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The Story of Zazzle
Among the best-known online personalized
shirt printers are www.zazzle.com
and www.cafepress.com.
Founded just a few years ago by brothers Jeff and Bobby Beaver
while students at Stanford University, Zazzle sells personalized
T-shirts and other items online. Their father, Robert,
serves as the CEO. But this is no longer a small-time
family affair. Zazzle caught the eye of big-time venture capitalists;
in 2005 a consortium of venture capital (VC) firms headed
by Kleiner Perkins backed Zazzle to the tune of $16 million.
Kleiner Perkins is no ordinary VC firm; it is one of the savviest
investors in Silicon Valley. Its head, John Doerr, is
revered in the VC community as a master of spotting new trends
and opportunities. Kleiner Perkins invested in countless
home run companies like Google, AOL, Amazon, Genentech and
Intuit.
In just two years, Zazzle grew to employ 250 people, and as
many as 500 during holidays. As of early 2008, Zazzle’s
Web site had recorded 2 million visitors monthly who buy more
than a million items per month; and this number is growing
rapidly.7 According to Zazzle, the company has sold more than
30 million items in the last several years. You can buy personalized
T-shirts sporting your own designs or photos. You can also
upload designs that can be purchased by other customers. Zazzle
has since created an alliance with MySpace, and has arranged
licensing deals with Fox, Lucasfilm, Disney and thousands
of bands. Visitors can use any of the licensed images
in their customized shirts or other items, like mouse pads.
Such customization of mass-appeal images and designs is creating
an entire new market.
CafePress.com is older and larger, with an average visitor
count of 4.5 million per month. It uses a business model
similar to that of Zazzle, but is more interested in providing
a marketplace for members to sell their shirts. When a visitor
buys a member’s shirt, CafePress will print the shirt
on demand at its digital apparel printing centers in the West
and Midwest. Neither CafePress nor Zazzle would exist without
digital apparel printing technology.
Digital Apparel Printing as a New
Business Opportunity
Now, let’s examine how digital
apparel printing meets the criteria established in Chapter
One. It easily meets all six of the non-negotiable criteria:
- Dr. Chase's Ten-Bagger Rule:
The typical minimum cost
of entry into this business is between $20,000 and $30,000.
If the proper equipment is selected for the business model,
the production capacity can be several hundred thousand
dollars per year. If you can develop the ability to sell
and utilize the production capacity, it can meet the Ten-Bagger
Rule. The key to success is that you be a motivated entrepreneur,
and able to develop the business. The nature of the business
allows you to concentrate on local businesses, yet you
can also serve a nationwide client base in the promotional
wear industry we will discuss later, and use Internet
marketing to leverage you.
- Easy-to-operate business:
Most, but not all, digital apparel
printers are simple and easy to operate. Most require
very little physical space. The business model can be
kept relatively simple if you wish.
- Profit margin:
The gross profit margin will depend
much on your business model and local market condition.
You have a choice of selling mostly to consumers and end-user
businesses at a higher margin, or to trades and wholesale
customers at a higher volume.
- Low operating expenses
and low inventory requirements:
In later chapters, you
will learn that you can keep operating expenses relatively
low. A well-developed blank garment supply chain makes
it possible to operate with little or no inventory.
- Large market potential:
According to the authoritative
2007 Decorated Apparel Universe Study, the apparel decoration
industry is a $44 billion market in the U.S., of which
an estimated $22 billion is printed garments. A good portion
of the garment printing is subject to digital printing.
- Controllable risk business:
The business has low
investment requirements, low overhead, low operating costs
and no inventory. These all point to low and controllable
risks.
Now, let's look at the seven additional
desirable characteristics we discussed.
- Recession-proof
business: "The
decorated apparel industry is resilient enough to withstand
whatever Mother Nature or the economy dishes out,";
concludes the 2007 industry study. Apparel is a basic
staple, and there is always a market for printed shirts.
- Clean,
quiet and environmentally friendly operation: Digital
apparel printing is environmentally friendly, as we discussed
earlier. It is clean and quiet, which is great for an
at-home or small business.
- Something
you enjoy doing: It’s not golfing,
but everyone we talked to seemed to enjoy digital apparel
printing. If you like arts and crafts, or just enjoy being
creative and helping others, you may well love this.
- Compatible
with a normal life schedule: This is a
nine-to-five, five-day-a-week business. It can easily
be run as a part-time or seasonal business.
- It's a business,
not a fad: As long as people
wear clothes, decorated garments will be in demand. Nothing
is more basic than clothing.
- Little
or no liability: You can design your business
to limit your liability to the value of the garments printed.
There is little possibility of product liability.
- Low
or no competition: There may be competition
in your area since it is difficult to avoid competition
completely. However, digital apparel printing is still
in its infancy, and there are relatively few competitors
in most communities. The competition of course will increase
as more people adopt this new technology.
As we will see in other chapters, increasing
unit sales is the key to success in the digital apparel
printing business. Prospective operators should be keenly
aware that the entire business depends primarily on one’s
ability to generate sales using a variety of methods that
we will discuss in later chapters. If one can leverage the
opportunity by using a Web site, reseller programs or alliances
with large outlets, the potential can be limitless. Clearly,
digital apparel printing has all the earmarks of one of
the best opportunities around.
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