August 1, 2005, 12:00 AM

Photo Finish

(Page 2 of 3)

That means retailers are not limited by the geographic reach of their stores, but can target their competition’s customers with products and services through the web and strategically placed web-based kiosks.

New entrants

New players also are entering the digital photo services market, often with competitive pricing and large numbers of registered customers. Comcast, the big Internet services provider, for example, is using the Snapfish online platform, including the ability to store, e-mail and print digital photos for home delivery, for its Photo Center on Comcast.net. Target Corp. has entered the market in a so-far exclusive deal with Yahoo Inc. to offer Target.com customers access to digital photo services.

Then there’s Shutterfly, a web-only service that lets customers load and manage their digital images on Shutterfly.com and order prints for home delivery. Shutterfly also accepts referrals from other web sites, and it has entered the business services market by providing and managing the online photo center at Panasonic Consumer Electronics Co.’s Panasonic.com.

If traditional photography retailers are happy with 30% of the growing digital market, Nelson says, they can get by with offering only in-store services that let customers load their digital images into an in-store kiosk for printing in the store’s lab. To get back to 95% in their local market, he asserts, retailers should offer customers the three options of in-store, web-to-store and web-to-home. “If you want to play in digital photography and have a complete relationship with the customer, you have to play in all three areas,” he says, adding that retailers offering complete digital photography services should sell printers and paper supplies as well as image-loading and printing services.

That tripod approach is working for HP Snapfish, Nelson says, noting that it has close to 15 million registered users and has stored hundreds of millions of digital images.

Companies like HP and Panasonic, of course, want to sell printers as well as cameras and photo services, and so link their online photography centers directly to their computer products pages, a strategy also followed in the digital photography services offered by major consumer electronics merchants like Best Buy and Circuit City Stores Inc.

But for photography specialty retailers not interested in adding to their inventory with print-at-home equipment, the digital photography market still offers multiple customer-serving options and a broad range of new products-many of them offering higher profit margins than basic prints, experts say.

“There’s no common way to deploy digital photography products and services, because every retailer has their niche,” says Chris Johnson, vice president of Silverwire, which provides several options for processing digital photo orders, including hosted order management and image-editing software that retailers can offer through their web sites or kiosks.

Kiosks and prepaid cards

The software can also run locally on an in-store kiosk, or consumers can download it from a retailer’s web site to run on their personal computers. Consumers who do heavy editing of large volumes of photos are more likely to download the software, providing for faster editing, Johnson says.

7-Eleven Inc., working with PhotoChannel Networks and payment card provider DataWave, is selling private label prepaid cards through 500 stores in Canada that let customers order and pay for digital prints at 7-11photo.com, then pick them up at any of 7-Eleven’s Canadian stores. The $25 card provides customers with up to 55 prints ranging in multiple sizes.

Rite Aid Corp. launched an online service this summer on RiteAid.com, using an image-management platform provided by Pure Digital Technologies. The service lets customers load images online for printing and pick-up within one hour at a RiteAid store. The program is being rolled out initially to about 800 West Coast stores before becoming available throughout the 3,400-store chain.

Online photography represents the only version of e-commerce offered by Wal-Mart Canada Corp., which it provides under contract with PhotoChannel Networks through WalmartPhotoCentre.ca. Images loaded online can be picked up at any Wal-Mart or Sam’s Club store in Canada.

At Black Photo, Chapman says he expects his overall photo printing business will rise slightly this year, factoring in both the decline in film and the rise in digital photography, even if overall industrywide printing declines. He attributes Black’s expected performance to its early start in digital photography, including its broad number of accessory products. “Some experts say people won’t print as much any more, but there are so many new things we can apply digital photography to,” he says.

$139 photo blankets

Black Photo has developed in-house software for making greeting cards and other text-based items embedded with customers’ digital photos, and it relies on PhotoChannel to connect its online customers to third-party developers that embed digital images in things like T-shirts, coffee mugs and calendars, Chapman says.

Although these other products can take longer to process and deliver, they offer higher profit margins that can offset any decline in traditional photography business, Chapman and others say, adding that consumers have responded in surprising numbers to items never before thought of as photo-related products. “We offer things that we think won’t sell, like photo blankets for $139, but e-mails on them get a great response rate,” says Joe Parkinson, director of marketing for PhotoChannel.

Wal-Mart has been expanding its range of photo-related products, an effort that e-mail is helping to sell to shoppers by bringing images into their inboxes that are often timed to seasonal demand. The winter hockey season, for example, coincides with e-mails showing suggested gifts such as player cards inserted with photos of team members or coaches. For Mother’s Day, a big seller is blankets adorned with the image of a child’s photograph. E-mail has also been effective at promoting personalized photo calendars that can be designed to begin with any month of the year. “Instead of selling calendars in January and then offering them at 75% off the rest of the year, we can e-mail offers for photo calendars for Mother’s Day that runs from May to April,” Parkinson says.

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