Sep 29, 2016
There haven’t been that many significant entries into the photo print market over the last several years, so it was especially notable when Amazon announced its AmazonPrints service on September 21st, which is available to Amazon Prime and Amazon Drive customers. The service is now offering photo prints in 4” x 6” ($0.09), 5” x 7” ($0.58) and 8” x 10” ($1.79) sizes, as well as two different types of photo books. AmazonPrints 8” x 11” hardcover photo book with glossy pages starts at $19.99, and an 8” x 11” premium layflat hardcover book with matte paper starts at $44.99. According to the AmazonPrints website, stationery and calendars are coming soon.
Amazon is no doubt hoping to capitalize on the fact that its Amazon Prime members are allowed unlimited photo storage included as part of their monthly ($10.99/month) or annual ($99/year) plans. According to research from Consumer Intelligence Research Partners, Amazon had 63 million Prime members as of June 2016, which was an increase of 19 million members from June 2015, which is an enviable base of potential customers to pull from.
Amazon is also entering the print market with aggressive pricing, especially considering that Prime members get free standard shipping or free expedited shipping on orders of $15 or more. The 9 cents 4” x 6” pricing matches that of Snapfish, dotPhoto, and York Photo as the lowest being offered by any of the current online vendors, as well as the home delivery per print price of retailer Walmart. Amazon’s 58 cents 5” x 7” pricing is lower than any of the established vendors, and the $1.79 price for 8” x 10” ranks as one of the lowest. Amazon’s photo book prices are among the lowest out there for 8” x 11” hardcover books.
Amazon’s entry into the photo printing business comes as revenues from traditional photo prints have been in decline for years, while the market for products like photo books, calendars and cards is still growing but is starting to flatten out from the double-digit growth experienced just a few years ago. The photo output market is still a big business and entering the market makes sense for Amazon. They already have access to millions of photos from existing customers and the prints business can be used effectively for cross-marketing with other Amazon products and services.
Wall Street’s knee-jerk reaction from the news of Amazon’s entry into the photo printing business resulted in a 12% drop in Shutterfly’s stock price, but it remains to be seen if Amazon’s entry will have an adverse effect on the established vendors in the market. Many customers of vendors like Shutterfly, Snapfish, Walgreens and CVS have been using them for their photo needs for years, and these vendors routinely run aggressive promotions that customers wait and look for, including specials like free prints, free shipping and even free photo books. While Amazon is certainly entering the market with aggressive pricing, we believe that there are other factors that will ultimately influence a consumer’s decision on which vendor to use, such as the ease of product creation and ordering as well as product quality.
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