Shutterfly 2008 Annual Report Download - page 7

Our Growth Strategy
Our goal is to grow our business, build a premium lifestyle brand and become the leading online provider of products and services dedicated to improving the sharing and
preservation of personal memories through social expression and personal publishing. We believe the combination of our focus, our dedication to customers and the benefits we derive
from our vertically integrated production facilities will allow us to profitably capture a significant share of our addressable markets. In addition to strong consumer trends supporting
our business — such as the proliferation of digital cameras, higher broadband penetration and greater adoption of Internet related e-commerce and communication services —
we
believe our growth will be supported by the following initiatives:
Expand customer base. We intend to expand our customer base and continue to promote the Shutterfly brand. We will leverage existing channels, which include word-of-
mouth referrals from existing customers, print advertising, catalogs, online advertising, search engine marketing and complementary alliances with other companies such as
Sony, David’s Bridal and Delta Airlines. We have also begun to expand our customer base through our offerings at Target stores, including in-
store placements and ad circulars
which complement our retail sales and “print-to-Target” offerings.
Expand product and service offerings. We will continue to innovate in order to increase the breadth and depth of our products and services, including prints, photo-
based
merchandise and ancillary products. During 2007, we have launched numerous new products, including “designer” cards, children’
s story books, personalized jewelry, holiday
ornaments, custom framing, square-
format scrapbook pages, digital scrapbooking card, calendar and photo book templates, and licensed content themed photo books including
Martha Stewart, Dora the Explorer, Go Diego Go, and the Sesame Street adventure book.
Increase sales to existing customers.
We intend to increase both average order value 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 vertical integration by expanding our 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 product offerings. For example, in
2007 we formed the Shutterfly Scrapbook Advisory Team, a team of scrapbooking experts, to advise us in product and services developments targeted toward
scrapbookers. During the year, we introduced new scrapbook page formats, enhanced the visibility of scrapbooking on the Shutterfly website, and launched a holiday blog for
scrapbookers, to provide a forum for discussions around printing holiday scrapbook pages greeting cards using the Shutterfly service. In 2008, we announced a strategic
relationship with CK Media Scrapbooking, the industry’s largest print publisher, and the introduction of two new designer scrapbooks.
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 2007, Shutterfly announced many enhancements to 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 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 services, we do not compress image files as part of the upload process, which we believe
preserves quality and photo resolution.
Organize and find. Customers initially upload their photos into user-
defined albums. We offer multiple ways to further organize and find pictures. For example, customers
can automatically sort photos within albums by upload date, photo titles or original filenames. Additionally, customers can quickly search for photos in a number of ways,
including by text, date taken, upload date and images ordered on prints or specified products. Customers can also use our “favorites”
function to tag their favorite photos with a
star rating system on both the website and within Shutterfly Studio.
View and enhance.
Once photos have been uploaded to Shutterfly, customers can choose to view their photos in a variety of ways, including photo slideshows. To improve
picture quality, customers also have access to our free online editing and image enhancement tools. In addition to cropping and red-
eye removal, we offer a variety of creative
options, such as saturating photos with additional color or changing color shots to black-and-
white or sepia. Customers are also able to choose from a wide variety of photo
borders. We offer free customized back printing on photos and the option to add captions to many of our products. Customers can view and enhance their photos online or on
their desktop via Shutterfly Studio, which easily integrates with our website. Shutterfly Studio provides advanced viewing and enhancing capabilities such as full screen
slideshows, cropping, red-, blue- and green-eye removal, sharpening, auto adjustments and captioning.
Create.
We enable customers to create a variety of personalized products from their photos, including prints in wallet, 4×6, 5×7, 8×10, 11×14, 16×20 and 20×30 sizes,
greeting cards, calendars, photo books and other photo-based products and merchandise. Our highly-interactive, design-it-yourself “creation paths” help even first-
time
customers make professional-looking, high-quality prints and products. Customers can easily design each product by following simple step-by-
step instructions and using
intuitive features, such as dragging and dropping an image into a template. Our technology then generates an image of the customer’
s product on screen so that customers can
make any desired design choices or changes and then view the final product to ensure satisfaction before purchase. Customers can also save in-
process projects and return to
them at a more convenient time to finish and purchase.
Recent enhancements made possible from innovations in our personal publishing platform include:
•
an easy
-
to
-
use search capability for our customers to find products and services;
•
new adventure books featuring Dora the Explorer and Sesame Street;
•
designer cards from popular designers;
•
additional photo gift products such as photo ornaments;
•
dozens of collage formats on calendars and poster prints; and
•
partnership with Target for pick up at Target retail stores.
•
a significantly expanded product offering, with many form factors and design choices including personalized photo covers with printing on the spine, 8x8 Story Books and
12x12 Memory Books;
•
a wide variety of background designs including numerous pre
-
set style templates organized across popular categories such as Wedding, Travel, Birthday, Baby, Kids,
Class Year Book, Recipe Book, Portfolio and Journal;