PRSS 2017 Annual Report

3 • Rebuild the User Experience. A key aspect of our ability to improve our retention and customer counts is to provide a site that removes as much friction from the purchasing funnel as possible. Updates to the website began to be released in 2017, starting with a new homepage. We focused on refreshing stale content, updated XML sitemaps and streamlined our link architecture which will enhance crawlability for search engines. During 2018, we plan to complete our website rebuild with an upgrade to a fully encrypted HTTPS site and new search, product details, cart page and checkout pages. We believe the new website will result in higher traffic, conversion and revenue from search engine optimization channels. • Retail Partner Channel Expansion. We intend to support growth in our Retail Partner Channel by further expanding into new marketplaces and geographies, focusing on product discoverability and an enhanced customer experience that includes detailed product descriptions, photographs, reviews and refined pricing and promotions. During 2017, we expanded into Germany, Italy, France and Spain domains throughAmazon and launched our initial product catalog with Walmart.com. During 2018, we will expand further with Amazon into their Australian domain. • Third-Party Printing and Fulfillment. In 2017, we implemented a $1.5 million garment printing platform upgrade to improve throughput, drive efficiency and increase capacity. We believewe can leverage ourmanufacturing platform and excess capacity to enter into new fulfillment agreements with other third-party consumer-facing, on-demand, custom product providers. We are focused on acquiring new fulfillment customers to generate additional revenue for CafePress. • Maintain Financial Discipline. We manage our business activities with a focus on profitability growth. In February of 2018, we announced a $4 million cost reduction plan and we will align our cost structure to maintain discipline in our operations and conserve our cash balances. Technology and Production Systems We use a combination of proprietary and third-party technology, including the following: • Website System. We have designed our website systems to be secure and highly available using cloud-based hosting and a virtualized server architecture. We can easily scale to increasing numbers of customers cost-effectively by adding capacity through this approach. We have a strong commitment to our privacy policy, and we utilize technologies such as firewalls and encryption technology for secure transmission of personal information between customers' computers and our website and intrusion detection systems. • Image Archive. We store our customers' images in our image archive. Once a customer uploads a photo to our website, it is copied to multiple redundant systems. We continue to expand our storage capacity to meet increasing customer demand. Our innovative storage architecture is cost-effective, facilitates the safe and secure archiving of customers' images and delivers the speed and performance required to create products in real-time. • Image Review. Our in-house system examines the content of an image and returns metadata that we utilize to run a product creation engine. This system produces the best quality image for the product selected. • Production System. We operate our production facility in Louisville, Kentucky. Our single piece flow automated production system efficiently controls our production processes, including order management and pick, pack and shipping operations. Using proprietary algorithms, the production system analyzes thousands of orders daily and automates the workflow into our state-of-the-art digital printers. We also use third-party print on demand partners internationally to assist with the speed of delivery and to help control fulfillment costs. Competition The market for customized products and services is large, fragmented and intensely competitive and we expect competition to increase in the future. We face competition from a wide range of companies, including the following: • Small, traditional offline printing, gifting and souvenir businesses for apparel, accessories, home, or other customized products; • E-commerce companies, including large online retailers andmarketplaces such asAmazon.com,Walmart.com, Target and eBay (who may also be part of our Retail Partner Channel); • Online providers of customized products such as RedBubble Inc., CustomInk LLC, Spreadshirt Inc., TeeSpring or Zazzle Inc. as well as providers of distinctive goods like Etsy, Inc. or Uncommon Goods LLC;