Companies like Walmart and Cimpress (parent company of Vistaprint and National Pen Co.) give distributors and suppliers reasonable cause for concern, as they are pulling in more business than in the past. One of the heavyweights in that category, however, seems to be in a weird free fall. We’re talking about CafePress.
In March, the company parted ways with chief operating officer Robert D. Barton and two board members, in addition to other staff members, after a 22 percent drop in gross profit for 2017. CEO Fred Durham also slashed his own salary in an effort to save money.
Last week, CafePress announced its first quarter 2018 financial results, which were less than stellar:
- Total revenue was down 20 percent from the same period of 2017.
- CafePress.com revenue was down 28 percent.
- Total orders were down 21 percent.
In episode 1 of our podcast, we speculated that some of CafePress’s recent problems were also tied to its suddenly low rankings in search (listen below at the 3:05 mark). And it turns out we were right. Visits to CafePress.com declined 38 percent, mostly due to lower visits from organic search—a real problem for a business that had until recently relied almost entirely on internet sales. The company is undergoing a major site overhaul to combat the SEO hit it’s taking from changes to Google, but clearly it wasn’t prepared for such major shifts in search.
“As previously stated, our top priority is to return to profitability and begin generating positive cash flow,” Durham said in a press release. “During the first quarter, we took actions to simplify the organization and drive business performance that served to reduce normalized, annual fixed costs and software development spend by $7 million. In addition, we made significant progress toward completing the modernization of CafePress.com and demolishing the old site, and are pleased to announce that we achieved another critical milestone during April, having released the new search pages to our primary, U.S. domain.”
In addition to the improvements the company made to its own web presence, there were three pretty big items that were easy to miss in the financial details of the release.
CafePress’s retail partner channel, which provides fulfillment to other custom products companies, completed an integration with the eBay marketplace. This works by letting eBay users list products sourced by CafePress. Think about it as an Etsy platform where you didn’t actually make that coffee mug you’re selling.
Here’s how Street Directory described it:
In case you haven’t heard, Cafepress is a web business that allows anyone to upload designs that they own the rights to onto the CafePress site.
Then, you can have those designs printed onto a wide array of products such as T-shirts, mugs, Frisbees, posters, clocks, book bags and many other products that they offer. If you or anyone you know either draws, paints or takes photographs, CafePress will let you put those artistic elements onto their products.
You can also use words, so if you can come up with funny sayings, you could have bumper stickers printed up. Or maybe you’d prefer inspirational quotes, Bible verses or anything that you can dream up.
By using CafePress as your source for products, you’re going to have a major advantage because you don’t actually need to buy the products from CafePress before you run your auction or set up your store. What you can do is start an auction for your shirt and then once the winning bidder pays, you order the shirt from CafePress and have it shipped to them as a gift.
The company also has a partnership with Walmart through a product catalog, which lists about 600 thousand CafePress items.
Finally, it has “expanded into the Australian domain through Amazon.”
That’s just about a bingo sheet of the companies that have been taking a larger role in the promotional industry despite outsider status.
Once the company rolls out its back-end web improvements, the goal is to make up for losses as a result of Google’s search engine algorithm changes.
Whether all that will be enough to save the company remains to be seen. But, through partnering with other big players from the promotional products industry’s periphery, CafePress has played pretty much every card it possibly can. If it fails from here, it’s a good sign that the company’s business model is no longer viable. If not, it creates another potential behemoth for competition.
