VistaPrint
Encyclopedia
Vistaprint is a large online supplier of printed and promotional materials as well as marketing services to micro businesses and consumers. In the 26th annual Graphic Arts Monthly
101 listing, the company is the 40th largest (by revenue) and the 4th fastest growing printing company
in North America. It is also the 6th largest public printing company (by market cap).
Revenue for the first quarter of fiscal year 2012 grew to $212.4 million, a 25 percent increase over revenue of $170.5 million reported in the same quarter a year ago. Excluding the estimated impact from currency exchange rate fluctuations, total revenue grew 20 percent from the same quarter a year ago.
, the Netherlands, Vistaprint employs over 3,100 employees globally in its offices and printing facilities. The company’s U.S. offices are in Lexington, Massachusetts
, while its European offices are in Barcelona
, Spain. Its three printing facilities, which total almost 800000 square feet (74,322.4 m²) of production space, are in Deer Park, Australia
, Windsor, Ontario
and Venlo
, the Netherlands
. Vistaprint uses patented technology to aggregate and print large numbers of customized orders in its automated production facilities in North America
and Europe.
Orders for customers in North America are printed in the company’s plant in Windsor, Ontario.
European orders that are placed by consumers are manufactured in Venlo, the Netherlands.
Asia-Pacific orders that are placed by consumers are manufactured in Deer Park, Australia.
The company’s customer service center, Vistaprint Jamaica Limited, is headquartered in Montego Bay, Jamaica and has been staffed by company employees since its doors opened in November 2003. In April 2009, the company announced that it would be reincorporating to Venlo, the Netherlands, and also open a Paris, France office which would serve as its French headquarters. The Paris office includes the office of Robert Keane, the Company's President and Chief Executive Officer, as well as a small number of other functions, including corporate strategy.
Business School. Keane was interested in closing what he perceived as a gap in the printing industry’s market with regard to the micro or small business, and developed that plan while in school. Because traditional print shops typically generated orders only in the thousands, something many small businesses could not afford, Keane perceived a potential area for growth with short run, high volume printing. Thirteen years later that gap has been recognized by a number of retailers, including Staples and OfficeMax, but Vistaprint still remains as one of the leading suppliers.
Using advanced technology to group similar orders in large groups, Vistaprint produces large numbers of orders in short runs. This allows for consumers to get quantities in low volumes, as low as ten for example, rather than thousands. Using the Internet as a medium, graphic design is offered through online design studios. Anyone can then design a product and order it through the site. These processes and manufacturing methods have been incorporated across the company’s vast product line.
In September 2005, the company went public with a successful initial public offering. Now publicly traded on the NASDAQ, Vistaprint has consistently seen growth rates in the 50-60% range, according to its earnings statements. All of this growth has been organic, as the company has not made any acquisitions since its IPO. Working to expand and focus on markets outside of the U.S, Vistaprint opened a European office in Barcelona, Spain in September 2006.
to printing, Vistaprint uses presses and processes of industrial printing for short-run commercial printing, while achieving units costs close to that of industrial printing. Using proprietary technologies, Vistaprint has managed to shift the conventional cost-volume curve, so that relatively short runs are still relatively inexpensive. This is a major competitive advantage, with many aspects of the process patented.
Vistaprint uses self-service
design, proofing and ordering at the front-end through the web, and controlled printing, cutting, packing and dispatching at the back-end through printing plants
. The key aspects of the process are system integration
, aggregation, standardization
and automation
.
Vistaprint's proprietary process involves multiple software components, and the management of multiple production components, in an end-to-end production workflow
from "click to ship". Vistaprint is vertically integrated with two large production facilities, one for North America in Windsor, Ontario and one for Europe in Venlo, Netherlands. This allows the company full control over the entire production process, and allows it to invest in the most efficient presses (such as the MAN Roland 700) and technologies as part of its printing assembly line
.
Vistaprint processes thousand of orders from many customers worldwide through their web site. Because of the high volume of orders, there is considerable homogeneity. Jobs can be gang printed using a complex formula based on such factors as type of job, paper stock type, run quantity, finishing (if any) and ship-by dates, among many others.
Vistaprint minimizes user selectable options typical in the low volume commercial printing world. They print standard types of printed materials, such as business cards or postcards. Within each category, it supports a specific size, paper stock and ink colors. This results in higher numbers of similar jobs which can be ganged together. It also results in faster changeovers because there's less need to change paper or inks between jobs.
Vistaprint uses Computer Integrated Manufacturing
techniques to minimize human intervention and labor costs. Using browser-based desktop publishing environment, customers act as their own designer and proof-reader. Jobs are routed for printing without intervention. Through capital investment in the latest equipment (for printing, cutting, packing, and shipping) the entire printing process can be computer/software controlled. The printing is done in a single pass on automated, high-volume, large format professional quality presses. Once printed, the products are cut down to size using a computerized robotic cutter, assembled, packaged and addressed using proprietary software driven processes, and shipped to the customer.
In a form of mass customization
using as little as 60 seconds of production labor per order versus an hour or more for traditional printers, Vistaprint is able to print orders faster and at lower costs than traditional printers. Their strategy is to target small-run orders usually excluded from conventional large printers.
Because of its low labor and production costs, Vistaprint achieves low unit costs, which allows it to profitably serve very small customers. The process also achieves very low marginal cost
for both incremental quantities (500 business cards instead of 250) and incremental orders (another business card order, or a set of address labels). This is the key enabler of Vistaprint's free business cards offer, a long-running viral marketing
campaign, as the unit cost of any one free business cards order is very small. It also means the process becomes more profitable when a customer upgrades quantities, or adds another product. Vistaprint's process results in a virtuous circle where high volumes of customers drive down unit costs, and lower unit costs allows the company to charge lower prices to attract even more customers.
. The North American BU is led by President - Vistaprint North America Trynka Shineman, who was formerly the North America chief marketing officer. Former European BU Chief Marketing Officer Nick Ruotolo is the president - Vistaprint Europe and leads the European BU team from Barcelona, Spain.
The company has described its objective as a "minefield of patents" and has been active in pursuing companies that it considers to be infringing on those patents. In 2006, Vistaprint filed a patent infringement suit against Print24 GmbH and UnitedPrint.com AG. A German court ruled in favor of Vistaprint in July 2007. However, after appealing, the German Federal Patent Court ruled in favor of Unitedprint.com, rescinding Vistaprint’s controversial software patent in March 2009.
Separately, in May 2007, Vistaprint filed a patent infringement suit against two Taylor subsidiaries 123Print and DrawingBoard. This action is currently ongoing.
to provide an in-store station in up to 900 OfficeMax stores in the US and Mexico. OfficeMax ImPress is a white label, OfficeMax-branded web site for small business printing based on Vistaprint technologies. The agreement marked Vistaprint's first major move offline. In 2008, Vistaprint announced a strategic partnership with Intuit, the leader in accounting software with 3.5 million active small business customers. This ties Vistaprint's service into Intuit's QuickBooks software using a white label, Intuit-branded web site for small business printing based on Vistaprint technologies. At Vistaprint's April 2009 third-quarter earnings presentation, the company also announced it will supply services for the FedEx Office brand.
or advertising
revenue. This form of co-marketing is popular because the revenue derived has almost no associated cost, and hence is highly profitable. In general, where such co-marketing results in a one-off customer purchase there is little criticism. However, this is significantly more controversial when it results in recurring (membership-related) billing.
In the USA, Vistaprint has been accused of enrolling customers into Vertrue
's paid-membership reward plan without the customer's agreement. Credit card details are passed on to Vertrue (formerly Memberworks Incorporated) by Vistaprint, and charges are then made on those credit cards by Vertrue without the owner's consent. Numerous complaints have been received by www.consumeraffairs.com and The Better Business Bureau by consumers objecting to these charges. Some consumers complain of still being charged after canceling the reward plan membership, and others that more than a year after cancelling membership, the charges began again.
Vistaprint's partnerships in the United Kingdom
have attracted criticism. Critics have stated that Vistaprint's customers are enrolled without their knowledge in a reward voucher
scheme operated by an associated company, VPrewards.com, at a cost of £9.95 a month, that no information on the reward scheme is provided to customers subsequently and that it is up to the customers to detect the fact that they have been enrolled as members and to cancel unwanted membership. A similar program operates in the USA. The number of complaints is significant enough to generate awareness on the web and to be a cause for concern. For complainants, the company claims publicly to cancel the membership, and refunds the monthly membership fees.
On November 30, 2009, the company announced that it had terminated its contract with an affiliate of Vertrue, Inc., effective December 20, 2009, and that, effective as of November 23, 2009, no membership rewards or similar programs have been or will be available to any Vistaprint customers. The company also reaffirmed its previously announced revenue and earnings per share guidance for the quarter ending December 31, 2009 and the full fiscal year ending June 30, 2010. The release also stated that Vistaprint's termination of the Vertrue relationship and elimination of all membership program offerings is in line with the company's previously stated strategy. The company believes it is also appropriate at this time in light of the recent United States Senate Commerce Committee inquiry into a variety of membership rewards programs, including the sufficiency of their disclosures to consumers.
On September 2, 2009, the company announced that the purported class action lawsuit pending against Vistaprint USA, Inc., Vistaprint Limited and two third party merchants in the United States District Court for the Southern District of Texas, had been dismissed by the Court. In the process of dismissing the case, the Court found "without reservation" that, as a matter of law, the web pages on which the membership discount programs were offered on Vistaprint.com were clearly written and not deceptive.
In August 2008, the company announced that class action lawsuits relating to the membership discount programs offered by third party merchants on Vistaprint's USA website had been filed against Vistaprint USA, Inc., Vistaprint Corp., and two third party merchants (Vertrue Inc. and its subsidiary Adaptive Marketing LLC) in Texas and New Jersey. Two additional class-action suits were subsequently filed in both Massachusetts and Alabama. The four complaints, all filed in federal courts, alleged that the defendants were in violation of the Electronic Funds Transfer Act (which protects from unauthorized charges) and the federal Electronic Communications and Privacy Act (which prohibits the unlawful access of financial information). "As we allege in the complaint, we believe that Vistaprint and Vertrue are acting in concert to access consumers' credit card information and then begin charging them relatively small amounts," said Jerome Noll, counsel for the plaintiff that filed the Massachusetts suit. "You're talking about $14.95 a month or $12.95 a month, hoping that consumers just won't notice."
From a financial perspective, some observers and analysts contend that this type of highly profitable third-party revenue distorts the company's finances. A relatively small referral revenue can have a relatively large impact on the net income. While Vistaprint, as a public company, properly includes this revenue in its quarterly figures, it is argued that excluding this revenue gives a better picture of the company's true profitability and the value of its stock. For example, in FY 2008, Vistaprint's revenue was $400.7m with 6.9% of this ($27.6m) coming from referral fees, the "majority" of which comes from the rewards program. This can be contrasted with the net income for the same period of $39.8m.
CEO Robert Keane stated in the company’s third quarter FY 2009 earnings presentation that, “Other factors contributing to our decision include the highly stable economic, political, and regulatory environments in the Netherlands and France; Vistaprint’s significant and rapidly expanding European operations; our company’s historical roots in France and the Netherlands; and the long-established commercial relationships and tax treaties that both France and the Netherlands have with other countries around the world. In summary, we believe that these moves will provide important managerial, economic and operational benefits for our company that will augment our competitiveness in markets worldwide.”
The company also said it does not expect any material change in its financial results or its effective consolidated tax rate as a result of either the re-establishment of a headquarters office in Paris or the change of domicile to the Netherlands.
Graphic Arts Monthly
Graphic Arts Monthly was a trade publication and web site owned by Reed Business Information serving the information needs of the printing industry, including printers and trade plants....
101 listing, the company is the 40th largest (by revenue) and the 4th fastest growing printing company
Printer (publisher)
In publishing, printers are both companies providing printing services and individuals who directly operate printing presses. With the invention of the moveable type printing press by Johannes Gutenberg around 1450, printing—and printers—proliferated throughout Europe.Today, printers are found...
in North America. It is also the 6th largest public printing company (by market cap).
Revenue for the first quarter of fiscal year 2012 grew to $212.4 million, a 25 percent increase over revenue of $170.5 million reported in the same quarter a year ago. Excluding the estimated impact from currency exchange rate fluctuations, total revenue grew 20 percent from the same quarter a year ago.
Business
Based in VenloVenlo
Venlo is a municipality and a city in the southeastern Netherlands, next to the German border. It is situated in the province of Limburg.In 2001, the municipalities of Belfeld and Tegelen were merged into the municipality of Venlo. Tegelen was originally part of the Duchy of Jülich centuries ago,...
, the Netherlands, Vistaprint employs over 3,100 employees globally in its offices and printing facilities. The company’s U.S. offices are in Lexington, Massachusetts
Lexington, Massachusetts
Lexington is a town in Middlesex County, Massachusetts, United States. The population was 31,399 at the 2010 census. This town is famous for being the site of the first shot of the American Revolution, in the Battle of Lexington on April 19, 1775.- History :...
, while its European offices are in Barcelona
Barcelona
Barcelona is the second largest city in Spain after Madrid, and the capital of Catalonia, with a population of 1,621,537 within its administrative limits on a land area of...
, Spain. Its three printing facilities, which total almost 800000 square feet (74,322.4 m²) of production space, are in Deer Park, Australia
Deer Park, Victoria
Deer Park is a suburb in Melbourne, Victoria, Australia, 17 km west from Melbourne's central business district. Its Local Government Area is the City of Brimbank...
, Windsor, Ontario
Windsor, Ontario
Windsor is the southernmost city in Canada and is located in Southwestern Ontario at the western end of the heavily populated Quebec City – Windsor Corridor. It is within Essex County, Ontario, although administratively separated from the county government. Separated by the Detroit River, Windsor...
and Venlo
Venlo
Venlo is a municipality and a city in the southeastern Netherlands, next to the German border. It is situated in the province of Limburg.In 2001, the municipalities of Belfeld and Tegelen were merged into the municipality of Venlo. Tegelen was originally part of the Duchy of Jülich centuries ago,...
, the Netherlands
Netherlands
The Netherlands is a constituent country of the Kingdom of the Netherlands, located mainly in North-West Europe and with several islands in the Caribbean. Mainland Netherlands borders the North Sea to the north and west, Belgium to the south, and Germany to the east, and shares maritime borders...
. Vistaprint uses patented technology to aggregate and print large numbers of customized orders in its automated production facilities in North America
North America
North America is a continent wholly within the Northern Hemisphere and almost wholly within the Western Hemisphere. It is also considered a northern subcontinent of the Americas...
and Europe.
Orders for customers in North America are printed in the company’s plant in Windsor, Ontario.
European orders that are placed by consumers are manufactured in Venlo, the Netherlands.
Asia-Pacific orders that are placed by consumers are manufactured in Deer Park, Australia.
The company’s customer service center, Vistaprint Jamaica Limited, is headquartered in Montego Bay, Jamaica and has been staffed by company employees since its doors opened in November 2003. In April 2009, the company announced that it would be reincorporating to Venlo, the Netherlands, and also open a Paris, France office which would serve as its French headquarters. The Paris office includes the office of Robert Keane, the Company's President and Chief Executive Officer, as well as a small number of other functions, including corporate strategy.
History
Vistaprint was founded in Paris, France in 1995 by current President and CEO Robert Keane, immediately following his graduation from INSEADINSEAD
INSEAD is an international graduate business school and research institution. It has campuses in Europe , Asia , and the Middle East , as well as a research center in Israel...
Business School. Keane was interested in closing what he perceived as a gap in the printing industry’s market with regard to the micro or small business, and developed that plan while in school. Because traditional print shops typically generated orders only in the thousands, something many small businesses could not afford, Keane perceived a potential area for growth with short run, high volume printing. Thirteen years later that gap has been recognized by a number of retailers, including Staples and OfficeMax, but Vistaprint still remains as one of the leading suppliers.
Using advanced technology to group similar orders in large groups, Vistaprint produces large numbers of orders in short runs. This allows for consumers to get quantities in low volumes, as low as ten for example, rather than thousands. Using the Internet as a medium, graphic design is offered through online design studios. Anyone can then design a product and order it through the site. These processes and manufacturing methods have been incorporated across the company’s vast product line.
Move to U.S. and IPO
Moving to Massachusetts in 2000, the company needed to attract software and marketing talent, as well as venture capital. It succeeded in doing all three. In order to survive the burst of the dot com bubble, the company’s staff was cut from 70 to 20, but in 2001 the company started turning a profit. Originally starting with business cards as its only product but then expanding to postcards, letterhead, stamps, and return address labels, the company started to see better profits as more and more consumers bought products online.In September 2005, the company went public with a successful initial public offering. Now publicly traded on the NASDAQ, Vistaprint has consistently seen growth rates in the 50-60% range, according to its earnings statements. All of this growth has been organic, as the company has not made any acquisitions since its IPO. Working to expand and focus on markets outside of the U.S, Vistaprint opened a European office in Barcelona, Spain in September 2006.
Vistaprint process
Vistaprint applies the principles of mass productionMass production
Mass production is the production of large amounts of standardized products, including and especially on assembly lines...
to printing, Vistaprint uses presses and processes of industrial printing for short-run commercial printing, while achieving units costs close to that of industrial printing. Using proprietary technologies, Vistaprint has managed to shift the conventional cost-volume curve, so that relatively short runs are still relatively inexpensive. This is a major competitive advantage, with many aspects of the process patented.
Vistaprint uses self-service
Self-service
Self service is the practice of serving oneself, usually when purchasing items. Common examples include many gas stations, where the customer pumps their own gas rather than have an attendant do it...
design, proofing and ordering at the front-end through the web, and controlled printing, cutting, packing and dispatching at the back-end through printing plants
Factory
A factory or manufacturing plant is an industrial building where laborers manufacture goods or supervise machines processing one product into another. Most modern factories have large warehouses or warehouse-like facilities that contain heavy equipment used for assembly line production...
. The key aspects of the process are system integration
System integration
In engineering, system integration is the bringing together of the component subsystems into one system and ensuring that the subsystems function together as a system...
, aggregation, standardization
Standardization
Standardization is the process of developing and implementing technical standards.The goals of standardization can be to help with independence of single suppliers , compatibility, interoperability, safety, repeatability, or quality....
and automation
Automation
Automation is the use of control systems and information technologies to reduce the need for human work in the production of goods and services. In the scope of industrialization, automation is a step beyond mechanization...
.
Vistaprint's proprietary process involves multiple software components, and the management of multiple production components, in an end-to-end production workflow
Workflow
A workflow consists of a sequence of connected steps. It is a depiction of a sequence of operations, declared as work of a person, a group of persons, an organization of staff, or one or more simple or complex mechanisms. Workflow may be seen as any abstraction of real work...
from "click to ship". Vistaprint is vertically integrated with two large production facilities, one for North America in Windsor, Ontario and one for Europe in Venlo, Netherlands. This allows the company full control over the entire production process, and allows it to invest in the most efficient presses (such as the MAN Roland 700) and technologies as part of its printing assembly line
Assembly line
An assembly line is a manufacturing process in which parts are added to a product in a sequential manner using optimally planned logistics to create a finished product much faster than with handcrafting-type methods...
.
Vistaprint processes thousand of orders from many customers worldwide through their web site. Because of the high volume of orders, there is considerable homogeneity. Jobs can be gang printed using a complex formula based on such factors as type of job, paper stock type, run quantity, finishing (if any) and ship-by dates, among many others.
Vistaprint minimizes user selectable options typical in the low volume commercial printing world. They print standard types of printed materials, such as business cards or postcards. Within each category, it supports a specific size, paper stock and ink colors. This results in higher numbers of similar jobs which can be ganged together. It also results in faster changeovers because there's less need to change paper or inks between jobs.
Vistaprint uses Computer Integrated Manufacturing
Computer Integrated Manufacturing
Computer-integrated manufacturing is the manufacturing approach of using computers to control the entire production process. This integration allows individual processes to exchange information with each other and initiate actions...
techniques to minimize human intervention and labor costs. Using browser-based desktop publishing environment, customers act as their own designer and proof-reader. Jobs are routed for printing without intervention. Through capital investment in the latest equipment (for printing, cutting, packing, and shipping) the entire printing process can be computer/software controlled. The printing is done in a single pass on automated, high-volume, large format professional quality presses. Once printed, the products are cut down to size using a computerized robotic cutter, assembled, packaged and addressed using proprietary software driven processes, and shipped to the customer.
In a form of mass customization
Mass customization
Mass customization, in marketing, manufacturing, call centres and management, is the use of flexible computer-aided manufacturing systems to produce custom output...
using as little as 60 seconds of production labor per order versus an hour or more for traditional printers, Vistaprint is able to print orders faster and at lower costs than traditional printers. Their strategy is to target small-run orders usually excluded from conventional large printers.
Because of its low labor and production costs, Vistaprint achieves low unit costs, which allows it to profitably serve very small customers. The process also achieves very low marginal cost
Marginal cost
In economics and finance, marginal cost is the change in total cost that arises when the quantity produced changes by one unit. That is, it is the cost of producing one more unit of a good...
for both incremental quantities (500 business cards instead of 250) and incremental orders (another business card order, or a set of address labels). This is the key enabler of Vistaprint's free business cards offer, a long-running viral marketing
Viral marketing
Viral marketing, viral advertising, or marketing buzz are buzzwords referring to marketing techniques that use pre-existing social networks to produce increases in brand awareness or to achieve other marketing objectives through self-replicating viral processes, analogous to the spread of viruses...
campaign, as the unit cost of any one free business cards order is very small. It also means the process becomes more profitable when a customer upgrades quantities, or adds another product. Vistaprint's process results in a virtuous circle where high volumes of customers drive down unit costs, and lower unit costs allows the company to charge lower prices to attract even more customers.
Business Units Established
In May 2008 the company changed its organizational structure to consist of two geographically-focused business units, one in North America and the other in EuropeEurope
Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally 'divided' from Asia to its east by the watershed divides of the Ural and Caucasus Mountains, the Ural River, the Caspian and Black Seas, and the waterways connecting...
. The North American BU is led by President - Vistaprint North America Trynka Shineman, who was formerly the North America chief marketing officer. Former European BU Chief Marketing Officer Nick Ruotolo is the president - Vistaprint Europe and leads the European BU team from Barcelona, Spain.
Patents
Vistaprint has been active, since its inception, in applying for a large number of patents for various aspects of its proprietary technology platform, and one of its early hires was an in-house patent attorney. The company recognizes that developing and protecting its intellectual property creates additional value in the company, and acts as a business moat to deter competitors. So far, Vistaprint has secured 15 issued patents and has applied for almost 40 more.The company has described its objective as a "minefield of patents" and has been active in pursuing companies that it considers to be infringing on those patents. In 2006, Vistaprint filed a patent infringement suit against Print24 GmbH and UnitedPrint.com AG. A German court ruled in favor of Vistaprint in July 2007. However, after appealing, the German Federal Patent Court ruled in favor of Unitedprint.com, rescinding Vistaprint’s controversial software patent in March 2009.
Separately, in May 2007, Vistaprint filed a patent infringement suit against two Taylor subsidiaries 123Print and DrawingBoard. This action is currently ongoing.
Strategic Partnerships
In 2007, Vistaprint announced a strategic partnership with OfficeMaxOfficeMax
OfficeMax , is an American office supplies retailer that was founded in 1988 and is headquartered in Naperville, Illinois.-History:On April 1, 1988, OfficeMax was founded in Cleveland, Ohio, by Bob Hurwitz and Michael Feuer. Hurwitz served as executive chairman and chief executive officer and Feuer...
to provide an in-store station in up to 900 OfficeMax stores in the US and Mexico. OfficeMax ImPress is a white label, OfficeMax-branded web site for small business printing based on Vistaprint technologies. The agreement marked Vistaprint's first major move offline. In 2008, Vistaprint announced a strategic partnership with Intuit, the leader in accounting software with 3.5 million active small business customers. This ties Vistaprint's service into Intuit's QuickBooks software using a white label, Intuit-branded web site for small business printing based on Vistaprint technologies. At Vistaprint's April 2009 third-quarter earnings presentation, the company also announced it will supply services for the FedEx Office brand.
Controversy: Rewards Program
Like many ecommerce companies, Vistaprint frequently uses its pages to promote its business relationships with third-parties, through which the company generates referral, affiliateAffiliate
An affiliate is a commercial entity with a relationship with a peer or a larger entity.- Corporate structure :A corporation may be referred to as an affiliate of another when it is related to it but not strictly controlled by it, as with a subsidiary relationship, or when it is desired to avoid...
or advertising
Advertising
Advertising is a form of communication used to persuade an audience to take some action with respect to products, ideas, or services. Most commonly, the desired result is to drive consumer behavior with respect to a commercial offering, although political and ideological advertising is also common...
revenue. This form of co-marketing is popular because the revenue derived has almost no associated cost, and hence is highly profitable. In general, where such co-marketing results in a one-off customer purchase there is little criticism. However, this is significantly more controversial when it results in recurring (membership-related) billing.
In the USA, Vistaprint has been accused of enrolling customers into Vertrue
Vertrue
Vertrue Incorporated, headquartered in Norwalk, CT, is a consumer services marketing company. The company again received an "F" from the Better Business Bureau for making unauthorized charges to its customers' credit cards...
's paid-membership reward plan without the customer's agreement. Credit card details are passed on to Vertrue (formerly Memberworks Incorporated) by Vistaprint, and charges are then made on those credit cards by Vertrue without the owner's consent. Numerous complaints have been received by www.consumeraffairs.com and The Better Business Bureau by consumers objecting to these charges. Some consumers complain of still being charged after canceling the reward plan membership, and others that more than a year after cancelling membership, the charges began again.
Vistaprint's partnerships in the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
have attracted criticism. Critics have stated that Vistaprint's customers are enrolled without their knowledge in a reward voucher
Coupon
In marketing, a coupon is a ticket or document that can be exchanged for a financial discount or rebate when purchasing a product. Customarily, coupons are issued by manufacturers of consumer packaged goods or by retailers, to be used in retail stores as a part of sales promotions...
scheme operated by an associated company, VPrewards.com, at a cost of £9.95 a month, that no information on the reward scheme is provided to customers subsequently and that it is up to the customers to detect the fact that they have been enrolled as members and to cancel unwanted membership. A similar program operates in the USA. The number of complaints is significant enough to generate awareness on the web and to be a cause for concern. For complainants, the company claims publicly to cancel the membership, and refunds the monthly membership fees.
On November 30, 2009, the company announced that it had terminated its contract with an affiliate of Vertrue, Inc., effective December 20, 2009, and that, effective as of November 23, 2009, no membership rewards or similar programs have been or will be available to any Vistaprint customers. The company also reaffirmed its previously announced revenue and earnings per share guidance for the quarter ending December 31, 2009 and the full fiscal year ending June 30, 2010. The release also stated that Vistaprint's termination of the Vertrue relationship and elimination of all membership program offerings is in line with the company's previously stated strategy. The company believes it is also appropriate at this time in light of the recent United States Senate Commerce Committee inquiry into a variety of membership rewards programs, including the sufficiency of their disclosures to consumers.
On September 2, 2009, the company announced that the purported class action lawsuit pending against Vistaprint USA, Inc., Vistaprint Limited and two third party merchants in the United States District Court for the Southern District of Texas, had been dismissed by the Court. In the process of dismissing the case, the Court found "without reservation" that, as a matter of law, the web pages on which the membership discount programs were offered on Vistaprint.com were clearly written and not deceptive.
In August 2008, the company announced that class action lawsuits relating to the membership discount programs offered by third party merchants on Vistaprint's USA website had been filed against Vistaprint USA, Inc., Vistaprint Corp., and two third party merchants (Vertrue Inc. and its subsidiary Adaptive Marketing LLC) in Texas and New Jersey. Two additional class-action suits were subsequently filed in both Massachusetts and Alabama. The four complaints, all filed in federal courts, alleged that the defendants were in violation of the Electronic Funds Transfer Act (which protects from unauthorized charges) and the federal Electronic Communications and Privacy Act (which prohibits the unlawful access of financial information). "As we allege in the complaint, we believe that Vistaprint and Vertrue are acting in concert to access consumers' credit card information and then begin charging them relatively small amounts," said Jerome Noll, counsel for the plaintiff that filed the Massachusetts suit. "You're talking about $14.95 a month or $12.95 a month, hoping that consumers just won't notice."
From a financial perspective, some observers and analysts contend that this type of highly profitable third-party revenue distorts the company's finances. A relatively small referral revenue can have a relatively large impact on the net income. While Vistaprint, as a public company, properly includes this revenue in its quarterly figures, it is argued that excluding this revenue gives a better picture of the company's true profitability and the value of its stock. For example, in FY 2008, Vistaprint's revenue was $400.7m with 6.9% of this ($27.6m) coming from referral fees, the "majority" of which comes from the rewards program. This can be contrasted with the net income for the same period of $39.8m.
Internationally Incorporated Company
Like a number of publicly listed companies, Vistaprint has a global corporate structure consisting of a parent company in Venlo, the Netherlands and subsidiaries in other locations including Bermuda, Jamaica, Canada, Spain, France and the United States. In a recent public quarterly earnings announcement July 30, 2009 it was revealed that Vistaprint’s Board of Directors concluded that it was in the best interest of the company and its shareholders to move the corporate domicile from Bermuda to the Netherlands; and to establish a two-tier board structure that is typical in Dutch corporate governance. The company also established a headquarters office in Paris, France. The company cited long-standing commitments to internationalism in market objectives, operations, corporate culture and corporate structure as reasons for the re-incorporation.CEO Robert Keane stated in the company’s third quarter FY 2009 earnings presentation that, “Other factors contributing to our decision include the highly stable economic, political, and regulatory environments in the Netherlands and France; Vistaprint’s significant and rapidly expanding European operations; our company’s historical roots in France and the Netherlands; and the long-established commercial relationships and tax treaties that both France and the Netherlands have with other countries around the world. In summary, we believe that these moves will provide important managerial, economic and operational benefits for our company that will augment our competitiveness in markets worldwide.”
The company also said it does not expect any material change in its financial results or its effective consolidated tax rate as a result of either the re-establishment of a headquarters office in Paris or the change of domicile to the Netherlands.
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