Commentary & Analysis
Vistaprint Revisited: New Acquisitions
WhatTheyThink profiled Vistaprint in January 2011and the company has made some notable acquisitions since then, so we are taking an updated look at what has been in development. Conclusion? Vistaprint is still charging ahead.
By Stacey Skotzko
Published: April 17, 2012
Vistaprint’s CEO said his customers are other companies’ worst nightmares.
At a presentation in February at a Goldman Sachs technology conference, Robert Keane explained that Vistaprint, the global company that reported second quarter 2012 revenue of $299.9 million, looks to the small guys. It’s the under 10-person businesses, the home offices, the $100-a-year clients that he wants to capture.
“It is a very hard demographic to get right, but when you get it right, they are very appreciative because they have not been well served before,” he said. Vistaprint seems to be getting it right — and is still growing. In comparison to 2010 figures, the company reported a 28 percent increase in revenue for the second fiscal quarter in December. For the full fiscal 2012, Vistaprint expects revenue of $997 million to $1,049 million.
But this didn’t come without a price. Only about two months apart, Vistaprint completed the acquisition of two companies, hoping to expand services and customer personalization: Albumprinter, a privately held Dutch photo book and photo product company, and Webs, Inc., a website development and hosting platform..
Photos and apps
At the same presentation in February, Keane said that 80 percent of Vistaprint’s revenues come from small businesses and 20 percent from cross-selling into home or consumer markets. Albumprinter, which joined the company in November, and then Webs, Inc., which joined in late December, both complement this model.
Albumprinter, also known as Albelli, was bought for EUR 60 million in cash and Vistaprint says it hopes to promote the company across the European market —Albumprinter already has an established presence in European retail shops, allowing customers to create their own personal family photo books. Obviously catering to the home market, this acquisition is intended to strengthen Vistaprint’s already prominent play in the Europe.
Webs, Inc. tends to feed into the small-business strategy for Vistaprint, as the company allows users to make websites, Facebook fan pages or mobile sites, mainly for small-business use. It hosts websites , helps create custom web pages and lets customers morph their new sites to mobile platforms. Vistaprint purchased Webs, Inc., which was started by two brothers in 2001 in College Park, MD., for $117.5 million, including $101.3 million in cash and $16.2 million in restricted shares.
Vistaprint is also looking for additional growth. In its most recent SEC filing, the company says though it will be “prudent and selective,” it “may continue to be proactive in assessing potential merger and acquisition targets.”
Physically, Vistaprint is growing as well. It opened a Mumbai office in December, expanding the company’s presence in India. Vistaprint already ships to 130 countries and has 24 localized websites. And though Keane says Vistaprint holds “love” for the U.S., it’s not the company’s top focus. “We love the US. We are expanding here,” he said. “It is a great market. Our Boston office continues to grow, but it is 20 percent of our employee base. All our servers are outside of the U.S., all of our customer service operations, all of our manufacturing. The company was founded and funded by French venture capitalists.”
Stefan Töpfer is the group CEO and chairman of WinWeb, and the founder and editor of The Small Business Blog (http://sme-blog.com). He sees these acquisitions from Vistaprint as a “natural progression.” He noted that Vistaprint helps small businesses develop their identities, something often easier said than done, and Webs, Inc. in particular will work toward that goal. “A lot of small-business owners struggle with that because they are very hands-on with what they do,” he said. “A website, they think it’s complicated to do themselves. But most of the time, they are worried about the time it takes, not the money. They struggle to make time.”
That’s where Vistaprint comes in, he says. But Töpfer added a caveat: With Vistaprint’s sheer size, he the company needs to remember that small businesses need some personal attention and “ego-stroking.” “These businesses often behave like consumers and they are looking for personal relationships and want to be seen as a person,” he said.
Despite that, Vistaprint’s inexpensive and quick services cater to the little guy, but it can’t do it all. The company acknowledges in its SEC filings that because of its growth, it still depends on external factors beyond its control, “including the reliability and performance of our suppliers, third-party carriers and communication infrastructure providers.”
With its size, the company works with a number of changing tax codes and regulations, the filing says.
Sometimes, the do-it-yourself approach doesn’t allow for quality craftsmanship.
Mark Perlman, the owner of Washington Engraving Co. in Washington, D.C., said he frequently sees customers who place multiple orders on Vistaprint and cannot get it right.
“My first job today was a customer who had purchased something on Vistaprint and had brought it back,” he said, explaining that the image kept running too close to the border.
Being in his shop for 30 years, Perlman says he hasn’t seen his business decline from companies like Vistaprint; business has just changed. “All these other zingy things,” that Vistaprint does, he says, cannot account for the fact that the type needs to be readable or the resolution needs to be correct on a photo.
“That’s where the small printer comes in,” he adds. “We do deals for the government and embassies, things that Vistaprint can’t do and can’t be reproduced.”
But regardless, Perlman and Töpfer both recognize that Vistaprint does play a substantial role in the market, and seems as if it will in the coming years. “Vistaprint is in a great market, a growth market, and it’s going to grow for decades to come,” Töpfer said.