Vistaprint 2011 Annual Report Download - page 26

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Form 10-K
Many of our current and potential competitors have advantages over us, including longer
operating histories, greater brand recognition, more focus on a given sub-set of our business, existing
customer and supplier relationships, or significantly greater financial, marketing and other resources.
Many of our competitors currently work together, and additional competitors may do so in the future
through strategic business agreements or acquisitions. Increased competition may result in reduced
operating margins as well as loss of market share and brand recognition.
Some of our competitors that either already have an online presence or are seeking to
establish an online presence may be able to devote substantially more resources to website and
systems development than we can. In addition, larger, more established and better capitalized entities
may acquire, invest or partner with online competitors as use of the Internet and other online services
increases. Competitors may also develop new or enhanced products, technologies or capabilities that
could render many of the products, services and content we offer obsolete or less competitive, which
could harm our business and results of operations.
In addition, we have in the past and may in the future choose to collaborate with certain of our
existing and potential competitors in strategic partnerships that we believe will improve our competitive
position and results of operations, such as through a retail in-store or web-based collaborative
offering. It is possible, however, that such ventures will be unsuccessful and that our competitive
position and results of operations will be adversely affected as a result of such collaboration.
Failure to meet our customers’ price expectations would adversely affect our business and
results of operations.
Demand for our products and services is sensitive to price. Changes in our pricing strategies
have had, and are likely to continue to have, a significant impact on our revenues and results of
operations. Many factors can significantly impact our pricing strategies, including the costs of running
our business, such as production, customer acquisition, marketing and personnel costs, our
competitors’ pricing and marketing strategies, and the effects of inflation. We offer certain free
products and services as a means of attracting customers, and we offer substantial pricing discounts
as a means of encouraging repeat purchases. These free offers and discounts may not result in an
increase in our revenues or the optimization of our profits. If we fail to meet our customers’ price
expectations, our business and results of operations will suffer.
Failure to protect our network and the confidential information of our customers against
security breaches and to address risks associated with credit card fraud could damage our
reputation and brand and substantially harm our business and results of operations.
Online commerce and communications depend on the secure transmission of confidential
information over public networks. Currently, a majority of our sales are billed to our customers’ credit
card accounts directly, and we retain our customers’ credit card information for a period of time that
varies depending on the services we provide to each customer. We rely on encryption and
authentication technology licensed from third parties to effect secure transmission of confidential
information, including credit card numbers. Advances in computer capabilities, new discoveries in the
field of cryptography or other developments may result in a compromise or breach of our network or
the technology that we use to protect our network and our customer transaction data, such as credit
card information. Although we maintain network security insurance, we cannot be certain that our
coverage will be adequate for liabilities actually incurred or that insurance will continue to be available
to us on reasonable terms, or at all. In addition, anyone who is able to circumvent our security
measures could misappropriate our proprietary information or cause interruptions in our operations.
We may need to expend significant resources to protect against security breaches or to address
problems caused by breaches. Any compromise of our network or our security could damage our
reputation and brand and expose us to losses, litigation and possible liability, which would
substantially harm our business and results of operations.
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