Home | Subscribe | Contact Us | Advertise

This series focuses on thriving or up-and-coming companies in the print industry. Some are investor darlings, others have created industry buzz with technological innovations or a new approach to selling print. If you have suggestions for companies that should be profiled in this series, email them to abrown@PSDA.org.

Crowd-sourcing in the Ad Specialties Arena

Zazzle.com Inc. keeps customer loyalty by making end users stakeholders in its business

By LaShell Stratton

While Jeff and Bobby Beaver were toiling at Stanford University in the late 1990s, the two brothers also worked on what they hoped would be a great business idea.

“We talked about building a new printing technology for carbon substrates or T-shirts,” Bobby Beaver explains. The new technology would involve proprietary inks and the T-shirts would eventually be designed by customers, printed on demand and offered online. “If you remember, this was around the time of the internet boom, when all these startups were popping up everywhere,” he says.

In 2000, the brothers’ plan became a reality when they started Zazzle.com Inc., a manufacturer based in the Silicon Valley that initially sold only large-format inkjet printed products. In 2001, Zazzle.com built the first version of its online storefront, joining the flood of e-commerce sites on the Web. But there would be one decision the brothers would make in the course of developing their business strategy that would help the fledgling company distinguish itself from competitors. The founders of Zazzle.com would embrace a “crowdsourcing” business model adopted by companies as diverse as iStockphoto.com and Procter & Gamble.

Crowd What?
“Crowdsourcing” sounds like outsourcing but they are two very different animals. The term was first coined in June 2006 by Jeff Howe, a contributing editor at Wired magazine, who noticed several internet companies were not only encouraging their customers to network online, but were also using the ideas their customers generated to create consumer goods—and profits—that could be shared with end users.

Crowdsourcing has become the web-enabled version of collective customer commitment, a business model that makes customers stakeholders in the companies from which they buy. It’s a new millennium baby, the product of open source programs like Mozilla and Linux and of web sites like eBay and YouTube that rely heavily on end user participation.

“We looked toward eBay and Dell for inspiration for Zazzle,” says Beaver, who is also chief technology officer at Zazzle.com. “eBay has done a tremendous job of allowing members to network and create a sense of community.”

Under the crowdsourcing business model, Zazzle.com allows customers to not only personalize and order ad specialty products online, but the company also offers browser software that enables end users to create online stores filled with galleries of T-shirts, mugs, hats and posters they designed. To guard against intellectual property infringement, Zazzle.com prevents end users from republishing others’ designs. They can purchase such designs only for personal use. With each transaction made through the online storefronts, Zazzle.com shares up to 17 percent of the sale with the end user. In exchange for sharing their revenue, the customers have a reliable manufacturer who is willing to print their high-quality products on demand and ship within 24 hours.

“Most standard commerce involves determining what will be popular and what won’t,” Beaver says. “You stock your inventory accordingly. But we want to extend the marketplace as far as it can go. It’s about the whole community of contributors who ultimately dictate the direction of the site.”

Zazzle.com isn’t the first ad specialties e-commerce site to do this. The web site CafePress also allows customers to design, order and sell T-shirts online, and sites such as Threadless allow end users to upload, order and vote on the best T-shirt design with monetary prizes given to the winners. Crowdsourcing makes customers feel a strong allegiance to a company and its fate. Zazzle.com’s customers, who range from housewives to professional designers, go to great lengths to help the company survive and expand.

“We haven’t really had to invest that much in advertising, in getting our name out there,” Beaver admits. “Our customers are the ones who go out and tell their friends about us. It’s our army of contributors and our partners that help us grow. But we’ve definitely benefited from the vision of our smaller contributors.”

Partnerships and Investments
Zazzle.com’s business model has enabled it to expand rapidly in size and product offerings. In addition to the usual ad specialties, Zazzle.com began a partnership with Pitney Bowes in 2005 to offer customized, U.S. Postal Service-approved postage to end users online.

“It allows them to create personalized postage stamps,” Beaver explains. “And in regards to corporate clients, we’re offering a serious proposition with custom postage. Now companies can easily send mail with their company logo, perpetuating their brand.”
Zazzle also has partnerships with nearly two dozen companies and organizations such as the Walt Disney Company, Warner Bros., Barbie, Marvel Comics and the Library of Congress to keep a diverse catalog of images on hand for end users. “We really want to cater to every demographic,” Beaver says.

In 2005, Zazzle.com received a further boost from the venture capital firms Kleiner Perkins Caufield & Byers and Sherpalo Ventures. It came in the form of a $16 million investment. In addition to having former Secretary of State Colin Powell as a strategic limited partner, Kleiner Perkins Caufield & Byers also has a history of picking winning bets in the online and software arenas. The firm was one of early investors in Google, Amazon, Netscape Communications and Sun Microsystems.
John Doerr, general partner at Kleiner Perkins Caufield & Byers, told BusinessWeek in July 2005 that he believes in Zazzle.com’s vision. “Zazzle is a way to take all those unique, individual and custom expressions of self and realize them in expressions generally of things, be they apparel, or posters or stamps,” Doerr said.

And those “things” are definitely bringing in the customers. Zazzle.com currently offers 500,000 unique, user-created products ranging from high-gloss photo paper to neckties. Beaver says he knows that the company’s success is due largely to the Web.
“The internet is such a fantastic medium,” he says. “I know Zazzle would not be possible without it.”

LaShell Stratton is assistant editor at Print Solutions magazine. Email comments to lstratton@PSDA.org.