Next time you’re out shopping at a retailer with a card aisle, try to count the linear feet devoted to greeting cards. Many stores have an entire aisle devoted, and very few have less than 16”. Some brands, like Hallmark, even force retailers to devote a minimum of linear feet: Such as 24” for Pharmacies (Source: 2018 Independent Pharmacy Cooperative) and 286” for Hallmark Crown Stores (Source: 2011, Hallmark). 

With Cardstalk, a retailer can sell as many cards as they please - all with less than 4 feet of linear floorspace required. Reclaiming that floorspace gives retailers the flexibility to stay competitive in tight markets, and control their own floorspace and how to use it.

Select and Customize Anywhere, Pickup at Store

One of our most frequent comments from customers is that they love the idea of browsing cards without being chained to a card aisle to do it! Our online card marketplace lets customers choose the card they want before driving to the store, and upcoming customization features will allow them to personalize any card as well.

Bringing Local Art to Retailers 

Demand for products from local artisans is strong, and Cardstalk gives retailers an effortless way to tap into the enthusiasm and loyalty of shoppers who want to support makers in their local communities. While the Cardstalk marketplace is open to anyone in the US, our kiosks prominently feature designs by artists who are located in communities nearest the kiosk.

Business Model

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How do we make money?

“Printing Cards is Like Printing Money”

- Peggy Parolin, former Director of Licensed Creative Content Development, Hallmark

Product Pricing

Based on user feedback around card quality and uniqueness of designs, Cardstalk has settled on a price of $7 per card (tax inclusive). This is competitive with Hallmark’s pricing for full-sized (5”x7”) loose cards in the aisle, and less than many premium card brands  (LovePop, ~$13).

Artist Costs

The primary costs of cards are actually not in the materials, but in paying out retailers and artists.

While Cardstalk is in the MVP period (while we have fewer than 5 kiosks deployed), we have temporarily increased the artist payout to $3, as part of an agreement with our artist partners to entice them to onboard and promote our product early. Once we have a greater number of kiosks deployed, artists have expressed willingness to reduce the payout to a standard $1 per card, as total sales volume should increase and improve their overall payout amount.

Pricing for Custom Cards

Our feature roadmap includes functionality to allow users to upload their own photos or digital art for the purpose of personal card printing. The current plan is to keep pricing the same ($7) for this feature. As artist payouts will not be required for these sales, average per-card profit will increase when this feature is implemented. Total per-card profit increased will depend on how frequently customers choose customized card images over artist images.

Retailer Payouts

Our current agreement with Earth Fare is to payout $1.50 per card sold. As we negotiate deals to deploy Cardstalk kiosks into other retail partners, we may test variations on the retailer compensation portion to ensure we are competitive to current income retailers receive from card aisles(as calculated on a per-linear foot basis). One model we are open to piloting is to pay retailers a flat amount per-month to rent the floorspace, and reducing or eliminating the per-card retailer pay-out.

Total Costs

Materials for Cardstalk kiosks, as presently designed, cost ~$5500 each, which can possibly be reduced to $5000 when components are purchased bulk. Our cards are currently listed for $7.00, where $1.50 goes to the retailer and artists receive a base payout of $1.00. During the introductory launch period, while we only have one kiosk, the artist base payout has been temporarily increased to $3.00, to incentivize Artist onboarding. This temporary cost increase will be maintained until we scale out to more print kiosks, as projected in phase 1 (see “Growth Plans” below),. Once we’ve reached that point, we plan to let Artists customize the pricing of their cards in order to make their desired profit, with Cardstalk taking a percentage of that (amount TDB).

Target Per-Kiosk Return on Investment (ROI)

After taxes and fees, we expect a total profit of ~$3.00 per card. If cards sell at the estimated 10 cards per-day average, we expect a single kiosk to achieve an ROI in less than 9 months. This ROI calculation includes per-kiosk operating expenses, technician salaries and other projected maintenance costs. Expected lifespan for a kiosk is 5 years, based on warranty and support available for the core printing technology.

Additional Revenue Stream Opportunities

Once Cardstalk kiosks are deployed into brick-and-mortar, we are planning to investigate other revenue streams that do not require additional hardware to implement. This includes investigating the practicality around printing additional content within the cards (ie, printing gift cards inside, selling NFTs with the cards), but our main focus is on potential services based on card search and sales data.

Growth Plan

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We have a two-pronged plan for growth, and will allocate resources to each prong according to demand we see.

1. Keep improving kiosk unit economics until Cardstalk can consistently outperform card aisles in high-foot-traffic locations (Grocery Stores). Once unit economics are consistently strong, the kiosks simply need a dense deployment network to ensure profit at high scale. To improve unit economics, we will:

   a. Drive up overall volume of card sales by: improving card selection, adding card customization features to drive demand, improving kiosk usability and messaging for new users, marketing targeted to repeat users, marketing leveraging local artists social media, marketing leveraging partner retailer resources

   b. Improve per-card profit for retailers - experiment with different price points and determine the amount that pays retailers enough to justify replacing card aisle.

2. Online Orders Shipped by mail

   a. Direct-to-consumer Sales (started in Feb 2022): Market our cards directly to buyers who would otherwise be using sites like etsy, but who like our card selection, card quality, and consistent ordering and shipping experience. Experiment with online marketing to drive sales from channels like Facebook and Instagram.

   b. Drop-shipping on behalf of artists. Rather than direct sales, let artists use channels they already promote (such as Etsy) to receive sales, and then charge the artists a fee to ship the cards directly to customers on their behalf. Once artists are on-boarded for dropshipping, the digital resources they provide for that will be available internally, and onboarding their work for kiosk sales and direct-to-consumer sales will be seamless.

In all cases above, we expect that our forthcoming Card Customization Feature will be an additional popular option for customers - whether in-store, or online. From a technical standpoint, we expect that the requirements around drop-shipping image uploads and custom image uploads will be extremely similar, meaning we’ll be able to re-use code to deliver features faster.

Some definitions:

SAFE 

A SAFE stands for Simple Agreement for Future Equity. It allows investors to invest in early-stage companies and receive stock down the road when certain events happen such as a series A round, an acquisition, or an IPO.

Valuation Cap

The maximum valuation at which your investment will convert. This means you'll receive shares at this price, regardless of how high the company is valued in the future. ie: higher valuations mean more shares for the same amount of money.

Discount

This is the discount on the share price that SAFE investors receive upon conversion.

For example: With a 20% discount, if the share price in a trigger event is $1.00, SAFE investors would receive shares at $.80 each.

Notes

1. The SAFE converts by either the Valuation Cap or the Discount depending on which one yields the best return for the investors.

2. An easy way to think about a SAFE investment is that you're buying $X worth of future stock.

3. At a trigger/conversion event, the issuer may continue the terms of the SAFE, issue "shadow shares" of preferred stock or allow you to cash out at the applicable conversion stock price.

4. Once the offering is live, it is important to refer to the subscription agreement and SAFE shares agreement to understand the conversion and termination terms, as well as potential rights of the securities into which the SAFE may convert.

Use of Funds

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Planned Runway of 12 months

Funding Milestones

$300K = 10 kiosks with 12 months of runway (20% discount, 5 million cap)

        ► $55,000 - 10x kiosks for Earth Fare & future partner deployment

        ► $175,000 - Developers salaries (us!)

        ► $70,000 - Business expenses including servers, legal, design, and marketing

$387.5K = The above + Q1 2022 Equipment Manager hire 

Establish a Regional Manager for the first 10 kiosks to begin building service model

$462.5K = The above + Q1 2022 Artist Community Manager hire

Artist management for onboarding and coordinating artists as we expand in the region

$825K = The above + Prepared Q2-Q3 2022 expansion across NC, SC, Atlanta or other regions depending on interested retailers

        ► $222,500 - x40 more kiosks

        ► $75,000 dedicated to Service Technician under Regional Equipment Manager to service new region

        ► $40,000 dedicated to kiosk transportation and storage costs

        ► $25,000 dedicated to co-working/office space

$950K = The above + Q2-Q3 2022 Data Scientist hire 

Begin focusing on aggregating and developing SaaS services to partners and inform our expansion plans

$1M = The above + Kiosk R&D and maturation for next regional expansion

With 50 kiosks deployed, we want to take lessons learned from our Mark 1 kiosk and prepare a final production model that reduces our involvement with future kiosk assembly