It was a tough first quarter for personalized products web merchant CaféPress Inc. with a drop in both sales and profits.

But CaféPress, No. 117 in the 2014 Internet Retailer Top 500 Guide will continue to diversify its business model, beef up its customization sponsorships with TV and movie studios and others and introduce more customized products.

“Our goal is to bring consumer products in a customizable fashion to market and we look at the consumer products that are sold online and that number begins with a ‘b’, $200 billion, but we’re still in the millions,” CaféPress CEO Bob Marino told attendees yesterday at the J.P. Morgan Technology, Media and Telecom Conference in Boston. “We think there is lots of runway in front of us,” he said, because ultimately everything sold online will be customizable.

Despite efforts to grow and diversify, CaféPress had a tough first quarter.

For the quarter ended March 31, CaféPress reported:

• Web sales declined 8.2% to $48.2 million from $52.5 million. Net loss was $5.21 million compared with a net loss of $3.98 million in the first quarter of 2013.
• Total orders declined 19.0% to 1.15 million from 1.42 million in the first quarter of 2013.
• Average order value was $42 compared with $35 in the prior year.
• Net revenue in the second quarter is expected to range from $48 million to $52 million.
• Net revenue for 2014 is expected to range from $244 million to $256 million.

Four years ago CaféPress, which grew web sales 13% in 2013 to $245.9 million, operated a customized products marketplace that was heavily dependent on one product—T-shirts. Around 2010 T-shirts represented about 80% of all marketplace sales, a figure that has since dropped to less than 50%, Marino told attendees.

To grow and diversify, CaféPress has integrated and managed a series of acquisitions made since 2010, Marino said, beginning with the acquisitions of Canvas On Demand and Image Kind, a pair of art merchants, to build a base in the online custom art business. In 2012 CaféPress purchased Logosportswear.com, a custom corporate apparel site, and EZ Prints Inc., a custom print services web merchant to diversify into the business-to-business e-commerce market. That diversification helped CaféPress process 2.56 million orders in 2013, up 95.4% from 1.31 million orders in 2012.

“CaféPress exists at the crossroads between technology and self-expression,” Marino told attendees. “What I mean by that is, as we develop more and more ways to make products customizable, people will accept those products. Our thesis is this: that people actually prefer to have the products in their world the way they want them rather than the way a mass production facility might assign them.”

Going forward CaféPress also wants to grow by developing more partnerships, especially in entertainment. In 2013 CaféPress signed merchandise licensing deals with entertainment companies to make and sell official fan merchandise for recent movies such as Divergent, Anchorman 2 and the Veronica Mars film, as well as television shows such as properties Breaking Bad, Walking Dead and Supernatural.

“Content is playing a huge role in our partnership business and starting with licensing, we’re working with most of the major movie studios and television networks,” CaféPress vice president of business development Ty Simpson told attendees. “What’s attractive to them is we create a new category of licensing, which is both print-on-demand and crowd-sourced print-on-demand.”

Favorite