Shutterfly 2011 Annual Report Download - page 7

In addition, to support our commercial print initiative, we have hired a small sales force to engage with marketing fulfillment organizations
and advertisers for commercial print services.
The following paragraphs summarize our business strategies within these three categories:
Personalized Products and Services
Personalized products and services ("PPS") are comprised of our photo book products, greeting cards and stationery, calendars, and other
photo-
based merchandise. In addition, PPS also includes revenues from advertising and sponsorship activities and referral fees. Our referral fee
program was discontinued effective March 31, 2010, and no referral fee revenue has been recorded subsequent to that date. We also provide
website services which include our share platform called Share Sites, developed from our 2008 acquisition of Nexo Systems, Inc. PPS as a
percentage of total net revenue was 71% in 2010, 66% in 2009 and 61% in 2008. Within this category, we seek to drive the following strategies:
We have focused substantive efforts in enhancing the products and services we offer in our PPS category. For example, during
2009, we launched the Simple Path feature which instantly creates photo books in all sizes and formats, making it easier and
faster for customers to create their photo books. In 2010, we enabled users to access photos from new sources including:
Facebook, Picasa, Share Sites and directly from personal computers, which lowers the barriers to creation of photobooks. In
cards and stationery, we have introduced a wide range of premium designer greeting cards and stationery for many occasions,
including holidays, baby announcements, birthdays, and weddings. For the 2010 holiday season, we offered our largest
holiday collection ever with nearly 1,400 new holiday designs across all form factors. We continue to expand and enhance our
Share Sites which allow users to easily create custom, personalized, private web sites for sharing with friends, family and
community groups. We launched new templates, themes, and functionality for our Share Sites designed to support new
parents, brides, teachers, and coaches. In 2010 we partnered with the American Youth Soccer Organization ("AYSO") to
create Share Sites available to support over 50,000 soccer teams across the country. We also offer the ability to upload, store,
and share a limited number of video clips for free and a video subscription service that provides unlimited video storage, larger
file sizes, and HD-quality video playback.
We intend to leverage our PPS offerings, and to promote the Shutterfly brand through word-of-
mouth referrals from existing
customers, print advertising, catalogs, online advertising, search engine marketing, and complementary alliances with other
companies. In 2010, we partnered with Groupon to offer multiple nationwide flash promotions to more than 10 million
Groupon members. We also partnered with Best Buy to promote Shutterfly products when customers purchase a qualifying
digital camera or camcorder in store. We leverage our Share Sites platform to drive increased awareness of our brand and our
product offerings, as well as increase the engagement of existing customers. In addition, we have expanded our presence
across social networks by enabling customers to post their photo books onto a variety of social networking and blogging
websites such as Facebook, MySpace, Twitter, and Blogger.
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. In 2010, we introduced new calendar designs and form factors and unveiled a new home décor
collection. 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. In 2010, we expanded our card and stationery collection to include occasions like
Baptisms, summer parties, moving announcements and birthdays.
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. In 2010, we expanded our print-
to-
retail relationships and customers can now pick up 4x6 prints at their local CVS/pharmacy and Walgreens store. 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.
Table of Contents
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Enhance product and services offerings.
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Expand our customer base.
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Increase sales to existing customers.
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Develop new lines of business and strategic relationships with complementary business.
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