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August 2009
Tell Your Story
By Chistina Kapely

      A couple of years ago, Dwayne Black, senior vice president of operations for Shutterfly and father of two, sat down to create a Shutterfly photo book for his youngest daughter’s high school graduation. His first attempt at it, Black began placing his images on the screen. With a few clicks and a number of captions, he arranged his selection of photos filled with memories of over eighteen years well spent with his daughter.

     At that time, Black had been working at Shutterfly only a few months and, although he was familiar Shutterfly’s flagship product—its award-winning photo book line, he had only heard anecdotal stories of its impact. It wasn’t until the moment he handed the photo book to his daughter, and watched her face as she flipped through pages, that he appreciated the true impact of his job.

     “That’s when I realized that what we are doing at Shutterfly is something very special,” says Black.

 

Clicks to bricks

     In 1999, the dot-com boom was well underway with companies moving “from bricks to clicks,” closing up their physical plants for online presence exclusively. Internet companies were popping up almost daily and the idea of building capital from little more than an Internet connection was gaining momentum.

     That’s when Shutterfly, started in California, made its entrance into the market. People were buying digital cameras for the first time and Shutterfly gave them the option of uploading their digital photos online and receiving film quality prints in the mail—a novel idea at the time.

     While other dot-com companies came and went, Shutterfly embraced quality personal photo printing and began to expand. By 2001, Shutterfly had enabled editing and special effects features for online photos and also provided customers with personal publishing products. Among the products were greeting cards, which was an industry first, and photo books, both of which are still top sellers today.

     Shutterfly also garnered some attention for its high quality products along the way. It was named the Best Photo-Printing Service by PC Magazine in 2004 and 2005, and was named one of the fastest growing companies in America by Inc. 500 for growing 626.8 percent over a three-year span. Just recently, it was named the Best Photo Website by Cookie Magazine and Overall Winner for Best Photo Book Website by Good Housekeeping magazine.

     With its record of success, Shutterfly went public and conducted an initial public offering of stock in September of 2006, just months before opening its Charlotte manufacturing facility. With headquarters in Redwood City, California, it already had a strong presence in the west. But with a growing number of customers, a second manufacturing facility was needed. But why Charlotte?

     According to Black, Charlotte was selected for east coast operations because of affordable land and resource prices, proximity to east coast customers for fast delivery, and for one other unique attribute: Shutterfly maintains at least two copies of every photo uploaded onto its system, plus it guarantees that no photos will be voluntarily deleted. So, needless to say, the location for the second manufacturing facility needed to have the capabilities to handle a high amount of bandwidth. Banking and financial centers also require strong Internet data pipelines, so Charlotte proved to be the perfect location for Shutterfly’s second facility.

     Today, a large percentage of all of the total photo orders nationwide for prints, photo books, calendars and enlargements are produced in the state-of-the-art Shutterfly offices on Shopton Road, right here in Charlotte. Ironically, the company’s online success has spurred its need for more manufacturing facilities, truly symbolizing a “clicks to bricks” phenomenon.

 

A part of the family

     “My grandfather used to tell me that you have to treat people like you would want to be treated,” says Black. As an executive at Shutterfly, Black applies this golden rule to his life daily not only because he believes in it, but because it aligns with the mission of Shutterfly.

     Success during the dot-com boom was extremely difficult for many companies, resulting in the dot-com bust for most. For Shutterfly though, two key factors led to its success—a commitment to quality, and a commitment to its people, both its customers and its employees.

     Black brought more than 20 years of operations and logistics expertise to Shutterfly, having opened or restructured twelve manufacturing and distribution facilities domestically and internationally. During that time, Black witnessed too many employees who did not enjoy their careers and decided that, in order to avoid feeling the same way, he needed to make a change. The solution was Shutterfly.

     Black revels in conversations he’s had and comments he’s received from customers of Shutterfly.

     “When you read what people write—about how much your products and services mean to them—it makes your job all worthwhile…This is one of the first times in my career that I feel that I am doing something to really help people,” he says.

     He is convinced that Shutterfly thrives because of its people. At Shutterfly, everyone at the company truly understands that success is achieved through its employees; it is within the culture of Shutterfly to make all employees feel like they are part of the family and valued. The result is a band of employees who have mutual respect for each other regardless of their position within the company.

     Equally important to the company is its commitment to its customers. Black nods, “We honestly eat, sleep and breathe our commitment to customers.”

     Part of that commitment is evidenced in the fact that Shutterfly does not charge for many of the services that it provides—the storage of photos, a personalized, secure photo Web site, photo and video sharing options and photo editing tools. And Shutterfly doesn’t charge its customers for membership.

     The catch? Well, there isn’t one. More than just an Internet-based social expression company, the employees and customers of Shutterfly view its services not as a commodity, but as a lifestyle.

     In some sense, Shutterfly is an insurance policy. In the event of a fire or natural disaster, most people say the first thing that they would grab would be their photographs. Now, families do not need to worry quite so much about their paper memories since Shutterfly will store multiple copies of their images and projects for safekeeping.

     It is with services like this that Shutterfly builds its business. Unlike most companies, Shutterfly not only wants to enhance the bottom line, it also wants to be a part of the family and a service that is a part of customers’ lives.

 

Keeping it in the family

     With each photo it prints, Shutterfly delivers a quality product to its customers. They don’t operate through gimmicks or special deals; customer satisfaction is earned through the company’s focus on value, safety and quality. According to Black, Shutterfly is the only company in the photo publishing industry that manufactures personal publishing items—such as photo prints, cards and photo books—in-house. Shutterfly strongly believes that the best way to really control quality and costs is to manufacture internally with strict quality measures.

     The manufacturing and printing process is automated for the most part by state-of-the-art equipment. Employees then follow up, ensuring top notch quality at a consistent 99.96 percent level. At every step of the manufacturing process, each item is checked electronically and then reviewed by an employee to ensure consistency and quality. If there are any imperfections, the product gets scrapped and reprinted.

     Black often jokes that quality is important to employees at Shutterfly not only because of their commitment to customer satisfaction, but also because of the notion that not many other products in this world are scrutinized and picked apart quite like photographs. All joking aside, it is this strong dedication to quality that really sets Shutterfly apart from it competition with a high customer retention rate.

     In fact, Shutterfly has grown every single quarter for the past 33 quarters, notwithstanding the the recent economic malaise. Just last year Shutterfly pulled in $215 million in revenue. To talk hard numbers, it has already sent out a million and half orders this year. Even more remarkable is that over half of Shutterfly’s business will not even begin until the fourth quarter, and a large percentage of that will come within the three-week period following Thanksgiving. During this peak time, the Charlotte facility will run more than a million prints per day.

     Even with its success, Shutterfly believes that it is important to constantly innovate and improve the overall customer experience. Unlike other companies who pull back and wait out their peak times, Shutterfly is focused on delighting and retaining customers now so they will profit from their loyalty once the economy improves.

     As a company, Shutterfly is constantly realigning business goals with current resources. For example, even though most of Shutterfly’s business takes place in the fourth quarter, it maintains a majority of its resources and employees throughout the entire year. Instead of lay-offs or furloughs other companies might choose to employ, Shutterfly embraces the opportunity to expand its consumer base and initiate commercial business, raising the baseline of productivity and realigning its offerings in light of the resources it has available year-round.

     On the consumer side, research shows that only 14 percent of the 74.5 million households that have digital cameras currently use a printing service. With such a large potential market, Shutterfly is reaching out to current and potential customers through online marketing and social media. Additionally, it continues to expand its offerings with services like video sharing and products like its new stationery collection.

     On the commercial side, Shutterfly is combining its on-demand printing expertise with its state-of-the-art equipment to offer a number of commercial products. Instead of just bulk printing though, Shutterfly’s real commercial niche is printing personalized marketing material for pure one-to-one digital print marketing. The goal is to create personalized marketing materials that will touch the end-recipient more intimately and provide greater results for marketers.

     Every company has its secret to success. For Shutterfly, that secret is the right combination of customer centricity, innovation and superior quality. The people at Shutterfly understand how special their products are to their customers, and the amount of joy that they are able to bring into thousands of people’s lives daily, which is why no corners are cut and quality products are delivered time and time again.

     Now, ten years later, this combination has made Shutterfly a solid and successful leader in the photo publishing industry.

 

Christina Kapely is a Charlotte freelance writer.
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