Shutterfly 2010 Annual Report Download - page 25

International expansion will require management attention and resources and may be unsuccessful, which could harm our future business
development and existing domestic operations.
To date, we have conducted limited international operations, but we intend to expand into international markets in order to grow our
business. These expansion plans will require significant management attention and resources and may be unsuccessful. We have limited
experience adapting our products to conform to local cultures, standards and policies. We may have to compete with local companies which
understand the local market better than we do. In addition, to achieve satisfactory performance for consumers in international locations it may be
necessary to locate physical facilities, such as production facilities, in the foreign market. We do not have experience establishing such facilities
overseas. We may not be successful in expanding into any international markets or in generating revenues from foreign operations. In addition,
different privacy, censorship and liability standards and regulations and different intellectual property laws in foreign countries may cause our
business to be harmed.
The success of our business depends on continued consumer adoption of digital photography.
Our growth is highly dependent upon the continued adoption by consumers of digital photography. The digital photography market is
rapidly evolving, characterized by changing technologies, intense price competition, additional competitors, evolving industry standards,
frequent new service announcements and changing consumer demands and behaviors. To the extent that consumer adoption of digital
photography does not continue to grow as expected, our revenue growth would likely suffer. Moreover, we face significant risks that, if the
market for digital photography evolves in ways that we are not able to address due to changing technologies or consumer behaviors, pricing
pressures, or otherwise, our current products and services may become less attractive, which would likely result in the loss of customers, as well
as lower net revenues and/or increased expenses.
Purchasers of digital photography products and services may not choose to shop online, which would harm our net revenues and results of
operations.
The online market for digital photography products and services is less developed than the online market for other consumer products. If this
market does not gain widespread acceptance, our business may suffer. Our success will depend in part on our ability to attract customers who
have historically used traditional retail photography services or who have produced photographs and other products using self-
service
alternatives, such as printing at home. Furthermore, we may have to incur significantly higher and more sustained advertising and promotional
expenditures or reduce the prices of our products and services in order to attract additional online consumers to our website and convert them
into purchasing customers. Specific factors that could prevent prospective customers from purchasing from us include:
If purchasers of digital photography products and services do not choose to shop online, our net revenues and results of operations would be
harmed.
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the inability to physically handle and examine product samples;
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delivery time associated with Internet orders;
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concerns about the security of online transactions and the privacy of personal information;
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delayed shipments or shipments of incorrect or damaged products; and
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inconvenience associated with returning or exchanging purchased items.
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