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HP gains sharp with Snapfish free prints
(China Daily)
Updated: 2008-06-23 15:02 The overall Print 2.0 strategy is designed to accelerate HP's ability to capture a more significant share of the 53 trillion pages expected to be printed by 2010, valued more than $296 billion, says HP's executive vice-president of IPG at the company's annual Imaging and Printing Conference held last May. Yet, numbers don't tell everything, especially when playing in ever-changing Chinese market. Analysts posted their doubts on this premier digital photo provider. Different from its practices in China's neighboring India, where HP intends to establish 3,000 retail photo outlets by 2010, HP is unlikely to agree with largely scattered convenience stores and end-retailers to provide pick-up services in a short period, because of the overall poor Internet penetration rate in China. In the same report announced by MII, China's 16 percent Internet penetration rate is still lower than the global average level of 19.1 percent, and 69.7 percent in the US. Currently, the laggard "cash on delivery" is still the main payment mode for Kachayu, and mail express companies delivery charges start at 7.9 yuan. If compared by price alone, Kachayu comes out on top, but the logistical fee is relatively high, and the delivery time is too long, Shen says of his own experience. It takes three working days for Kachayu to deliver in Shanghai, by contrast, 51very.com, a Shanghai local online photo printing store offering almost the same service, takes only one working day within the city, and the postal service charges 5 yuan. While in a physical store, say a Kodak photo outlet near Lian Hua Road in Shanghai, the same size 46-inch photo costs less than 1 yuan, a slightly higher charge than Kachayu. But with the delivery fees, the two different outlets nearly charge the same, which could see Kachayu losing its customers to its non-Internet counterparts, says analyst Wang Fang from iResearch. "Online photo print is an innovative and new service model, price and delivery time are the core determinants for consumers' loyalty." "I don't think online photo printing will be popular as people like my friends and I prefer to share photos through emails and blogs, rather than print them out," Shen says, and admits the most of his friends and colleagues have personal printers. "I can't figure out when I will print my photos online again, if Kachayu doesn't offer more free prints." "The demand for photo printouts is limited in physical stores, let alone in online shops. And more importantly, the switching cost from one website to another is quite low if more players enter into this market. It's just several minutes spent on registering a new account," Wang says. However, people are interested in personalized services to print photo gifts, from photo books, calendars, T-shirts and posters, to photo mugs, mouse pads, key chains, and jewelry. "I ordered a mug from Kachayu for a couple of bucks for my little baby, " says Luo Binhua, a 30-year-old office worker who just gave birth of her first child. "The price is affordable. It's worth it for its uniqueness." Analyst Wang agrees, and adds that this service is in particular perfectly fit for youngsters and people craving unique gifts or mementoes. "It's what we call 'emotional consumption,'" he says. Maybe rather than it's free of charge promotion mode, customized photo service is where hope lies for Kachayu's future. (For more biz stories, please visit Industries)
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