Shutterfly 2010 Annual Report Download - page 7

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Please find page 7 of the 2010 Shutterfly annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

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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. We have specifically focused on features that make it easier for customers to personalize products, such as the
launch of Simple Path, and offerings that provide new and different occasions to engage with Shutterfly, such as our expanded
set of cards and stationery designs.
We continue to focus our efforts to expand our advertising and sponsorship line of business within the PPS category. Our loyal
customer base has depth in many key demographics, and we seek to continue to monetize that base in a way that is consistent
with our premium brand. In addition, we develop strategic relationships with complementary businesses, such as our relationship
with Target, Inc, which provides an alternate sales channel for our products. This and other strategic relationships also drive
direct customer trial and acquisition, co-
marketing opportunities, and opportunities to display the Shutterfly brand to new
audiences.
Prints
Our Prints offerings include 4x6 prints, as well as other print sizes ranging from wallet sized to jumbo-
sized 20x30 enlargements, and
photocards. During the last three years, our Prints revenues as a percentage of total revenues have declined from 44% in 2007, to 39% in 2008,
and to 33% in 2009. Despite these decreases, we continue to utilize our Prints category to drive new and continued engagement with the
Shutterfly Brand, and we continue to innovate in this category. In September 2009, we completed our acquisition of TinyPictures and in
December 2009, we launched Wink, a new mobile service which enables customers to create, order, and mail customized photo strips using
photos from their iPhone, Facebook, and Flickr accounts.
Commercial Print Services
In 2008, we launched our Commercial Printing business initiative. The primary objective of this initiative was to leverage our large
installed base of existing variable digital presses to provide commercial printing services primarily to the direct marketing industry, and utilize
idle print capacity during low volume periods. In 2008, we generated $0.4 million in revenue. In 2009, we expanded this initiative and
generated approximately $3.8 million in revenue from customers such as Group O, a leading provider of marketing services, as well as many
other advertisers and marketers. Commercial print contributed approximately 2% of our net revenues in 2009. We intend to continue to develop
and grow this initiative during 2010.
Technology and Production Systems
We use a combination of proprietary and third-party technology, including the following:
Customer relationship management, or CRM, system.
Our integrated CRM system is composed of various tools designed to convert
first-
time customers into repeat buyers. We seek to increase average order sizes by expanding customer awareness, providing targeted,
segmented offers to customers and encouraging cross- and up-
selling. The system uses a variety of data, including website usage patterns,
order size, order frequency, products purchased, seasonality factors, image upload and share usage, as well as customer satisfaction
information. This data is continually updated and refreshed in a data warehouse, from which different customer segments are identified
and monitored on a continuing basis for targeted marketing communications.
By using this deep customer intelligence and ongoing analysis, we are able to offer customers a more personalized website
experience and to target them with specific website promotions, discounts, specialized e-
mail and direct mail offers. Our promotion
engine generates special offers that are account specific and applied automatically at checkout.
•
Increase sales to existing customers.
•
Develop new lines of business and strategic relationships with complementary business.
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