Shutterfly, Kodak EasyShare Gallery, and Snapfish have emerged as the market leaders in this arena, according to InfoTrends. (Sony’s ImageStation site, another viable photofinishing player until recently, announced this month that they will be shutting down completely by February 2008, with the first phase of the closure scheduled for November; ImageStation members have been invited to transfer their accounts and images to the Shutterfly site.) On the surface, these sites may just appear to be the online, 21st-century versions of a local photo lab.

Snapfish, for example, is actually owned by Hewlett-Packard (sprinklings of the “HP” acronym appear throughout Snapfish’s site and marketing materials), while the original Ofoto was usurped by a certain Rochester, NY, behemoth and rebranded as Kodak EasyShare Gallery. Shutterfly is privately owned, but has made its own strategic alliances to strengthen its brand. “This year we announced a partnership with Target to give our customers a retail pick-up option and to gain in-store presence for our products,” explains Bridgette Thomas, senior director of marketing for Shutterfly. “We are also building partnerships that let us expand to new and relevant markets such as bridal, pets, and travel. This is a new area for us, and there are many exciting vertical markets we’re beginning to tap.”

Online photo services also make it their mission to stay on top of (and capitalize on) industry trends to nab their hefty slice of the photofinishing pie. Custom calendars were all the rage a couple of years ago (and are still going strong), while photo books were the talk of this year’s Photo Marketing Association convention in Las Vegas—and are now popping up as options on the online photo sites. Snapfish, for example, offers what they term a coffee-table-quality “memory book” in three sizes, deemed “perfect keepsakes” for vacation, wedding, and family milestone photos. Shutterfly, on the other hand, has created a complete line of licensed and nonlicensed photo books with character themes, as well as “Adventure Books” that incorporate your child into the storyline. “With a front-facing photo and minimal information about the child, like name and city, he or she will have a personalized, timeless keepsake to cherish through the years,” says Thomas.

To print or not to print…
One of the challenges that all of these photofinishing sites face, however, is that people just aren’t as keen on printing their images as they used to be. Even with photo industry campaigns designed specifically to drive consumers to print, it’s a much harder sell than it used to be. “Consumers have an increasingly lower emotional attachment to printed photos thanks to other viewing and sharing options, including social networking sites that share photos and [the proliferation of] digital frames,” says InfoTrends’ Bullock.

Even the strongest photofinishing brands find it difficult to compete with the growing significance of these “photo-sharing” and social networking sites. Portals like Flickr.com (owned by Yahoo!) and Google’s Picasa have latched onto the somewhat-ominous-sounding arena of “photo management”: the organization, archiving, and presentation of photos for viewing and for sharing with family and friends. There are definite similiarities between these types of photo sites and their photofinishing counterparts. Flickr.com, for instance, does allow you to upload photos that can then be made into photo books, DVDs, and calendars. And Google’s Picasa (free, downloadable software that allows you to manage your photos on your home computer) permits you to send your photos to an outside photofinisher if you actually want prints.

What differentiates sites like Picasa and Flickr.com from the Shutterfly/Snapfish/EasyShare Gallery triumvirate, however, is that they’re focused more on sharing the photos than actually developing them; any aftermarket purchases are incidental. “Output is a lower priority, usually outsourced to a third party,” says Bullock. “Images may be down-sized on uploading for storage and display efficiencies, and as a result may not be suitable for much more than 4x6 printing.”

The photofinishing sites are obviously more dependent on gift-item and print sales: You can show off all your baby pictures indefinitely on Flickr, while on Snapfish, for example, if you maintain an account but don’t make a single purchase for a set period of time, you’ll receive a friendly yet firm e-mail informing you that your account will soon be deactivated unless said purchase is made.

There’s also an unspoken rivalry for consumer attention between the photofinishing sites and social networking sites like Facebook and MySpace. “InfoTrends research shows that people who interact with others and share photos on social networking sites share a higher percentage of their photos than the average digital camera user,” explains Bullock. “Facebook, for example, is widely reported to be the largest photo-sharing site on the Internet.” He adds that, unlike the traditional online photo sites like Snapfish and Shutterfly, these sharing and social networking sites are using photo sharing to drive traffic, attracting page views for which ad space can be sold.

In the end, though, online photofinishing brands can strengthen their appeal by paying attention to consumer needs. “[We believe] that listening to our customers and letting that experience guide product innovation is the biggest key to growth,” explains Thomas. “We built our business on that mission, and it has worked well for us.”

These customer-driven services, combined with the relative ease of uploading, designing, and ordering on all the major photofinishing sites, have put the photographic focus and exposure right back where it needs to be: on enjoying your memories.     

[24-Sep-2007]