Why Former Kodak Customers Are Furious With Shutterfly

Former Kodak Gallery customers are annoyed. This past April, online photo sharing and publishing company Shutterfly (Nasdaq: SFLY  ) acquired Kodak Gallery, Eastman Kodak's (OTC: EKDKQ.PK) online division. Many considered the deal a huge bargain, as Shutterfly paid around $0.35 per Kodak user and took out one of their largest competitors in one fell swoop. But since July 2, when Kodak finally shut down and forced its users onto Shutterfly's platform, former Kodak Gallery customers have been furious with Shutterfly's mobile app.

Don't take my word for it
The following are the headlines of the first nine reviews for Shutterfly's iPhone app, many coming from former Kodak customers: "Please Fix!!," "Worst App!!!," "Worst app," "Does not work," "No Sign on!," "Crashes!," "Horror," "Bug??," "I'm so sad!!," and "This app isn't good at all." Not a single one of the 37 reviews in the past month has been positive (less than 3 stars out of 5). In addition, more than 60% of the reviews for its Android app have been one-star ratings.

What are they complaining about?
The gripes Kodak users have with Shutterfly are varied. First, some former Kodak customers can't even log in. Others can't do basic tasks like editing album names or uploading photos in any kind of order. Former Kodak users also gripe that the app is far too slow and sometimes buggy, and they're not happy that they can't even order anything from the app, having instead to upload to Shutterfly's main site and order from there. All these problems combined with unhelpful, computer-generated responses to complaints are making many mobile app users wish they still had Kodak.

Compared to what?
Complaints may seem like par for the course among reviews, but compare the outcry over Shutterfly's mobile app to the praise for Facebook's (Nasdaq: FB  ) Instagram. When I looked, all of the 80 most recent reviews of Instagram were positive.

In fairness, Shutterfly's main competitor, Hewlett-Packard-owned Snapfish, has a similarly poor mobile app, with only one positive review in the past 20. Both companies compete with primary photo-sharing companies like Instagram to drive as many photos to their site as possible.

Who cares about mobile anyway?
While Shutterfly is in the business of selling personalized photo albums, calendars, and other novelty items, more and more of the pictures being taken today are being done so with mobile phones. Facebook paid $1 billion for Instagram, a company that operates primarily in uploading mobile photos in the same manner as Shutterfly's app. That shows how serious Facebook is taking the industry. Shutterfly will therefore need to improve its mobile app if it wants to keep Kodak's old customers.

As a company that prides itself on being a "consumer-focused organization" with "unrivaled service," Shutterfly looks like it's doing a pretty poor job. These findings should raise a red flag for potential investors, especially for a company whose P/E ratio of 80 shows that the stock is priced for tremendous growth. A weak mobile app is not necessarily a deal-breaker, but I'd want to be extra sure about Shutterfly before putting any of my money behind it.

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Fool contributor Sam Stevens has no stake in any of the companies mentioned above. The Motley Fool owns shares of Facebook. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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