Printing technology plays the match-maker
for greeting cards and online gifts
By Rick Markley
The buzz about greetings cards on the Internet has been e-cards. Who hasn’t been captivated by a dancing, singing elephant thanking you or wishing you happy birthday?
But the truth is e-cards only go so far. Most consumers still want to send paper cards, especially to accompany gifts. In fact, Harry and David, the Oregon retailer that sells gourmet fruit and gifts through its catalog and web site, receives up to 90,000 unsolicited cards a month from customers who want the card sent with the gift package—a logistical nightmare.
Those 90,000 notwithstanding, most catalog and online gift givers have been content to let the retailer insert a little slip of paper with the giver’s name—or, even more impersonal, print the giver’s name on the shipping label.
4YourSoul.com is changing that. “We want a new generation of greeting cards,” says Doron Friedman, CEO and co-founder of 4YourSoul.com. “People buy greeting cards with gifts 64% of the time. And you can’t do that over the Internet.”
Here’s how the system works. Santa Barbara, Calif.-based 4YourSoul partners with online gift retailers. A shopper checking out at one of those sites will receive a message asking if she wants to buy a greeting card to accompany the gift. If she agrees, she is taken to 4YourSoul, a chameleon site, to select and create a card. 4YourSoul has printers in its retail partners’ distribution facilities. When a customer orders a greeting card, it is printed at the retailer’s distribution site. Fulfillment personnel put the card in an envelope, then place it inside the gift box. “We can adapt our printing and fulfillment mechanisms to any kind of fulfillment center—whether it’s antiquated or high-tech,” Friedman says. 4YourSoul’s cards cost $3.25.
“The main idea is keeping the gift and card together,” Friedman says. “We’re touching the fulfillment center; we’re another pick-and-pack item.” The technology allows for the card to print at the same fulfillment center where the gift will originate. This is important if a company has several fulfillment centers and it is not clear until the last minute from where the gift will ship. “It’s not easy to print these cards from anywhere in the world,” Friedman says.
4YourSoul developed its technology in-house. Friedman’s partner Ajay Singhvi’s company Worldwide Software, Mumbai, India, developed the software and proprietary printing technology which operates on Indigo N.V printers. Friedman says his company contracted with Indigo because of its reputation as the best on-demand printer. Indigo N.V. also services the printers. “They weren’t the fastest printers, but they had the best quality,” he says. 4YourSoul trains retailer’s employees on how to work the printer.
In addition to the proprietary printing technology, 4YourSoul also designs all its own greeting cards. The company employs writers and about 20 part- and full-time artists. For its corporate clients, 4YourSoul creates 10 unique cards for each major holiday.
In 1998, Friedman owned a small chain of cafes. “I got to know the mailman and asked him how his Christmas shopping was going,” Friedman says. The mailman told him his wife did all the shopping online. Friedman asked how they handled the greeting cards and the mailman said they didn’t. “That rang a bell,” Friedman says.
“Two weeks later I got a box of chocolates and I had no clue who it was from,” he recounts. There was only a small typed message at the top of the delivery slip. “There was definitely something missing, you can’t put a message like that on your fridge,” he says. “I researched it and saw there was a need. But I came from business school, I didn’t know the technology side.”
The hangup
Soon after, Singhvi, who was running his Mumbai software company, called his old schoolmate out of the blue; Friedman and Singhvi had lost contact over the years. Friedman told Singhvi about his greeting card idea, and received a less than enthusiastic response. “He basically hung up on me,” Friedman says.
But Singhvi relayed the idea to his wife, and she set him straight on the merits of the idea. “Five minutes later he called me back,” Friedman says. The two brought in another friend with expertise in hardware and yet another friend who was twice named California Poet Laureate. “We had the art and the writing know-how, we had the business and technology and hardware,” he says. “It just came together; it was like fate.”
When 4YourSoul approached Harry and David, the retailer said it had been trying for some time to supply greeting cards with gifts ordered online, but could not figure out how to do it. Receiving thousands of greeting cards a month for attachment to gifts, “they signed us immediately,” Friedman says. 4YourSoul has a multi-year contract to be the exclusive online greeting card provider at Harry and David.
4YourSoul beta tested its system on Harry and David’s smaller gift site NorthwestExpress.com before applying it to the higher-volume sites. “Harry and David sends a few hundred thousand gifts per day during the holiday season,” Friedman says. “To test it out on that kind of client would have been dangerous. You’re going to make some mistakes early on.” Harry and David will be putting 4YourSoul on its main web site this spring.
“If there was a Christmas wish list for catalogers, one of the top 10 items would have been the ability to send greeting cards with gifts,” says a Harry and David spokesman. “This is a great concept. We’ve tested it and believe in the product.” The retailer is looking for the service to improve customer satisfaction, thus driving return business. Harry and David also will retain a percentage from each card it sells through its site or catalog. He does not know how many customers will buy the cards, “but we expect the numbers to be big.”
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.
The Joneses
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.
Standard issue
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.
Not all marriages are meant to be. But, Friedman believes paper greeting cards and gifts were made for each other, and he’s hoping his model is as effective as one of cupid’s arrows.
rick@verticalwebmedia.com
How important is the card with the gift?
A telephone survey of 1,004 adults by Zogby International, commissioned by 4YourSoul, found:
— 85.7% believe it is important to send a greeting card with a gift
— 64% always include a card with a gift
— 81.3% prefer paper greeting cards to electronic greetings 
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