Sunday, May 3, 2009

VPRT - Putting the Pieces Together

If you bought any given stock last November, where would you hope to be today with that investment?  Most answers will be in the category of minimizing losses, or in some optimistic scenarios possibly treading water around the same level as when you bought in. So a company whose stock price in the same period has more than tripled rightly deserves giving some attention to the strategies which have delivered stable and positive results which have in turn supported the stock price in historically difficult times.

Vistaprint has at least three approaches which conspire for this success:

1) Focus on small and medium businesses: while a lot of companies see their future addressing the high end of the market, Vistaprint is unashamed about preferring clients in the SMB space, attracting and retaining millions of customers with small budgets and low average orders (just a touch over $30). Big wins with key accounts make the news, but they can also break your margins and such deals are difficult to repeat. If you establish a broad customer base and address them relentlessly with new offers and ideas (see following points), the business might be less spectacular but the results can be comparable - or even superior.

2) Master the art of web-based marketing: although nominally a web-to-print company like many others, Vistaprint demonstrates exceptional talent in developing, packaging, promoting and delivering products which are ideally suited for the medium of internet sales and support. You have to find, touch and attract a lot of prospects, as otherwise your business model, like many internet business concepts, is a load of hot air. But Vistaprint avoids the "bubble trap" by ensuring that there is substance as well as regular and highly relevant customer touches. Both the methods and the deliverables are ideally suited for web-based business, and the implementation is exemplary.

3) Support hard copy and electronic platforms equally: the core concept at Vistaprint appears to be hard copy print job submission and fulfillment. But Vistaprint defines their sweet spot as everything that makes sense for small business marketing and studiously avoids limitations based on HCO - hard copy only.  They use their platform to offer other services such as internet and e-mail services. Not only are these additional and attractive revenue streams that can be extracted from the same customer base, but the cost of customer acquisition declines rapidly as they leverage existing communications, processes and customer relationships.

This last point is somehow astounding. At the most basic level, nothing they offer is genuinely new. But their knack for selecting components that belong together (especially from their chosen target group's perspective) is unique. Much larger companies in the imaging industry are evidently blinded to such opportunities by their focus on the hard copy (read: print supplies) business.  This is indeed lucrative, but the extreme focus of efforts and expertise cause many companies to neglect key opportunities and allow others like Vistaprint to gain momentum.

Another observation, which is a corollary (but hardly less amazing), is that all components of the Vistaprint package are there for almost anybody to grab and go, but the Vistaprint selection, timing and execution is superb. They are doing a fantastic job of anticipating and leveraging opportunities, and the head start they have now established will be difficult to overcome. The product could always become a commodity, but it appears that they will achieve and maintain an advantage through their unique and prescient attention to providing key tools to improve their customers' business.  Even in tough times, that basic message and strategy is a formula for success, and the market has been rewarding that approach for Vistaprint.


hubbers said...

Please don’t use Vistaprint or recommend it to your readers.

Using Vistaprint could very likely lead to you being signed up to FAKE discount clubs and hundreds of dollars benig taken from you Visa/bank without your knowledge or permission.

I have a huge blog post with all the details of all of the different scamming sites Vistaprint and Adaptive Affinity run and how best to get a refund.

If you don’t believe me check this blog and the scores of comments form people who have been ripped off!

According to the Washington Post this negative option selling scam earned the parent company Ventura $650 million in revenue in 2006.

If you have already used Vistaprint, start checking your bank statements.

You can also sign this petition!

Rob Sethre, CEO, Woodford Group said...

Thanks for your comments and input. This concern has been addressed during recent investor conferences. Vistaprint management are aware of the criticism and state that it is not a large part of their business or focus. I do not judge or defend them, but I am also aware that they are pretty sensitive to what drives repeat business and customer satisfaction. As their business continues to grow and evolve, it would not surprize me to see them limit exposure through such partnerships.