Shutterfly 2013 Annual Report Download - page 17

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customers. If free shipping offers extend beyond a limited number of occasions, are not based upon a
minimum purchase requirement or become commonplace, our net revenues and results of operations
would be negatively impacted. In addition, we occasionally offer free or discounted products and services
to attract and retain customers. In the future, if we increase these offers to respond to actions taken by our
competitors, our results of operations may be harmed.
We face intense competition from a range of competitors and may be unsuccessful in competing against current and
future competitors.
The digital photography products and services industry is intensely competitive, and we expect
competition to increase in the future as current competitors improve their offerings, including developing,
acquiring and expanding mobile and cloud-based offerings, and as new participants enter the market or as
industry consolidation further develops. Competition may result in pricing pressures, reduced profit
margins or loss of market share, any of which could substantially harm our business and results of
operations. We face intense competition from a wide range of companies, including the following:
• Online digital photography services companies such as Snapfish, which is a service of Hewlett-
Packard, American Greetings’ Webshots brand, Vistaprint, SmugMug, and many others;
• Social media companies that host and enable mobile access to and posting of images such as
Facebook, Twitter, and Myspace;
• Photo hosting websites that allow users to upload and share images at no cost such as Picasa,
Flickr, and Photobucket;
• ‘‘Big Box’’ retailers such as Wal-Mart, Costco, Sam’s Club and others that are seeking to offer
low cost digital photography products and services. These competitors provide in-store
fulfillment and self-service kiosks for printing, and may, among other strategies, offer their
customers heavily discounted in-store products and services that compete directly with our
offerings;
• Drug stores such as Walgreens, CVS/pharmacy, and others that offer in-store pick-up from
their photo website internet orders;
• Mobile digital photography services companies such as Instagram (acquired by Facebook),
Woven, and iPhoto;
• Self-publishing companies and services such as Lulu, CafePress, and Zazzle;
• Cloud-based storage services and file-syncing services such as Dropbox, SugarSync, Box,
Amazon Cloud Drive, and iCloud;
• Specialized companies in the photo book and stationery business such as Hallmark, Cardstore
by American Greetings, Minted, Picaboo, Blurb, Mixbook, MOO, Smilebox, Creative
Memories, and Photobook America;
• Photo-related software companies such as Apple, Microsoft, Corel, and FotoFlexer;
• Internet portals and search engines such as Yahoo!, AOL, and Google that offer broad-
reaching digital photography and related products and services to their large user bases;
15