Cedric Chin-Yick won't soon forget the year he sent his wife an e-card for her birthday. She made her disapproval quite clear.
“She prefers the hard copy. It's substantial. It's a material thing,” Mr. Chin-Yick, 44, said Tuesday as he fought the crowds shopping for Valentine's Day at a Carlton Cards store in downtown Toronto. But he noted that he'll back up the paper card with an electronic one.
Despite dire predictions a decade ago that e-cards would lead to the demise of the traditional card business, the two have found a happy co-existence. While Valentine's Day is the busiest day of the year for electronic cards, many shoppers wouldn't think of sending their sweetheart an online greeting.
“It certainly has not ended the card business,” said Sally Babcock, general manager of americangreetings.com, whose parent company also operates Carlton Cards stores. “What we see is that people send e-cards to different people than they're sending paper cards to. They also supplement their card-sending with an e-card.”
North America's two leading greeting card companies are Hallmark Cards Inc. and American Greetings Corp.
They have adopted polar opposite strategies in response to the rise of online cards.
Hallmark, with an estimated 50-per-cent market share, gives them away for free on its website, part of a marketing effort to drive traffic to its retail stores. American Greetings, with a 35-per-cent share, has built a thriving online business where 3.4 million people pay about $20 a year for a subscription for unlimited e-cards.
American Greetings says it will send out seven million to eight million e-cards today, its busiest day of the year. Hallmark, which is privately held, declined to provide online statistics.
The U.S. Greeting Cards Association estimates that Americans will send out 14 million e-cards today, compared with 190 million paper cards. Canadian statistics were not available, but experts say the ratio is probably similar.
Hallmark Canada says its traditional card business continues to show modest growth, typical of a mature industry.
“We just haven't seen that negative impact. If anything, [e-cards] have been great for our business, because our consumers are going on to our website,” said Jennifer Kinnon, brand marketing manager with Hallmark Canada.
Ms. Kinnon said she's sending several traditional paper Valentine's cards, including one from the family dog to her husband.
In the late nineties, the online greeting card business was dominated by bluemountain.com, which offered online cards for free. In the dot-com craze, Excite@home bought Blue Mountain for $780-million (U.S.). Two years later, it sold the site to American Greetings for $35-million.
When online cards were primarily free, they posed a serious threat to American Greetings and Hallmark, according to Kathleen Reed, an analyst with Stanford Group Co. While the main business model for e-cards is now a subscription-based service, Hallmark still provides free cards.
“I do not believe electronic cards have cannibalized the paper card market ...,” Ms. Reed said.
“E-cards were very popular when they were free. I used to get e-mail cards all day long.... Now when I get one, it's kind of nice. They're nice and unique because they don't come every day.”
American Greetings Corp.'s shares peaked at over $50 a share in 1998, but trade today at around half that level. But Ms. Reed said the main reason for the decline in the company's share price was not the rise of e-cards, but the growth of dollar stores, which forced Hallmark and American Greetings to offer discount cards in their own stores and with retailers like Wal-Mart.
For Valentine's Day, Ms. Reed says she still prefers the real thing.
“There's a sentimentality with paper cards that e-cards are still not quite capturing,” she said.
