Vistaprint 2012 Annual Report Download - page 8

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Union and that these micro businesses undergo frequent changes with many forming and dissolving each year,
creating a large market for business identity products and services in addition to marketing products and services.
We also believe that, in response to the growth of the Internet and the emergence of digital production technologies,
micro businesses are shifting from traditional suppliers of customized marketing products and media toward online
alternatives.
In the past, a business seeking customized marketing products and services could either hire a designer to
develop and coordinate the production of marketing materials or produce printed materials themselves using
desktop software and an inkjet or laser printer. A designer can produce a professionally coordinated portfolio of
marketing products and services, but this is a significantly more costly and time-consuming alternative, whereas
traditional self-service typically produces less sophisticated and lower quality output. We believe that neither
alternative satisfies the needs of micro businesses, which typically lack the resources or skills to generate
satisfactory results using either approach.
Online commerce provides significant advantages and opportunities to micro business customers seeking
customized marketing products and services at affordable prices. These customers do not typically need the large
quantities that are traditionally 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 traditionally
procuring customized marketing products and services have historically dissuaded micro business customers from
purchasing these products and services. We believe that the highly fragmented, geographically dispersed nature of
the micro business market 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 and more efficient
production units.
We believe that the micro business market has been underserved by expensive traditional marketing
alternatives. Further, we believe that the sophistication of marketing efforts by larger businesses demonstrates to
micro business owners the attractiveness of multi-format coordinated marketing portfolios. We also believe there is
a significant advantage to combining the Internet’s ability to reach these highly fragmented markets with an
integrated design and production process that can rapidly deliver sophisticated, high quality marketing products and
services. In addition, we believe that coordinated portfolios of marketing products and services can help micro
businesses appear more competent and professional, which can enhance their customer relationships and
prospects for success.
In fiscal 2012, we acquired Webs, Inc. ("Webs"), a leading provider of do-it-yourself websites, Facebook
pages and mobile presence solutions for small businesses. This acquisition is part of our strategy to serve the core
micro business market with a broad array of marketing products and services, including digital marketing services.
Through its viral “freemium” business model which provides customers base level products free of charge with
advanced options available at a premium, Webs' offering enables us to improve our ability to attract new customers
with a digital products and cross- and up- sell other digital and physical offerings.
The Marketplace for Customized Products and Services for the Home and Family
While we focus primarily on micro business marketing products and services, many of our product formats
are also purchased by consumers seeking customized announcements, greeting cards, calendars, stationery,
personalized gifts, photo books and related photo products. In the past, many such products were supplied by an
industry comprising print manufacturing wholesalers and local retailers, such as stationery stores. Compared with
today’s Internet-based alternatives, traditional offerings were relatively limited, prices were significantly higher, and
delivery often required longer lead times. Graphic designs were limited and it was rarely possible to incorporate full
color photography into the design.
Online commerce combined with digital production technologies provides significant advantages and
opportunities to consumers seeking high quality personalized products at affordable prices. The overall market
opportunity for these types of products is very large, and we believe it could be a longer-term source of growth
even though it is not our primary focus today. Our home and family efforts have gained significant traction in
Europe, where the consumer market is highly fragmented. We have invested more in our home and family efforts in