Shutterfly 2013 Annual Report Download - page 8

service, called ThisLife. Consumer revenues as a percentage of total net revenues were 95% in 2013, 96%
in 2012 and 97% in 2011. Within this category, we seek to drive the following strategies:
•Continue to grow and optimize our core brands.
We have a primary strategy to grow our core Shutterfly and Tiny Prints brands by
acquiring new customers, expanding the lifetime value of our existing customers, and
improving conversion rates. In 2013, we acquired MyPublisher and began to introduce
their customer base to the other products and services of our Shutterfly and Tiny Prints
brands. In 2012, we acquired over five billion of Kodak Gallery customer photos and
migrated those customers onto the Shutterfly platform. Also in 2012, we offered
SeeHere.com customers an opportunity to transfer photos from their SeeHere.com
accounts to our Shutterfly platform. Our Share Sites platform, as well as our integrated
marketing campaigns and Internet marketing are also a significant source of our new
customer registrations.
We intend to increase 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. In 2013, we added more
styles and premium content and options across our brands. We have specifically focused
on features that make it easier for customers to personalize products, such as our Custom
Path photo book creation solution which we launched in 2011; as well as the integration of
advanced image analysis and selection technologies from our acquisition of Photoccino
into some of our product creation solutions to a select set of customers. Finally, we intend
to continue our efforts to promote and cross-sell products across our various brands, such
as Shutterfly photo books and calendars on the Tiny Prints brand website.
•Invest in early stage strategic growth initiatives.
We have made investments in key, early stage initiatives. In 2013, we introduced our first
ever photobook creation app for the iPad, making it possible to create digital and physical
photo books with enhanced multimedia features. Also in 2013, we launched the beta
version of our enhanced cloud service, ThisLife, where consumers can now gather and
organize photos and videos from across devices, cloud services and social networks. In
addition, we further leveraged the capabilities of the team and technology from our 2012
acquisition of Photoccino, incorporating proprietary algorithms in to our intelligent
product creation paths.
We intend to continue our efforts to develop products and services for Treat, and within
the Wedding and Mobile categories. In addition, we plan to make continued
improvements in our platform and infrastructure including our big data strategy and
analytics, e-commerce development, and manufacturing scale and automation. In
particular, the scale and scope economies from our vertically integrated manufacturing
and supply chain enable us to extend our competitive position and improve overall
customer satisfaction, further strengthening the barriers to success in our industry. In
June 2013, we opened our new state-of-the-art production facility located in Fort Mill,
South Carolina, tripling our southeast manufacturing footprint, reducing the time to
market for new product introductions and enabling greater in-sourcing of our order
volumes. In late 2013, we began construction of our new Shakopee, Minnesota production
facility, which will provide us with production facilities in the Midwest, to round out our
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