Shutterfly 2007 Annual Report Download - page 12

Table of Contents
Increase sales to existing customers. We intend to increase both average order size and repeat orders per
customer by expanding our products and services, tailoring our offerings to encourage additional purchases for
different holidays and life events and increasing our cross-selling and up-selling activities.
Leverage vertical integration. We will continue to invest in making our business even more vertically
integrated by adding additional in-house production capabilities. We believe this will allow us to extend our
objectives to provide the highest quality products and services at the lowest possible costs, to provide
exceptional fulfillment and customer service, even at peak demand periods, and to continue to innovate rapidly
with new products and services.
Develop new lines of business. We intend to continue to leverage our existing systems and capabilities to
develop additional adjacent lines of business. For example, our Pro Gallery service, targeted to professional
photographers, provides end-to-end fulfillment services, including hosting online photo galleries and providing
the printing, payment and order fulfillment functions. For our Pro Gallery line of business, we earn revenues
from annual gallery maintenance fees, individual print orders and a transaction fee.
In addition, in 2006, partnering with Scholastic, Inc. we launched Picture Perfect Language Arts, a program
to help teachers offer new ways to build students’ skills in language arts through the powerful medium of
photos. The program, developed for kindergarten through third grade teachers, combines Shutterfly’
s experience
in digital photography and personal publishing with Scholastic’s education expertise to offer a new perspective
on teaching language arts while bringing more creativity into the classroom.
International expansion. We intend to develop additional business opportunities through international
expansion, targeting consumers in key geographies where digital camera penetration is high and where Internet
usage and e-commerce are widespread.
Products and Services
Using the Shutterfly service is easy, convenient and fun. Our website is designed to be simple, uncluttered and
inviting, and we work continuously to enhance the customer experience of the website, while also improving ease of
use. In the second half of 2006, Shutterfly announced the first phase of our innovative personal publishing platform,
which includes:
There are only five navigational “tabs,” which correspond to the primary activities offered by the website —
Add Pictures, View & Enhance, Share Online, Order Prints and Shutterfly Store. If consumers decide to either
upload pictures or purchase products, they register on the website and begin the following process:
Upload. Customers can upload digital photos from their computer to our website one at a time, many at
once through simple drag-and-drop or by using Shutterfly Studio, our new photo organization software. There
are no limits to photo file sizes and the upload processes are accelerated by multi-threading, which enables
photos to be uploaded simultaneously, thereby reducing image upload times. Unlike some competitive
7
•
an
easy
-
to
-
use
AJAX
-
based,
drag
-
and
-
drop
website experience;
•
enhanced sharing and personalization features;
•
a significantly expanded product offering, with many form factors and design choices;
•
a wide variety of background designs;
•
dozens of collage formats on our greeting
-
cards; and
•
licensed content and customized storybooks.