Brits may be sending fewer letters, but when it comes to personalised gifts and cards, the market is growing apace. The online greetings-card sector is estimated to be worth £80 million, having doubled in size in the last 12 months. Although impressive, this represents a mere 5 percent of the overall greetings-card market, which has annual sales of some £1.6 billion.
Over the moon
Where there’s growth, there soon follows the jostle for market share through mergers, acquisitions and strategic partnerships. In July, online photo printing firm Photobox bought Moonpig.com in a deal valuing the greetings-card business at £120 million. Following the acquisition, the companies will continue to operate as separate businesses but enjoy the benefits of a complementary customer base and increased scale. Photobox chief executive Stan Laurent becomes group president and chief executive, while Moonpig’s founder and executive chairman Nick Jenkins will serve as an adviser on the group’s board.
For Laurent, the merger means huge growth potential. With only 30 percent of the photo market and less than 5 percent of the greetings-card market online, Laurent has ambitions to become the global sector leader. “It’s still early days in this market, with lots of opportunity to grab market share,” he says.
This is not the first merger for £72 million Photobox, which joined forces with France-based Photoways in 2006. In turn, Moonpig is no stranger to international expansion, turning over £38 million selling cards, flowers, mugs and T-shirts in the UK, USA and Australia. Laurent says that for now, he is concentrating on integrating the two companies, but he does not rule out further acquisitions, even beyond the companies’ core product offering.
From bricks to clicks
Traditional high-street retailers are also recognising the opportunities the online greetings card and “personalised publishing” market offers. Card Factory, which has sales of £230 million and more than 570 UK stores, acquired personalised gifts etailer GettingPersonal.co.uk from private-equity owner Isis in July. The deal, for an undisclosed sum, sees GettingPersonal become a wholly owned subsidiary of Card Factory. In the year to April 2011, GettingPersonal generated sales of £11.5 million—an increase of 22 percent on 2010.
Hilary Large, GettingPersonal’s marketing director, says the acquisition means the business now has “access to an enviable retail store network—600 by Christmas—and to a team of people who are great retailers. We can lead more customers to the GettingPersonal.co.uk site because we can leverage the massive footfall that the average Card Factory store offers”. At Christmas, Large says the company will run a number of initiatives to offer Card Factory customers incentives to try out the personalised gifts from GettingPersonal.co.uk, further driving awareness for the online business.
Another development this summer was the partnership between Flying Brands and Hephalump.com. Print-on-demand business Hephalump will provide the software, manufacturing and fulfilment for the new venture, allowing Flying Brands to broaden its product offer and enabling customers to purchase personalised cards via the Flying Flowers and Flowers Direct websites. In a reciprocal arrangement, Hephalump will start selling Flying Brands’ flower bouquets on its site. Flying Brands first entered the greetings-card market with the takeover of Greetings Direct in 2006, but shuttered the operation two years later.
Photobox’s Laurent says we will see many more of these deals—both from high-street brands tapping into the online market, and mergers in the online space. “I’m expecting more M&A activity in general—especially with a developing market where there’s a successful player,” he says. Competition, he adds, can only be a good thing—for consumers and businesses alike.
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