Personal-publishing service Shutterfly
Customers are flocking to Shutterfly, which operates an Internet-based "social expression and personal publishing service." In addition to letting users store and share photos online, the service also lets them adorn various types of merchandise with their digital prints. Shutterfly then mails the personalized wares to the customers.
The growth is impressive, but according to CEO Jeffrey Housenbold during the conference call, Shutterfly may just be scratching the surface. He revealed that only 6% of potential customers -- those with digital cameras that are also plugged in to the Internet -- have used a personal publishing service for photo merchandise.
The lack of awareness is one reason Shutterfly is starting to look at strategic partnerships with key retailers. In pursuing that goal, it recently teamed up with Target
Shutterfly is also looking at the pet lovers' market as holding great potential. This summer, the company packaged special offers with Del Monte's
As for how it all played out in the second quarter, revenues jumped 52% over the same period a year ago. Equally important is that the company didn't sacrifice gross-margin performance for the sake of growth -- in fact, gross margins actually improved slightly, to 50.4%. Shutterfly has yet to achieve profitability, however, since operating expenses still outweigh gross income.
Investors should also know that Shutterfly isn't the only player in this game. Others include Kodak
Shutterfly is definitely up against some big-time players, and so far, it is holding its own quite nicely. But can it continue the growth while it also achieves profitability by improving operating efficiencies?
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