In most conversations that I have about our company, a question comes up about the viability of the card market. Aren’t cards going away? Isn’t that market dead? It’s not surprising because that’s the story line in the media, but it’s so completely wrong that I feel compelled to defend it.
The simple truth is that cards are a gift, and connecting meaningfully with other people through gifts is not going away. Last year 6.5 billion cards were purchased in the United States. That represents a steady no-growth environment for the last 3 years since we started. No growth isn’t something to celebrate, but it’s not a hemorrhaging market by any stretch of the imagination.
What we are seeing is a channel shift reminiscent of what happened to other content businesses since the early 2000s. Online sales are increasing as a percentage of total sales and brick & mortar sales are declining (particularly at specialty retailers). Whereas online sales represent only 8% of total sales today, by 2016 it will almost double to 14% and by 2018 it’ll be 32%. By 2018 almost $2.3B in card orders will be done through the internet if current trends to continue.
The average american family buys 31 cards a year. Roughly a third are Holiday Cards, another 1/3 are Happy Birthday Cards and the remaining 1/3 are everyday cards and non-Christmas holidays like Mother’s Day, Father’s Day and Valentine’s Day.
Bottom line, the card market isn’t dead.
Looking for an AWESOME Christmas card and waiting until the last minute? You still have time to order one of our independent artist created greeting cards and have it delivered before Christmas! Just order by Sunday, December 19.
Want to hand deliver the card with that special present? No problem… just select “send to myself” when you’re personalizing your card and we’ll deliver it to you with an extra envelope. Or you can have us deliver the card directly to your loved one… and as always, shipping is free!
View all of our Christmas cards at http://www.cardgnome.com/holidays/christmas
And don’t forget to Like us on Facebook!
Almost anything you build on the web has already been tried in one form or another. This should not deter you.
-Chris Dixon on “Timing your startup“
We are asked a lot of questions about CardGnome everyday. My favorite is “how are you different.” To which the answer is not a litany of product features or marketing strategy, although both do differentiate us, but rather a conversation about the timing of the market. We’re not the first to try “we mail it for you” greeting cards, but unlike the previous companies, the printing technology is finally good enough that we can print one-off cards as cheaply as large companies can print in large runs.
Current print-on-demand presses, like the one we use, can print thousands of unique cards in a single run and can be programmed to work alongside other machines to automatically stuff the envelopes and stamp them. Its cheap. This is how Barack Obama printed personalized appeals to you for money and votes during the election. The systems have improved so much in the last few years that the cost compared to factory presses is comparable. Previous companies could only feasibly offer bulk customized cards at a reasonable rate, so they weren’t able to do the mailing of just one card for you.
So why doesn’t a large company switch to our model? To be successful in the greeting card market today means being great at choosing the right mix of cards to offer. Stores have about 250ft of card space to offer you cards for hundreds of occasions and personal tastes. Psychologists, market researchers and retailers work together to maximize the space with the cards that will sell. They leave money on the table because some customers will not like the options offered or didn’t go to the store because it was a big pain in the butt. eCommerce sites like ours solve this problem by offering hundreds of thousands of cards and the tools to quickly find the ones that fit what the customer needs exactly. On top of that our site can schedule cards to be sent at a later date and set to remind you of important dates in time to send the card.
Can our established competitors learn to operate in this new model? Probably, but changing the company culture from large scale printing of a few hundred cards to the lean print-on-demand model demanded by an eCommerce distribution model will not be easy. In my experience, old-school factory managers don’t readily give up their budget or adopt new methodologies. It will take them some time just like it did with Blockbuster. In the meantime we’ll build our content library and customer list.
A pivot is the term for a company that changes its business model in order to take advantage of an opportunity. The opportunity is often only visible after the founders have progressed with their initial concept enough to learn about their market and its needs. Many of the hottest companies today, from YouTube (which started as a dating site) to Flikr (which was a videogame) are examples of great pivots. The founders in these companies tested their hypothesis and realized they wouldn’t work, so they moved in the direction that would. The affectionate name for this is “failing fast” and its a good thing. Chad and I did just this about 3 weeks ago when we changed our underlying business model.
Our previous idea was a marketplace for creative messaging services, from funny eCards to custom phone calls from voice impersonators. What we found was that people wanted ways to interact, but our product offering was too wide. We were talking with too many different target markets. We needed a much more narrow product offering which would enable us to target just one demographic and build a core user group. Our customers and artists told us repeatedly that they were interested in printed cards. We heard “I love the eCards but I want you to mail it as a real card” and “I hate going to the store to buy cards, I end up not sending them! Can you make some of your eCards available to print?”
We started researching the greeting card market and realized that it is massive. Over 7.5 billion greeting cards are bought each year in the US, representing a $11B market with over 3,000 independent publishers. Only a handful of small companies currently print and mail cards from a web marketplace and none of them are executing the concept particularly well. Chad quipped that we could do to greeting cards what NetFlix did for videos, bring the card buying process online. As soon as that came out of his mouth, we both instantly realized the market potential. We were hooked.
That was 3 weeks ago. Since then we’ve repurposed our website and launched the new features as a minimum viable product. Try it out, you can actually have us print and mail a card for you right now. Don’t forget to let us know what you think of this new direction in the comments.