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WIKI ANALYSIS
Shutterfly, Inc. (NASDAQ: SFLY) is a leading Internet-based social expression and personal publishing service that enables consumers to share, print and preserve their memories by leveraging the company's technology-based platform and manufacturing processes. The company offers services for users to store, edit, and organize their digital photos. In the past fiscal year, new mobile technology, such as smartphones and iPads have given Shutterfly new channels for its products. Shutterfly's products have predominantly sold during the Holiday Season as gifts, giving the firm a risk of expecting most of its revenues during that time period.
Business Overview
In the past fiscal year, SFLY achieved year-over-year revenue and net income growth due to expanded mobile technology services[1] As the mobile technology industry strengthens, and photography continues to shift to digital media, Shutterfly should expect continued growth in the 2011 fiscal year.
Trends and Forces
Mobile Technology Gives New Channels for Photographs
The smartphone and iPad industries have grown tremendously recently, giving SFLY new channels to market its products. Shutterfly currently has applications for both the iPhone and iPad.[2]
Reliance on Holiday Season Sales
Shutterfly's consumer products, such as photo albums and personalized coffee mugs, are typically bought as gifts and not as everyday items. From this, the firm typically receives a majority of its annual sales during the Holiday Season (mid October to mid January). Weak Holiday Season sales can possibly cause a net loss for SFLY during the fiscal year.
Competition
The market for digital photography is large, fragmented, evolving, and intensely competitive, and the company expects competition to increase in the future. The company faces challenges from a variety of companies including:
- Online digital photography services companies such as Kodak EasyShare Gallery (formerly Ofoto), Snapfish, and others.
- "Big Box" retailers such as Wal-Mart Stores (WMT), Costco Wholesale (COST) and others that offer in-store fulfillment and self-service kiosks for printing
- Drug stores such as Walgreen Company (WAG) and CVS (CVS) that offer in-store pick-up from Internet orders.
- Regional photography companies such as Ritz Camera that have established brands and customer bases in some communities.
- Internet portals and search engines such as Yahoo! (YHOO), AOL, Google (GOOG), and CNET Networks (CNET) that offer broad-reaching digital photography and related products and services to their large user bases.
- Home printing service providers such as Hewlett-Packard Company (HPQ), Epson and Canon (CAJ), that are seeking to expand their printer and ink businesses by gaining market share in the emerging digital photography market; and
- Photo-related software companies such as Adobe Systems (ADBE), Apple (AAPL), Microsoft (MSFT), Corel (CREL) and others.
References
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