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PhotoTLC, Major Fulfillment Server, Shuts Its Doors Without Notice; Club Photo Website Dark


Jerry Lansky

The end came very abruptly for PhotoTLC. Just a few days before the PMA convention in Las Vegas opened its doors, this gift fulfillment operation closed its doors.

The firm, which was founded in 2002, considered itself the leader in the fulfillment business with a broad line of photo gift items. It counted as its customers many of the major names in retailing including Walgreens, CVS, Rite-Aid, Wal-Mart, Albertsons, Meijers, and others. They claimed to be serving 22,000 storefronts.

According to reports, PhotoTLC's venture capitalists suddenly withdrew financial support and in the course of just a day or two, the doors were locked at the firm's facilities in Petaluma, CA and Austin, TX putting about 140 people out of work. No notice was given to customers, either, though the word spread quickly on the PMA convention floor.

As recently as December, 2005, $10 million was invested by a group led by Steamboat Ventures, the capitol arm of The Walt Disney Company, along with other investment partners.

Also affected is the Club Photo online service which was acquired by PhotoTLC in January, 2006. At this writing the Club Photo website is shut down, though it remained in operation for some days after PhotoTLC locked down leaving in doubt countless consumer images that have been stored on its servers over the years. There has been no notice to Club Photo customers as to the status of these stored images or how they might be retrieved—if ever.

According to a source, annual sales were approaching $20 million and the firm was close to reporting a profit.

Handling up to a million orders a year for a wide variety of photo specialty gifts (mugs, t-shirts, mouse pads, towels, etc.) and other specialty services, there were some thousands of orders in process for the customers of these major retailers at the time of the shutdown. It is understood arrangements were made with certain other fulfillment firms to complete these orders and that while there may have been some delivery delays, most, if not all, orders were eventually completed.

Two other major players in the fulfillment business are Photo This, Chambersburg, PA., and EZ Prints, Norcross, GA, and it is understood these firms picked up the lion's share of the orders-in-process as well as most of the PhotoTLC customers. Kodak's Easy Share Gallery is also a factor in the photo gift item category.

Jamie Bardin, president of EZ Prints, indicated that his firm stepped in to assist in some of the rescue efforts by fulfilling certain orders-in-process but would not reveal the names of the accounts. "It was a real mess," he said. He also noted that he was able to buy some of the production equipment from the liquidator, Escalate Capital Partners, Palo Alto and Austin, at 30-40-cents on the dollar.

Bardin felt that PhotoTLC's downfall was a result of them setting pricing levels for their goods and services that was simply not sustainable for the company. "We saw the writing on the wall."

EZ Prints, founded in 2000, operates a 100,000 sq. ft. facility in Norcross and supplies such accounts as Target and Yahoo, among others.

Photo This did not return calls for comment. Photo This was recently acquired by District Photo.

PhotoTLC was founded by Ed Bernstein, CEO, and Howard Beech, VP sales, as a photo restoration service operation with Walgreens as its biggest customer. At the time Walgreens was sending its photo gift specialties to Kodak for fulfillment but switched that business to PhotoTLC.

At the time of the Disney financing in December, 2005, a website that follows venture capital activities, www.thealarmclock.com, noted that Photo TLC would be competing with such firms as Kodak and Snapfish and reported the following: "We just talked with a mid-level employee at one of these companies who related that sales volume is large, but because competition has leveled prices, nobody can understand how they (PhotoTLC) can make a profit."

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