2. Moonpig is a UK based
What?
e-retailer that sells
personalized greeting
cards
3. An Overview
• Launched in 2000
• Founded by Nick Jenkins
• Considered the founder of the online greeting cards
industry
• Has expanded into other personalized products: mugs,
flowers, wines & spirits, t-shirts, toys
• Core markets in UK, Australia, and U.S.
• A very successful company to emerge from Dot-com
speculative bubble of 2000
6. Nick Jenkins: Making Pigs Fly
• British-born entrepreneur
• Started career in commodity trading
in 1991 at Moscow-based firm
• Developed strong managerial skills
and drove more than $ 20 million in
profit
• In 1998, he returned to England and
began work on his new venture
7. Greeting Cards Industry
• Characterized by cheap, fast-moving products that are
both a sentimental and luxury good to the consumer
• Greeting cards are a cost-effective and feasible
alternative for expensive gifts
• Little room for innovation due to rigid product structure
o Sound, pop-up, light-effects, e-cards, animated e-
cards, personalization, interactivity, and brand
partnerships
• Differentiation is crucial
• Categorized into Everyday Cards and Seasonal Cards
• Pricing range for individual cards <$1.00 - $6.00
8. Industry Profile
• Greeting card industry can be traced back to 1856 in the UK
• 1990s internet boom revolutionized the industry with e-
Cards and e-Greetings
• Generates £7 billion of annual revenue
o Growth from 2004-2007
o Flat growth since 2008
• In 1995, 2.7 billion Christmas cards to be sold
• In 2011, figure has dropped 44% to 1.5 billion
• Largest publishers include Hallmark Inc., the American
Greeting Card Association, Simon Elvin and Carlton Cards
• Women purchase 80% of greeting cards
9. UK Market
• While the U.S. is the largest
regional market, the UK is
known for its lead in design
• The most successful
greeting card industry in the
world, with an average 31
cards being sent per person
each year
• Over 800 publishers,
dominated by smaller
businesses
• Responsible for the jobs of
100,000 people in the UK
• In 2001, 1.3 billion units
Source: Datamonitor Report, “UK-Greeting Cards”
being sold annually
10. Competitors
• In 2000, there was little competition
o Cybercard
o Sparks.com
• Now, there are various competitors to Moonpig
o Funkypigeon.com
o Hallmark.com
o Cardstore.com
o Etc.
11. Thinking about moving
Q:
the Greeting Cards
industry online: where
do you see
opportunities to
develop a sustainable
competitive
advantage?
13. The Early Stages
•What are the viable ideas for a new venture?
•How to start forming the business?
oWhere are initial start up funds coming from?
oTotally committed, profitable, viable
oPulling the pieces together
oCapital, location, staff
•Launching the business
•How will outside investment be handled?
•Is the business plan adaptable?
14. The Idea for the Start-Up
•One year MBA course at university
oGraduated September 1999
oBegan working on Splat.com
•His First Ideas
oUK humor card market
•Where is the market niche?
•The benefits of an internet based business
•Name change to "Moonpig"
18. Executive Summary
• Splat.com is an internet retail outlet for greetings
cards that uses a new digital print technology to print
each card to demand. A customer accessing our
web site can choose from a large range of well
known cards, personalize the message or caption
and have the printed card delivered to them by first
class post or direct to the recipient.
19. The Original Business Plan
S Market Growth
o UK £ 1 billion industry 5. Low FC & Scaleable
o Online card sales from £ 0- £ o Paperlink's 300,000 customer
75 million in 10 years base
S Competition
o Break-even at 75,000 cards
o Not capital intensive
o Online Physical Cards
o Cybercard & Sparks.com 6. Financing Requirements
S The Product
o Limited Company
o Nick >50%
o Customization o Card Publisher<50%
o Convenience o E
Exit through sale
o Advertise through Paperlink
S People & Management
o High wage high quality
o Nick Jenkins
o Robin Stevens
20. Forming Moonpig
• It's all Nick
o Who to turn to?
• Paperlink's role
o Initial Investment
• December 1999 formed as a limited company
o Facility
o Capital
o Staff
22. Launching Moonpig
•Launch party
oApril 2000
oCreate awareness and initial consumers
•Coincidence and Disaster
•July 2000 trading finally begins
•Financial Strains
o8 months of paid salaries with no operational business
23. The Need for Investment
• Leverage
o Credibility is a necessity
• Environmental Advantages
o Internet Boom
o E-Commerce
• Angel Investors and Networking
o Friends of friends of friends...
• Venture Capital Backing...at a price
o Altergraphics
o Share redistribution
24. Survival Funds
• Taking advantage of current
investing environment
o Angel investors interested in the
"internet boom"
• Friends from MBA course invested
o Both loans and equity
• Nick had to increase personal
investment
26. Pricing Policy
• Need to cover costs became greater after failure to meet
target sales figure in 2001 and 2002
• Raised prices from £1.99 to £2.99
o Recognized the price was high
o Had to make the change to keep company afloat
• No decline in sales was observed
27. Product Confidence
• Managing Director Iain Martin
• “If you have a good product you have to be confident and price
accordingly. The product was far too cheap and there was not
enough margin to sustain the business.”
• Similar to Dyson philosophy
• “Have confidence in your product. Do the sensitivity analysis
and make sure you have a pricing structure that enables you to
operate long-term.”
28. Original Marketing Plan
• Direct mail and online marketing
o £1 per customer
• Direct mailing = £8
• Banner ads = £100
• Buying email lists = £33
• Customer's only spent £20 per year
• Marketing costs were crippling the company
29. No More Marketing
• 2001 marked a philosophical company change
o Without direct marketing, customer growth rate reached
150%
o Speculated to be viral growth from word of mouth
o Good PR coverage
• Business to business marketing
o Vodaphone
o Microsoft Hotmail.com
30. Results from No Marketing
• By March 2002
o Amount of customers increased
from 15,000 to 30,000
• 25-36 age group is strongest sector
• Factors:
o Broadband technology
o No serious direct competitors
o B2B sales increasing
o Valentine's Day
30,000 unique visitors in single
day
31. Cost Cutting Decisions
• Expanded use of software team
o Almost able to pay for themselves
• Anti-dilution clause in investor contract reduced ability to
receive more funding
o Had to wait until April 2002 for clause to expire
• Venture capitalist firm announced they would not invest in
further rounds of investment
o Created opportunity to find investor who would buy out the VC fund
and add new money
32. Cost Cutting Decisions cont.
• Price dilemma
o High enough for the current VC fund, low enough for new investor
• Nick still had £260,000 in loans outstanding
o Planned on capitalizing them at new share price
o Meant to keep his share holding power in company
• July 2002
o Needed £300,000 to keep business running
33. What is the Last Push?
• Nick revised business plan and financial projections
• Believed that revenue would surpass fixed costs
• Needed a profitable year in 2003
• Needed to price the shares correctly for the next round in
order to get the necessary funding
34. Survival Fund Raising 2002
• Because of the internet boom, Angel investment had been at
a rate of £25 per share, theoretically valuing the company at
nearly £5 million
• The fundraising process had diluted Nick’s 70% share capital
ownership to 41%
o Average investment cost of £3 per share
• New round of investment in September 2002
35. Survival Fund Raising 2002 cont.
• The VC was disillusioned by other investments in the sector
o Sold their 35% at £3 per share, wrote off nearly 75% of their original
£720,000 investment
• New investors agreed to buy at this same price
o Raised £120,000 more than the £300,000 needed
• Nick maintained share ownership by capitalizing his
£260,000 loan
o At same £3 price
36. Survival Fund Raising 2003
• The extra financing allowed for an increase in sales
o Wasn’t at same rate that Nick had projected
o B2B sales sector was lacking
• Design of company structure and business plan had to be
altered
o Nick needed to revise his direction
37. Third Business Plan
• More general greeting cards
o Increase customer spending and retention
• Redesigned website
• Alternative postcard sizes
• Photo upload facility
38. Reaching a Profit
• More modest projections for 2004 and 2005
• First planned profit in 2005
o Raised further investment
• The 2004 and 2005 projections were correct
• Moonpig had turned a profit
39. Customer Demographics
• In 2005, UK customer based had reached 137,000
o 1,500 new customers each week
• Average age: 33
• 55% of customers: female
o Accounted for 75% of sales
42. Soaring Profits
•Currently, Moonpig accounts for 90% of the UK online card
market
•In 2011, Moonpig ranked third in the London Sunday Times list
of the UK's fastest growing companies
•Moonpig Finance director Paul Lantsbury: "The business has
reached a certain stage in its growth and is kind of ready to get
to the next phase." Source: Hinks, Financial Director Journal
43. Expansion Across the Atlantic?
•U.S. market potential is eight times larger than the UK
•In 2010, Jenkins establishes an American-managed team in
London to create a Moonpig U.S. website
•After the 1 year trial, the American team estimated that 20
million pounds of investment would be necessary to fully
develop Moonpig USA
•Jenkins did not want to use nearly two years of profits to
establish business in the U.S.
•Bad memories from company's beginning, shareholders stand
in the way
44. Photobox to the Rescue
•French company, with focus in
online photo albums and
personalized gifts, such as mugs,
puzzles, and calendars
•Operates in 15 European countries
•Served 8 million more customers
and generated 34 million more
pounds of revenue than Moonpig in
2010
•Looking to expand into Moonpig's
product line
45. The Merger
•Photobox buys Moonpig for 120
million pounds in July 2011
•Jenkins walks away with his
34% value share in cash, agrees
only to work as an advisor
•Moonpig investors receive a pay
day ten times their initial
investment
•Moonpig will remain a separate
brand
46. What do you Think?
• How will the merger • Resources?
affect Moonpig?
• Profits?
• Expansion?
47. Impact of the Merger
•Jenkins says the merger will allow us to, "take our core greeting
card product to countries which would be difficult to access as a
standalone business." Source BBC News
•Partnership with Photobox equals:
•IT expertise
•More contacts and larger consumer base
•More capital
•Greater investment opportunities
•Diversified product line in Europe- (mugs, wine, stuffed
animals, T-shirts)
•The logical next step....
48. Expansion: Take II
•Merger with larger company=
reduced risks in expansion for
Moonpig shareholders
•Renewed enthusiasm for
expansion to the U.S.
•Photobox is currently
exploring expansion options
for Moonpig in continental
Europe
49. Moonpig USA
Challenges
•"There is such a cultural
difficulty to greetings cards." -
Jenkins Source: Moules, FT
•Competition- Hallmark and
American Greetings have both
adopted Moonpig's strategy of
selling personalized cards
•They are one of Hallmark's
"fastest growing products."
Source: Byron, WSJ
50. Staying Ahead
•Moonpig has not attempted to undercut prices of Hallmark and
American Greetings:
5x7 personalized card
Moonpig $3.99
Hallmark $3.49-4.29
American Greetings $2.99
•Moonpig distinguishes itself by offering a wider range of
templates: School exam, driver's test, new job promotion, and
Muslim, Jewish, and Hindu holiday cards
52. Marketing in U.S.- TV
•Moonpig TV ad makes its
way to the United States
•Its catchy, maybe a little
annoying, but it certainly
makes you remember
Moonpig
54. Marketing in U.S.-Facebook
Moonpig USA
•COMPETITION: Love the 'Keep Calm' Mantra &
posters from the UK? Make your own cards with
your own text. Make your version here and share a
pic of your slogan on the card with us and we'll
give the funniest one a prize.
Make it here: http://bit.ly/y9dirr
55. Facebook (Cont.)
•Moonpig USAValentine's Card of The Day! Put
Your Face and your loved one's face in the
center of this Twilight card!: You can make your
own here:http://bit.ly/x4jDBC
We'll print and mail the real card with your
photos to you or your recipient as we do all for
all our cards! xoxo
56. Facebook (Cont.)
•Simply spreading the word...
Moonpig USA COMPETITION! Want to win a
mystery prize?! Share on your wall the following:
'Moonpig makes great personalized cards!' & Tag a
friend! Post the same message on our wall so we
know you've entered! Will be a good prize so go for
it!!!!! xoxox Moonpig
Like · Comment · January 31 at 3:13am ·
57. What do you think?
•Will Moonpig be successful in
the United States?
•What should be the
company's course of action?
58. Our Recommendations
•Embrace expansion opportunities in continental Europe
•Utilize Twitter in addition to Facebook as a customer
service and marketing tool
•Exploit Moonpig’s recognizable name and logo through
guerrilla marketing in the U.S.
•Target that guerrilla marketing towards women in
Moonpig’s core demographic: 25-36 years-old
60. Takeaways
•Consumer satisfaction comes naturally when consumers
create the product
•People like to customize things, so marketing should play
into imagination and creativity
•Persistence while in the red can pay off in the long run
•Once profitable, selling out can be beneficial to the
company's future growth
61. Sources
-Anonymous. “Moonpig set for extra categories and European launch after sale.” Retail
Weekly, July 28, 2011.
-Byron, Ellen. “Making Cards Cool Again.” Wall Street Journal, June 20, 2011.
http://ezproxy.library.tufts.edu/login?
url=http://search.proquest.com/docview/872421887?accountid=14434
Hinks, Gavin. “Bright Future on the Cards.” Financial Director, September 2011.
http://search.proquest.com.ezproxy.library.tufts.edu/docview/879722541/134EE2AD6BE5A8D47
-Moules, Jonathan. “With best wishes from the chairman: A business plan devised during
an MBA has become an international online greetings card company.” Financial Times,
October 21, 2009.
http://ezproxy.library.tufts.edu/login?
url=http://search.proquest.com/docview/250240114?accountid=14434
-“Photobox announces merger with Moonpig.com” BBC News, July 25, 2011
http://www.bbc.co.uk/news/business-14275632
-“About the Industry.” Greeting Card Association
http://www.greetingcard.org/AbouttheIndustry/tabid/58/Default.aspx
-- “Global Greeting Cards Market to Exceed US$30.4 Billion by 2015” PRWeb. October 29,
2010
http://www.prweb.com/releases/greeting_cards_everyday/birthday_seasonal/prweb4695304.h
.
