As more retailers roll out their digital photofinishing solutions, I can imagine that consumers will use retailers and online photo services differently. I know many in the industry believe that customers may drop off their media cards to get a quick set of prints of their images in-store and may upload their favorite images to an online photo site like ours to create photo related products like photo greeting cards or wall calendars and to send reprints or enlargements to their friends and family. I do believe that could be one scenario. But I don't think it recognizes Shutterfly's value to the consumer.
Regardless of how the retail solution takes shape, consumers will still print their digital images at Shutterfly in order to take advantage of our personalization features that are not available anywhere else in the market today. Our users tell us that they love the flexibility and choice that Shutterfly provides. They like the choice of ordering prints only of the images they like, enhancing their images and even adding a custom message on the back of their print and sending exactly the combination of products they want to different recipients in a single transaction.
Customers will go to retail or come online for different reasons and with our hallmark personalization features, we believe we are uniquely positioned to meet consumers' needs across all product linesfrom prints to specialty items like calendars and Snapbooks.
ptn: On the other hand, with new options such as digital print kiosks; less expensive inkjet digital minilabs; and the coming of CPXe (Common Picture eXchange), an industry standard designed to make printing digital images at retail as easy as film; do you expect online photofinishing revenues to plateau at some point?
Wood: All these options have a role to play in providing customers the degree of choice they expect from the digital world and I think they will help the entire industry demystify digital photography for consumersand that is the reason why we are a member of the CPXe initiative.
I support these efforts but believe that consumers will still seek the option that gives them the best quality, products and services.
ptn: What are the three most important things to maintain to keep people using and printing with Shutterfly?
Wood: Our customer focus.
We have been able to achieve our success because we listen to our customers and deliver the products and services they want. In fact, we have an intense and passionate focus on the customer that is beyond other online photofinishers.
We do so by having a real-time connection with our customers, which we reinforce monthly by surveying our customers about what it is they like in terms of products and services or improvements they'd like made to the site. We pride ourselves on being able to rapidly act on that feedback and turn it into real products. One example I really like is the way we responded to requests for 4x8 photo cardswithin 30 days we were able to make them part of our standard product offering. We are constantly improving upon our site to make it even easier for customers to use our service and consistently add products, features and services to provide them with the level of choice and flexibility they've come to expect from Shutterfly.
Our high quality.
We know we have the best quality because our customers tell us that continually. We've had that reinforced by leading industry publications, including PC Magazine and Mac World. We are able to do this by producing all our products in-house using our proprietary technology, thereby enabling us to offer the highest quality control, making sure that our customers receive nothing but the best. Given the amount of new customers we're getting every month (better than 70,000 each month), that tells us that we have quality that is second to none.
Our customized products and services.
Our level of customization capability simply cannot be found anywhere else. This can range from doing all the "basics"picture enhancements, red-eye removal, etc.to a whole new level that is unequaledability to put a message on the back of a print, create Snapbooks' mini albums with custom captions, or even sending different products to different recipients in the same transaction. This kind of personalization is what differentiates us from other online services, printing at home and printing at retail. It is our hallmark.
ptn: How much has the lack of broadbrand access in the home affected the online photofinishing market?
Wood: It is hard for me to say, as our customers are evenly split between broadband and dial-up access. We do, however, see a large percentage of the 1 million images uploaded each week being uploaded on Monday morningso that makes me think that some customers take advantage of their office's broadband network to get their images to us.
We spend a lot of time at Shutterfly testing our site from dial-up and making improvements wherever we can to give our dial-up customers the best possible experience. One example of this is the different options we have to make it easy for our customers to send their images to us: we offer browse upload, a plug-in, SmartUpload software and a mail-in CD program. We consistently make enhancements to each of these options and will continue to do so.