Sympathy for Egreetings

PDF Download“Teen-agers and young people are a hard sell,” muses a former American Greetings executive. “For them to come to a store specifically looking for a greeting card is too much hassle. Sending a greeting card is something they’d rather do on the Internet. The trouble is, they’ve gotten used to it being free.”

Marketing to younger consumers worries managers at American Greetings and archrival Hallmark. The widespread use of e-mail to send and receive greetings has convinced both to crank up their online efforts. American Greetings has cranked the hardest.

The Cleveland company was the first to establish a greeting-card Web site. It began working in 1995 with America Online, Netscape and Microsoft to produce static, then animated and audible greetings, online. Hallmark put up its own Web site a year later, with designs that could not be found on its shelves.

Passage to a working online model hasn’t been easy. Both have experimented with paid and unpaid e-greetings. American has also tested membership subscriptions. has become one of the most visited sites on the Web since American purchased Gibson Greetings in 1999. Then, in rapid-fire order in 2001, it acquired the Egreetings Network and, two popular sites that pioneered online “cards” for personal messages.

At one point American Greetings considered taking its site public, but when the Web economy went bust two years ago, the plan was shelved.

Company executives concluded Web site ads and card-related sales from the site would not produce the return stockholders expected. Consumers balked at $19.95 Web site memberships and even a $4.95 monthly subscription.

In 2002, the company limited the number of free greetings on its Web site and initiated a lower-priced subscription: $11.95 a year. For less than an average family spends for birthday and seasonal cards, consumers could access a vast library of greeting cards to send electronically.

The company sold a million subscriptions within a few months. That produced $12 million in additional revenue for 2002. Even so, lost $2.1 million on its operations last year and brought in $30.5 million of revenue—from advertising.

Dr. Rachel Benbunan-Fich, who teaches at City University of New York’s Baruch College, says American Greetings got distribution in a marketplace that did not require expensive shelf-space to reach consumers. The company also was able to link consumers electronically to its archives of card designs.

Now, customers can pull from 200,000 images and messages as they order traditional greeting cards, produced on paper, or send greetings electronically.

“These two innovations are challenging traditional managerial practices in the greeting-card industry,” Benbunan-Fich said.

The online greetings effort wasn’t the company’s first flirtation with technological innovation. American Greetings first created an in-store greeting card kiosk in the early 1990s.

The kiosks allowed buyers to find a design, select or type a message and print a greeting card they liked. But it took almost 10 minutes to print a card—and people would not wait.

In the mid-’90s, both Hallmark and American Greetings helped move card-making to personal computers on “create-a-card” software in a box, each working with Micrografx, a graphics software firm in Richardson, Texas.

Those packages offer consumers creativity—a choice of design elements, ready-written or user-created messages and color choices. But the cards still had to be printed out, stamped and mailed. Internet cards bypass that, allowing customers to send greetings directly to recipients. That has taken the rivalry beyond American Greetings and Hallmark. and others have found that offering free e-greetings helps attract people to their Web site and stimulate advertising. Meanwhile, American Greetings executives are banking on the diversity and variety of their online offerings to get consumers to be willing to pay for cards—or at least for access to them.