector. Internet retail is projected to grow at a blistering pace, from about $132 billion in 2008 to almost $189 billion by 2011. The numbers come from eMarketer Inc., a New York research firm.

“We’re big believers in online retail as a category, and obviously Stamps.com is positioning itself to capture a bigger part of it,” Sutton said. He recently upgraded the company’s stock from “neutral” to “accumulate,” partly because of Stamps.com’s marketing initiative to users of eBay and other e-commerce sites.

Past conflict

Stamps.com had tried to integrate its services with e-commerce in the past. The company was on the verge of a deal in 2002 that would have allowed eBay users to print postage using Stamps.com’s technology. The service was slated to launch in holiday season 2002.

But eBay decided to go with a service offered by Pitney Bowes Inc., a Stamford, Conn.-based postage machine company and Stamps.com’s main competitor. Stamps.com sued eBay and its PayPal subsidiary, which was a party in the deal, alleging breach of contract. The lawsuit was settled out of court for undisclosed terms.

McBride said the past history with eBay had no bearing on the relationship between the two companies now.

“We’re on fairly amicable terms with eBay,” he said.

EBay did not return a request for comment.

The expansion into Internet retailers is part of a broader campaign by Stamps.com to diversify its customer base. Over the past year and a half, the company has started to market itself to large and midsize businesses that have a network of satellite offices as a cheaper alternative to buying Pitney Bowes machines.

Stamps.com executives targeted larger companies because they calculated that such businesses would have lower turnover and provide more reliable revenue streams than small firms, said Jeff Carberry, Stamps.com’s director of finance.

Carberry declined to say how much additional revenue the company stands to gain if its joint expansions into larger businesses and Internet retailers are successful.

Analysts said the number is difficult to calculate, but that if Stamps.com can convince larger companies that its service is less expensive and more efficient than Pitney Bowes machines, it could give the company a boost.

“Longer-term initiatives targeting large enterprises and high-volume shippers hold promise for accelerating the company’s PC Postage revenue growth and enhancing the ‘stickiness’ of its customer base,” wrote Kevin Liu, an analyst with B. Riley & Co. in Los Angeles, in a note to investors.

Because Stamps.com is debt free and has $70 million in cash, Liu gave the company a “buy” rating.

But Stamps.com’s ambitions carry risks. The recession has forced even large corporations to tighten their belts, potentially making it difficult for Stamps.com to convince them to sign up for a new service.

Also, the company’s efforts to move into the corporate sector put it in face-to-face competition with the much larger Pitney Bowes, with more than 25,000 employees and a market cap in the billions of dollars. By comparison, Stamps.com has 190 employees and a market cap of $146 million.

“There’s a relatively competent competitor in this market already,” Sutton said.

Analysts also point to Stamps.com’s “churn rate” – the rate at which it loses subscribers – as a cause for concern. Currently, Stamps.com loses about 3.8 percent of its customers every month, a relatively high rate that the company will have to push down if it wants to increase its growth.

McBride said Stamps.com was aware of the hurdles it needs to clear. But he believes that the company was up to it.

“Of course there are always challenges in new areas, but we’re excited with progress we’ve made,” he said.

In the mail

Founded in 1996, Stamps.com is one of only three companies in the country certified by the U.S. Postal Service to sell postage over the Internet. The other two are Pitney Bowes and Endicia Internet Postage, a Palo Alto company that was acquired by Newell Rubbermaid Inc. in 2007.

While Pitney Bowes served large businesses and Endicia focused on shipping companies, Stamps.com originally honed in on the small business market. Subscriptions to its software service typically cost $16 to $25 a month, and allow customers to print postage from their home or office computers.

Stamps.com provides subscribers with a scale that can be plugged into a computer to weigh packages and letters. It also gives them adhesive stickers that can be run through a printer to create postage.

The company also offers a service called PhotoStamps, which allows users to create customized stamps from photographs or company logos. Businesses, for instance, that want a personal imprint on their postage can use PhotoStamps to do so. The program has proved successful, although revenue has declined in the past year.

More than 85 percent of the company’s revenue comes from the postage printing business, and Stamps.com’s effort to capture Internet retail and larger business signals it continues to see growth potential in postage.

Sutton, for the most part, agrees.

“We’re encouraged, and we continue to see enthusiasm around these new programs,” he said.