Shutterfly Inc., an online provider of photographic product and services to businesses and consumers, more than doubled sales to businesses in the fourth quarter, helping Shutterfly surpass $1 billion in full-year sales for the first time.

Shutterly still earns most of its revenue through retail sales, which accounted for more than 90% of total Q4 sales of $548.1 million. But while Q4 sales increased a relatively modest 13% year over year, B2B sales surged 119.1% to $44.7 million from $20.4 million.  

Shutterfly, which posted $1.06 billion in full-year sales, up 15% from the prior year, sells marketing materials to businesses as well as photography products and services to consumers through Shutterfly.com and other sites including ThisLife.com, WeddingPaperDivas.com and TinyPrints.com. It also operates a photography equipment rental site at BorrowLenses.com. About 90.7% of its sales are to consumers, but a stepped-up focus on business customers in recent years has resulted in sharp increases in B2B revenue—what the company refers to as “enterprise revenue”—generated by Shutterfly Business Solutions, or SBS. In Q2, the company signed a “multi-year, nine-figure” B2B contract with a Fortune 50 company, CEO Jeffrey Housenbold said in a Q4 earnings call with stock analysts. He declined to name the client, but said it had responded to Shutterfly’s increased investment in technology and services designed to help companies more efficiently produce marketing materials and to use web analytics to evaluate the impact of those marketing materials.

In the company’s fourth-quarter earnings call with stock analysts, Housenbold said the company was taking cues from this client and kicked off a two-year-project to build an Internet-based data management platform customized to six business verticals—likely including financial services, insurance, healthcare, retail, education, and leisure and entertainment—that will enable these business clients’ teams to gather data on everything from creative to pre-press to post-press printing. This will help business clients segment and analyze data on customers’ past buying patterns, responses to marketing campaigns and other information to manage marketing campaigns.

“We believe our platform investments will further differentiate SBS and position us to capitalize on an important new market opportunity,” Housenbold said, adding: “The return on that investment is going to be fantastic and already paying off with this one client that we signed [in Q2]. And so, once we have that executed, you should see the benefits start to roll in and an expanded client list for our SBS business.”

advertisement

The company says it will cost about $14 million to build the platform.

Shutterfly’s B2B sales are comprised primarily of four-color marketing materials ordered online and manufactured for business clients, including such companies as satellite TV provider DirecTV and hotel chains Starwood Hotels and Best Western International Inc. In the call with stock analysts, Housebold said Shutterfly signed an “official photo” partnership with cruise line Carnival Cruise Line. The company declined to specify what this partnership entailed. But Shutterfly produces customized photo-enhanced marketing materials and offers a multichannel marketing platform that enables clients to manage coordinated campaigns through such channels as web ads, mobile text messaging and targeted e-mail.

Shutterfly is No. 152 in the B2B E-Commerce 300, and No. 50 in the Internet Retailer Top 500 Guide.

For the fourth quarter ended Dec. 31, Shutterfly also reported:

  • Total sales were $548.1 million, a 13.4% increase from $483.3 million in the year-ago period;
  • Sales to consumers reached $503.3 million, up 8.7% from $462.9 million;
  • Total unique customers grew to 6.1 million, up 7.0% from 5.7 million;
  • The number of orders increased to 10.3 million, up 7.3% from 9.6 million;
  • Average order value for the quarter was $48.96, up 1.5% up from $48.26;
  • Net income of $131.1 million, up 31.5% from $99.7 million.

For the year ended Dec. 31, Shutterfly also reported:

advertisement
  • Total sales of $1.06 billion increased 15.0% from $921.6 million in 2014;
  • B2B sales totaled $98.0 million, up 93.7% versus $50.6 million;
  • Sales to consumers totaled $961.4 million, up 10.4% versus $871.0 million;
  • The number of orders increased to 25.8 million, up 18.3% from 21.8 million;
  • The number of customers was 9.8 million, up 6.5% from 9.2 million;
  • Average order value was $37.26, a 7% decrease from $40.00;
  • Net loss of $843,000 compared with a year-earlier net loss of $7.9 million. In 2015, Shutterfly consolidated a number of technology platforms, closed a manufacturing facility and shutdown mobile greeting card brand Treat as a way “to drive scale efficiencies and operating margins,” Housenbold said in the company’s q4 2014 earnings call.  

Sign up for a free subscription to B2BecNews, a twice-weekly newsletter that covers technology and business trends in the growing B2B e-commerce industry. B2BecNews is published by Vertical Web— Media LLC, which also publishes the monthly business magazine Internet Retailer. Follow Nona Tepper, associate editor for B2B e-commerce, on Twitter @ntepper90.

 

Follow us on LinkedIn and be the first to know when new B2BecNews content is published.

Favorite