Are PhotoStamps an example of N.I.F.T.Y product marketing?

My wife and I discovered PhotoStamps for the first time this past Christmas season.  PhotoStamps was launched in 2005 in 3 test markets and slowly added additional test markets.  Despite that the product has been out on the market a few years, we were oblivious to it.  I suppose we weren’t a prime target for the product until becoming proud parents this past summer.  It’s amazing how quickly you decide things are just a touch better with a picture of your little bambino on them.

And while babies do not come with instruction manuals, they do seem to come with a membership to some type of warehouse club.  It was while we were dashing through CostCo this past December, trying to navigate an endless maze of products packaged as if on steroids, that we happened across PhotoStamps.  Instead of using the typical assortment of stamps available through the US Postal service, PhotoStamps, a product offered through Stamps.com, allows customers to personalize their own postage with original photos or graphics they create.  We were immediately sold on the concept. 

The product packaging clearing communicated the value to us. For less than $30 we received a kit that contained 3 CDs.  The customer puts the CD into their home computer and is taken to the PhotoStamps Website. 

Photostamps offers customers a chance to personalize their postage

Once on the site, the customer enters the voucher code that is printed on the sleeve of the CD.  From there it’s a matter of uploading your favorite photo, filling out the shipping form and allowing about 7 days for delivery. The user interface design makes uploading, editing and optimizing your photo for postage pretty straightforward. The hardest part of the whole ordering process was picking a photo that would work well as a stamp. 

So, are PhotoStamps N.I.F.T.Y. marketing?

Novel:  Stamps.com, Inc. was the first to market with a product that offered customers the chance to customize their postage with individual photos. The initial launch of the product occurred in May of that year in 3 test markets. In less than a year it sold approximately 138,000 sheets or about $2.8 million in stamps and was recognized by Business Week as one of the best new products of 2005 (Stamps.com 2005 10K). The following year brought the roll out in 3 additional pilot markets.  Slowly additional markets were added and now they are available across the US.  Over time, competitors  offered an identical service, however, PhotoStamps is the market leader commanding nearly 80% market share.

Intelligent: At first blush it’s hard to deny the intelligence in offering customers the opportunity to create personalized postage. Mass customization over the past 15-20 years has given customers new opportunities to put a personal touch on otherwise mass produced products. With the advent of SnapFish.com, Google’s Picasa and ShutterFly.com I believe Stamps.com did a decent job capitalizing on the concept of the “long tail”–using the power of the Web to create economies of scale while still allowing for extremely high levels of variety and or customization.  Allowing a customer to add their personal photos to postage-a place once reserved for Presidents, activists and social causes seemed like it couldn’t miss.

But the more I looked into PhotoStamps.com and their relationship with USPS, the more I began to question the product’s intelligence from a marketing perspective (Product, Promotion, Place and Price).  Sure, the product aspect of the marketing mix exploits mass customization via the Web quite well, but in my book the order fulfillment (the “place” of the marketing 4 P’s) is where the value proposition falls apart for me.  See the diagram to see exactly what I’m talking about.

 We went from compelled to buy, to actively engaged with the product site (which theoretically can happen in an afternoon), to waiting for days for the product to be processed not to mention finallydelivered to us.   In other words, what has has enabled PhotoStamps to work from a product marketing standpoint, is its Achilles heal when it comes to the logistics side of marketing. While technology has enabled the product to exist in the first place, the company reverts to  pre-internet methods of delivery to fulfill the order.  Wouldn’t it be ideal to print these stamps off at home?  Or at least have that option?

From a product, promotional and pricing perspective PhotoStamps works– its NIFTY. But from a logistics (place, i.e. delivery) point of view it falls very short of meeting N.I.F.T.Y.