PhotoBox is an example of a company that operates a portfolio of business models. In this write-up, we focus on their customizable printing brand, which is an exemplar of a product business model. In this business model, the company offers its customers the ability to order prints of their digital photos, and create other items based on their digital photos (e.g., calendars, phone cases, etc.). Each customer can customize his or her own products, using PhotoBox’s website, but the same set of tools are available to all customers – hence the classification as an exemplar of a product business model.
PhotoBox was created by Graham Hobson and Mark Chapman in 1999, who realized there would be a market for people looking to get their digital photos printed online. Via their website and app, PhotoBox allows customers to order digital prints, posters, photo books, phone cases and gifts that feature their own digital images. PhotoBox now operates in about 20 countries, has 5 factories in Europe with 1,000 employees and also has a portfolio of subsidiaries including Moonpig.com, Sticky9, Hofmann and posterXXL. In 2014, the company returned revenues of £175.3m with an underlying EBITDA of £19.8m. They consider themselves to be Europe’s leading digital consumer service for personalized products and gifts.
PhotoBox’s customers are the people who use their website or app to purchase their products online. Their main customer group consists of amateur photo enthusiasts, who appreciate the ability to conveniently and cheaply turn their images into photos and custom products. PhotoBox products are also widely used as gifts, with peak business occurring around Christmas and other seasonal events such as Mother’s Day, Father’s Day, Valentine’s and family birthdays. Customers must have a reasonable level of computer literacy to use this service.
Learn more about the Product Business Model
A dyadic transactional relationship where your good or service can be designed and delivered without prior interactions with the customer.
Engagement — Value Creation Proposition
PhotoBox engage with their customers via their website, mobile phone and tablet apps, email and webchat. They also allow customers to both share and upload images from social media. PhotoBox create value for their customer by providing them with the ability to create their own “bespoke” products using their own images. The personalized nature of the product enables them to engage with the customer on an emotional level, as well as allowing them to express their creativity and create a product that can be cherished or that commemorates an important event. Whilst the product is considered by the customer to be personalised, this only occurs at the very final stage. PhotoBox’s offering is in fact scale-based, as customers are only able to choose products from a set range of sizes or configurations. This process is completely automated through the website and app.
Delivery — Value Chain
The main business of PhotoBox is a hierarchical value chain, whereby the raw products such as photo paper and mugs are purchased from distributors in bulk. These are then turned into personalized prints or gifts at their factories/warehouses and shipped to customers. PhotoBox manage manufacturing internally. Due to the seasonal nature of their product, PhotoBox outsource part of their non-core workforce to cope with variations in demand.
A key component of the value chain and a reason behind PhotoBox’s success is the increasing popularity of photography. This has been driven by the inclusion of high-quality cameras within mobile phones, the proliferation of digital cameras and the trend towards taking “selfies”. The cost of Digital SLR’s has also dropped significantly in recent years, thus resulting in an increase in the number of amateur photographers who are able to use commercial level cameras.
The company uses its proprietary software to work directly with the original photo files from customers – that is, PhotoBox does not compress or reduce the file size, which allows it to maintain high quality across all products.
Monetisation — Value Capture
The PhotoBox model captures value at the point of sale. Customers go onto the website, add the items they wish to purchase into their “shopping basket” after adding their photos, and then complete the purchase. Money is transferred using an online payment method such as with a credit/debit card or via paypal. Upon confirmation of the transaction, PhotoBox prints and assembles the order and ships to the customer, who receives it at the designated address.
Disclaimer — Written by Daniel Thrift and edited by James Knuckles under the direction of Prof Charles Baden-Fuller, Cass Business School. This case is designed to illustrate a business model category. It leverages public sources and is written to further management understanding, and it is not meant to suggest individuals made either correct or incorrect decisions. © 2016 Published 23 May 2016