Groovebook acquisition impacts Shutterfly’s Q1 financial results

groovebook— By Hans Hartman

The fact that Shutterfly just cranked out its 57th consecutive quarter of year-over-year net revenue growth (net revenues totaling $160M, a 17% year-over-year increase) would have been yawn-worthy if not for the fact that we’re now seeing the first full quarter impact of Shutterfly’s acquisition of Groovebook – in terms of order volume and average order value, if nothing else.

Groovebook is an inexpensive and subscription-based photobook creation app, popularized by their founders’ Shark Tank appearance. Shutterfly acquired the company last November for $14.5 Million. [There’s more about them in our The Photo Output App Market study].

Based on Groovebook’s impact on Shutterfly’s average order value (Shutterfly reports a 15% YOY decline, but only 4% when excluding the Groovebook sales), the app must have generated so many orders that it actually tilted Shutterfly’s companywide average order value.


Four things jump out when contemplating Groovebook:

  • Groovebook is there to stay. It is not a fad, catapulted through Shark Tank but since fizzled. Not only do their subscribed customers generate ongoing sales, the app also currently ranks among the top 200 US-downloaded iOS and Android photo apps – not stellar, but certainly better than most print output products that have been on the market for a while.
  • Groovebook is an app. Naysayers claiming that consumers don’t want to create and order multi-page photobooks on mobile devices: think twice. This app alone apparently can impact the average order value of a $1-billion dollar company.
  • Groovebook sells dirt-cheap photobooks. To be exact: $2.99 each, including shipping and handling. Shutterfly made a daring move acquiring such a low-priced and potentially cannibalizing product, apparently willing to take the risk of a declining average order value.
  • Groovebook is a subscription service. And this might be exactly why Shutterfly took this risk: Groovebook’s ongoing revenues and order volume help to smooth out Shutterfly’s seasonality. And that’s not a bad thing in the low season quarters, as we’ve just had with Q1. It also lowers their customer acquisition costs, assuming the customer churn is reasonably low.

We’ll keep a close look at how Shutterfly will manage further integration of Groovebook in its sales and marketing activities (Groovebook will remain under its own flag, we’ve been told), and how it will fair in the busier spring and summer seasons.

Hans Hartman is president of Suite 48 Analytics and chair of the Mobile Photo Connect conference.

Plenty of Picture Products & News #4

It’s a busy week in the photography biz. Here’s a fourth round-up of news and products covered around the Web.

procam 2

• ProCam 2 shows off Iphone manual camera controls

• Case carries APS-C sensor, f/2 lens to iPhone

• Canon tours Pixma Pro printers

• Adobe Revenue Forecast Misses, Shares Slip

• Sony reports losses in mobile


Sony CEO apologizes…

Sony Make.Believe Logo…Well, not to you: to shareholders.

Sony Chief Executive Officer Kazuo Hirai “apologized to investors today after the maker of PlayStation consoles and Xperia smartphones projected a sixth loss in seven years,” BusinessWeek reports. “Sorry that we failed to meet shareholders’ expectations,” Hirai said at the company’s annual meeting in Tokyo. “We will bear responsibility to complete restructuring in fiscal 2014, with a strong sense of crisis and without further delay.”

Sony has lost $831 million since Hirai became CEO in 2012 and predicts another 50 billion-yen loss this year as he struggles to revive the television business.

The full article here focuses on the TV, movie-making, game console, phones, and other large Sony divisions. Cameras doesn’t get a mention, apart from noting, “When Hirai took over, he said Sony’s revival would be driven by mobile devices, games and imaging products.”

Ecce Terram reports high holiday sales

ecce terram

“After literally tens of thousands of orders we have looked at some interesting statistics,” says CEO Frank Simon.  “Ecce Terram is celebrating a record number of orders going through our SaaS Photo2lab Services.”

Mobile remains around 9 percent, with a big 2>1 lead by iOS over Android.

For orders from desktop clients, Mac OS X came up to 17 percent of all orders, compared to 15% as the annual average. 82 percent of orders were received from Windows clients. “We are also happy to note that our SaaS Key Accounts received a 6 percent increase in orders compared to past years,” Simon adds.

Ecce Terram provides software and workflow solutions for photo product design and output.

Olympus returning to Profitability?

olympus stylus1 hand

Will Olympus start making a profit on its camera sales again? Yes, the company forecasts, thanks primarily to mirrorless interchangeable lens models.

Bloomberg reports the company claiming annual sales of mirrorless models will rise to 1 million units, reaching 5 percent share of the global market — and about $68 million in operating profit.

Olympus has posted losses in two consecutive quarters. “With the camera industry’s revenue falling to the lowest level in a decade, amid surging smartphone sales, Nikon has cut prices to lure consumers,” Bloomberg adds. “The single-lens reflex camera market was 20 million units globally last year, according to data by Camera & Imaging Products Association. Olympus’s camera unit accounted for about 14 percent of the company’s total revenue last year and reported an operating loss of 2.7 billion yen in the six months ended Sept. 30.”