Shutterfly 2009 Annual Report Download - page 8

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We currently address several adjacent markets related to consumers’
desire to be thoughtful and creative with their memories. These
include, but are not limited to:
We generally characterize our products as either “personalized products and services” or “prints”.
Our personalized products and services
revenues are derived from sales of photo books, greeting cards, calendars, and ancillary products such as photo-
based merchandise, and the
related shipping revenue from these sales. Also included in personalized products and services revenue is our sponsorship and advertising
programs and our commercial print services. Our print revenues are derived from sales of photo prints and the related shipping revenue. In
2008, 2007 and 2006, our personalized products and services revenues represented approximately 61%, 56% and 51% of our total net revenues,
respectively, and our print revenues represented approximately 39%, 44% and 49% of our total net revenues, respectively.
The addressable market for our products and services includes every person who enjoys the memories created by digital photographic
devices such as cameras, camera cell phones or camcorders. Although photofinishing products and services are purchased by a broad consumer
base, we believe that women, in particular, play a key role in many photo-
based purchasing decisions. The U.S. Census Bureau reports that there
were approximately 55 million women age 25-
44 in 2006. We believe that securing the loyalty of this core consumer base represents a sizable
market opportunity.
•
Photo
-based merchandise. Photo-
based merchandise is a substantial market opportunity that includes any product that can be
customized with the imprint of a digital image. Photo-
based merchandise includes, but is not limited to, photo calendars, photo greeting
cards and photo books. InfoTrends estimates that revenue from U.S. online net-to-mail sales of non-
print products (photo gifts and
merchandise) will grow from less than $350 million in 2007 to more than $1 billion in 2012.
•
Greeting cards and stationery. According to the Greeting Card Association’
s website, U.S. consumers purchase approximately
7 billion greeting cards each year, generating nearly $7.5 billion in retail sales. More than 90 percent of all U.S. households buy greeting
cards, with the average household purchasing 30 individual cards per year. The Greeting Card Association also reports that nine out of
ten Americans say they look forward to receiving personal letters and greeting cards because cards allow them to keep in touch with
friends and family and make them feel they are important to someone else.
•
Scrapbooks.
According to a 2007 survey by Creating Keepsakes, the addressable markets for the US scrapbook industry was
approximately $2.87 billion in 2007 up from $2.55 billion in 2004. Additionally, approximately 82% of scrapbookers have at least a
college degree and spend almost four hours a week assembling their memories into scrapbooks.
•
Calendars.
A 2002 guide published by the Calendar Marketing Association estimated that 500 million calendars are produced annually
in the United States and that approximately 98% of American households have at least one calendar.
•
Photo prints
. InfoTrends estimates that nearly 20 billion digital photo prints were made in the U.S. in 2008, generating revenue of
approximately $5 billion. Total revenue from prints is expected to decline by approximately 10% by 2013.
6