In an episode of the popular ABC show “Shark Tank” that aired last week, founders of the web-only fashion retailer ranked in the Second ...
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Harry and David is surprised other retailers have not flocked to add the card function to their sites. But, others are beginning to show interest. 4YourSoul is negotiating contracts with two major retails, one with an international presence. Friedman cannot name the retailers until the contracts are signed. Online garden gift retailer Jackson & Perkins will be added to the rolls this spring. “Four other companies have expressed strong interest in the service,” Friedman says. “The money will begin rolling in this May.”
Going global with its prospective retail partner will pose no problem to the card company. “We said, ‘no problem’ this is the way our business is scaled,” Friedman says. “We won’t have to worry about shipping a card to Europe, we’ll print it in Europe.”
As for future clients, 4YourSoul is pitching its service to other online gift companies. And it is hoping a few high-profile wins will attract other retailers. “When someone is doing something, others have to do it to stay competitive,” Friedman says.
And while no one has duplicated 4YourSoul’s model, others are trying their hand at similar offerings. American Greetings has a deal with Flooz.com allowing shoppers buying cards at AmericanGreetings.com to buy Flooz gifts, or those buying from the Flooz site to add an American Greetings card. Flooz is an online gift currency accepted by more than 140 online merchants. The card and Flooz gift are packaged and shipped together. American Greetings also allows shoppers to buy gift certificates to accompany cards. Some of the gift certificate partners are Omaha Steaks, Art.com, Barnes & Noble and Macy’s.
Hallmark offers a similar, though abbreviated service. Hallmark online customers can order greeting cards to accompany a gift, but only gifts they buy at Hallmark.com. Hallmark also will send the card in the same package as the gift.
Similarly, Sparks.com, an online retailer that sells paper cards for BlueMountain.com and American Greetings and carries about 100 gift items, allows customers to send a greeting card with the gift. The company also sells gift certificates for more than 50 retail partners, and a card can accompany a gift certificate as well.
Survival of the leanest
Most in the industry agree that selling paper cards online is a small niche. But with the growing popularity of online shopping and the size of the greeting card industry, 4YourSoul has reason for optimism. Consumers spend nearly $7.5 billion per year on greeting cards, says the Greeting Card Association. There are more than 3,000 U.S.-based greeting card publishers. The two biggest, Hallmark and American Greetings, control 75% of the industry. Hallmark says its total online sales are less than 1% of its $4.2 billion annual revenue in cards and gifts, calling the online paper market “small but potent.” Hallmark is shooting for e-commerce to account for 10% of its revenue within four years. Greeting cards are now the company’s top seller online and are expected to continue leading the way.
One of the biggest tests of the 4YourSoul model will be whether it can make money. 4YourSoul believes it is spending its money in ways that make business sense. Friedman won’t say how much it took to get the company off the ground. But, he says, 4YourSoul is saving a great deal of money by partnering with Singhvi’s software firm. “A lot of people spend their money on software,” he says.
The company also keeps costs down by using part-time staff. And, because its focus is on b2b, it is not spending piles of money creating brand awareness. Another avenue of savings comes from placing the printers at clients’ facilities; this eliminates the need for large warehouse space for centralized printing. “Basically, our main cost is the printers,” Friedman says. Because of that initial cost of setting up the printer hardware and software integration, 4YourSoul targets only high-volume gift sellers as potential clients. The cost to put a printer in a fulfillment center starts at $200,000.
In addition to running lean, 4YourSoul appreciates the added earning potential from being multi-channel. The technology was adapted to work with print catalogs. For example, the Harry and David catalog offers customers four card choices. Customers type or print their message on the catalog order form, then send it in. Harry and David generates the card at the fulfillment center, just as if the card had come in over the web site. 4YourSoul also built an interface that allows telephone reps to enter card orders. “Initially, we thought we were going to work for e-retailers only,” Friedman says. But, when they saw how much larger the print catalog industry was they adapted the technology. “That’s a $104 billion industry, we had to adapt.” They plan to offer four to 12 different cards in each catalog.
Besides trying to make money, 4YourSoul is also giving some away. The company donates 5% of all revenue (before profits) to charity-and the person buying the card picks the charity.
Like the more traditional sites such as Sparks and Hallmark, 4YourSoul offers a b2c component beyond its client partners. The company offers 2,500 standard cards. It allows customers to create or enter a mailing database, mails cards to those in the database throughout the year and provides e-mail reminders when cards are going out. Sparks and Hallmark offer these options as well. 4YourSoul customers can download scanned images or their own handwriting to personalize cards, or they can add and position typed messages. Sparks and Hallmark do not offer scanning; however both have employees who hand write card messages and hand address envelopes. Hallmark says it does not offer scanning because the majority of Hallmark customers-in fact, the majority of all PC owners-do not have computer scanners. And although these features are slightly more advanced than the greeting card giants, b2c remains a small portion of 4YourSoul’s focus. “I can’t imagine it would be more than 10% of our business,” Friedman says.