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Zazzlestorm – Zazzle Acquires Goodstorm – Is Capitalism “Still” Done Right?

Zazzle announced a purchase of Goodstorm a few days ago. Both Zazzle and Cafepress were negotiating the purchase of the company and/or components of the business but it appears that Zazzle had the best offer. What does this purchase include? Well, it is hard to say so far. Goodstorm had built up over 1400 stores and probably a respectable customer database. It appears that the Goodstorm infrastructure will be dropped and existing data will be merged to Zazzle.

Zazzlestorm

Goodstorm did have a snazzy t-shirt product designer that allowed their shop partners to allow their web site visitors customize their own t-shirts and purchase them through Goodstorm but ended the program after a few months because it proved to be more work than profitable. Zazzle obviously has a pretty smoking product designer and does not need the one developed by Goodstorm.

So why did Goodstorm sell out the big Z? Well, from what I understand Goodstorm decided to sell the t-shirt component of their business because they wanted to put all their efforts into the music industry component of their business. My guess is that the t-shirts just became too competitive. I wonder if it really had to do with the fact that Goodstorm was paying too much of their profits to shopkeepers and it was impacting their ability to expand based on their “Capitalism Done Right” model. Goodstorm was never a manufacturer/printer, they were really more of a development company who outsourced printing. Goodstorm Founder Yobie Benjamin was named President of new Zazzle Community and the Co-Founder Andy Rappaport was named Advisor to Zazzle Board.

It is still not clear if Zazzle’s purchase of Goodstorm includes the music portion. The press release says the company was acquired but there is no mention of the music component. Zazzle is wasting no time; the full integration of Zazzlestorm will be by February 8th.

So how will it change? It is hard to say…Goodstorm had a model that made sure that the Shop keeper/designer would receive 70% of the profits. Shopkeepers set their own markup over the cost to produce a t-shirt and the shopkeeper gets 70% and Goodstorm received 30%. The 30% of Goodstorm’s profit goes to company development and a charitable donation product. There was never an exact number but Goodstorm said they would also give a percentage of profits to charitable organizations that participate on Goodstorm.

The example of commission breakdown given on old Goodstorm.com is that a white heavyweight shirt with an image on one side has a base price of $7.00 and if you sell it for $16 the total profit will be $9.00. Goodstorm keeps $2.70 and the partner will earn $6.30 for each sale. Zazzle has offered non-profit companies an additional 20% commission of the sale price that might come close to the Goodstorm model but who knows how if any additional Zazzle profits will be donated. Zazzle has a much larger overhead and is definitely a for-profit company that might mean less per sale BUT because of Zazzle reach and customer base it might result in increased sales volume and exposure on Zazzle.com. As always, we will keep you posted of any new developments on the new Zazzlestorm.

You can check out the official press release and Zazzle’s new Goodstorm component of their site. Also, thanks to Best Losers emailing me about the acquisition.

Zazzle

Written by T-Shirt Talk

2 Comments

  1. Blake · January 28, 2008

    I wish someone would leak the terms of the deal. I haven’t heard a dollar amount yet and I am curious to hear how much the acquisition was.

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