Vistaprint 2007 Annual Report Download - page 8

Market and Industry Background
The Small Business and Consumer Markets
We focus on providing products and services for the small business market, generally businesses
or organizations with fewer than 10 employees. We believe this market represents a large and growing
opportunity. In addition, approximately 11 percent of revenues are derived from the consumer market.
Traditional Graphic Design Services and Printed Products
Small businesses and consumers seeking graphic design services or printed products have
traditionally had three principal alternatives:
‰Self-Service—The self-service option typically employs off-the-shelf desktop publishing, word
processing or other types of software to create a design and uses either an ink jet or laser
desktop printer or a local copy or print shop to print the finished product. However, design
software applications, ink cartridges and special paper stock can be costly, design options are
limited and often time consuming to create, and printed end-products are typically of
significantly lower quality than those generated using professional commercial printing
methods.
‰Professional Graphic Designers and Commercial Printers—A second alternative is to employ a
professional graphic designer to create a design and then arrange for a commercial printer to
produce the finished product. Graphic designers and commercial printers can create
sophisticated, customized designs and high quality professional printed output. However, the
traditional graphic design and printing process is generally time consuming, with the entire
process often taking several weeks or more, and can be prohibitively expensive for small
businesses and consumers. Graphic designers typically charge hourly or project based fees
and commercial printers typically run each job independently, creating a low utilization of fixed
assets, high labor costs and high material costs, which are passed onto the customer in the
form of expensive set-up fees or high print prices.
‰Wholesale/Retail Print Distribution Channels—Graphic design within the wholesale/retail print
distribution option often entails the customer choosing from designs, standard layouts and
format options from binders of product samples or from mail-order catalogues. Design options
may be limited and permit little or no customization, print quality may be below that provided by
traditional commercial printers and delivery lead times can be substantial. Prices for printed
products, while typically lower than traditional commercial printers, can significantly exceed
self-service prices.
Internet-Based Graphic Design and Printing
Online commerce provides significant advantages and opportunities to small business customers
and consumers seeking high-quality graphic design services and customized print products at
affordable prices. These customers do not typically require the high quantity print runs that are required
to achieve low per-unit pricing and do not maintain dedicated procurement departments to negotiate
pricing effectively. We believe the high price, inconvenience and complexity of traditional printing
methods historically have dissuaded these customers from purchasing high-quality printed products for
small business or personal use. We believe that the highly fragmented, geographically dispersed small
business and consumer markets for graphic design and printing services is ideally suited for Internet-
based procurement, as the Internet provides a standardized interface through web browsers,
availability seven days a week, 24 hours a day, the ability to offer a wide selection of products and
services and the opportunity to efficiently aggregate individual orders into larger print runs.
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