Shutterfly 2009 Annual Report Download - page 14

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In 2008, we acquired Nexo Systems and with the integration of its technology and team, we launched our new sharing platform called
Shutterfly Share Sites. Shutterfly Share Sites enable customers to create personalized, secure websites for sports teams, school activities,
clubs and other tight-
knit social networks. With Share Sites, customers can post and share photos, videos, journals, calendars, forums,
polls, and widgets all in one place. Customers can personalize the look of the site by choosing from dozens of backgrounds and layouts
and by creating their own personalized URL address. To ensure the privacy of Share Sites, we offer users the choice of making sites open
or members only and allow for optional password protection.
We also launched Shutterfly Gallery, our community sharing platform, allowing customers to post their photo books, share their
thoughts and perspectives on storytelling, add photo books to their favorites list, rate and comment on other photo books, and share
interesting Gallery projects with friends and family with the “Email a Friend”
feature. When a customer finds a photo book they
particularly like, they also have the ability to “make one like this”
which uses the design and layout of that book as a template for a new
book using their own photos, captions, and titles.
Order and ship.
We provide convenient ordering and flexible shipping options. To order a product after it is created, the customer
adds it to his or her shopping cart and completes the billing and shipping information. Shipping addresses can be typed in or easily added
directly from a customer’
s Shutterfly address book. When a picture or product is being ordered, we flag photos of poor quality, usually
due to low resolution, to alert customers of potential quality issues. This helps ensure that a customer does not order an out-of-
focus or
poor quality picture. Customers can ship single orders to multiple recipients. We also offer several different shipping options, such as
next-day, two-day or regular service. Standard turn-
around times from the time an order is placed to the time it is shipped are one business
day for most print orders and two business days for other photo-based products manufactured by Shutterfly. For our photo-
based
merchandise manufactured on our behalf by third parties, turn-
around times vary, but generally range from two to five days from the time
we receive the order and transmit it to our manufacturer. We also offer premium services for addressing, stamping and mailing greeting
cards directly to recipients.
Archive.
We provide customers with unlimited storage of their photos, collections and projects at no cost to the customer. Customers
can also order a copy of their photos on a DVD for an extra fee.
Marketing, Advertising and Promotion
We use a variety of integrated marketing programs, including advertising, direct marketing technologies, channels, methods and strategic
alliances to attract and retain our customers. These methods include direct marketing over the Internet, e-
mail marketing to prospects and
existing customers, search engine marketing, and traditional direct marketing mailings such as postcards and seasonal catalogs. In addition,
because many of our products are either shared over the Internet or given as gifts, the appearance of our brand on the products and packaging
provides ongoing distribution as well as viral advertising.
We place targeted advertisements on websites and in publications, contract for targeted e-
mail marketing services and contract for
advertising placement on leading search engines. We also maintain an affiliate program under which we pay program participants for referral
sales generated from hyperlinks to our website from the affiliate’s website and in promotional materials.
We maintain alliances with complementary companies. For example, we have co-
marketing and promotion arrangements with companies
such as Delta Airlines SkyMiles, David’
s Bridal, and Proctor and Gamble. In 2007, we began a relationship with Target Corporation where we
provided our customers the ability to order their 4x6 prints online and pick them up at select local Target store in as little as an hour. We also
offer an in-
store suite of prepaid products including photo books, adventure books, photo gifts, and gift cards. Customers may purchase these
products at select Target stores and redeem them online at Shutterfly.com.
In addition, from time to time we create co-
branded versions of our website. In general, these arrangements involve payment of a
commission to or revenue sharing with these companies for sales of our products and services generated through these websites.
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