It was just a few short years ago that I remember sitting in the office of Sequoia Capital with my business partner, pitching Michael Moritz about our new crowd-sourced online greeting card business. By that time I’d had my fair share of visits to Sand Hill Road and had witnessed reactions from VCs ranging from unbridled enthusiasm to polite boredom. But I had not, to my knowledge, ever given a VC a headache until that day, when our pitch left Mr. Moritz rubbing his head in muted agony.
Full Circle! Right in time for the 2011 Holiday Season, perhaps Greeting Cards are finally having their day in the Silicon Valley spotlight. Apple’s recent announcement about its new Cards app for iOS5 has stimulated much discussion about an industry that has been rather resistant to digitization over the past ten years. According to the GCA (Greeting Card Association), today approximately 97% percent of all greeting cards purchased in the US are still purchased in stores – the old fashion way. Many incumbent players in the greeting card space must be feeling somewhat anxious due to Apple’s new found presence in their industry.
Today, in spite of the social nature of greeting cards, very few paper greeting card companies fully leverage the web, social networks, or mobile devices, so the industry is ripe for major change. Whether or not Apple ends up revolutionizing the greeting card industry, I believe its entrance into this market is a pivotal event that will quickly lead to tremendous growth, mainly because millions of consumers will finally be made aware that going to the store to buy their cards is not the only option, and quite often not the best option.
Facebook plays a large part in this shift as well, having created a global web of 800 million connected ‘friends’ and family. The average Facebook user today has 130 friends (On average that is a friend’s birthday every 3 days!), and relies on Facebook almost daily to stay abreast of birthdays and other events, some of which have greeting card potential. Facebook also stores massive amounts of personal data about you and your friends, which can enable powerful targeting and merchandising of appropriate cards for any situation or occasion. For example, when card shopping for my good friend’s 40th birthday (he’s a tennis fanatic), I would be way more likely to buy if a company automatically reminded me a week in advance with recommendations for tennis themed 40th birthday cards.
Furthermore, over 350M Facebook users access Facebook from their mobile device, so in the very near future there will be millions of people in their homes and on the streets with an iPhone or iPad – all of whom will have instant access to an easy way to send a card, the dates and occasions that warrant the sending of a card, and the photos that are often a key ingredient when creating a card. It is no surprise that the 8 megapixel camera on the new iPhone 4S will hit the market at the same time as the Cards app, since high resolution photos ensure that the printed cards will meet consumer expectations for high quality.
It will not be long before third party apps and the companies behind them begin to capitalize on this newly ‘educated’ consumer base, by adding their own unique features and functionality to the basic idea. Some will differentiate their services based on content selection, some on price, some on delivery speed and methods, and some on features. While more and more greeting cards will be purchased using apps on mobile devices and tablets, online sales will also contribute significantly to the growth of the industry, the key being that consumers will begin to realize that both web-based and app-based services offer a world of alternatives to the traditional in-store card buying experience, many of which will be easier, faster, and more FUN than going to a store. The early adopters have already discovered this as evidenced by the rapid growth of the leaders on the digital side of the industry like Shutterfly/Tinyprints, Snapfish, Cardstore, and Greeting Card Universe.
Apple and its new Cards app will lead the way in finally making greeting cards as easy to buy via phone, tablet or website as it is to buy them today in stores. Once that happens and consumers become aware of it, they will discover thousands of new reasons to send cards, and content providers will rapidly create new designs to meet this demand. A much more frictionless marketplace and rapidly growing demand will fuel rapid market growth, just as it did for music when Apple launched iTunes and changed the landscape of the music industry.
Speaking of friction, I was hoping Apple’s Cards app would do more when it comes to the worst part of sending a paper card online or via mobile device…typing in the mailing address. The app requires that I type in the address manually or choose a contact from my contact list. In my case very few of my contacts include physical addresses, which makes me way less likely to start sending cards this way. Services of this type will not reach their full potential until capture of destination address becomes a one click function, as simple as selecting a friend on Facebook. A digital equivalent of a paper card like what one might send with Paperless Post addresses this problem to some extent, but in spite of the highly digital nature of today’s society, a paper card still imparts a special and powerful feeling to the recipient, and this probably will not change for a long time. While people express their feelings on special occasions in many ways – wall posts, text messages, phone calls, ecards and others – for those special relationships or perhaps specific milestones, there is nothing like a real card with a personalized sentiment.]
Perhaps it’s time to revisit with Mr. Moritz. Three years after that initial meeting, we now operate the largest online greeting card store in the world, with 4,400 talented artists and over 500,000 cards. I wonder what his reaction would be now!
by Paul Love, President of Greeting Card Universe www.greetingcarduniverse.com
