Zazzle, the site that lets you custom-design and sell everything from T-shirts and sneakers to postage stamps and skateboards, is launching localized sites and offerings in Australia and Canada. The company has also expanded its existing UK site, which was launched in late 2008, to the greater European market by accepting payments in Euros. And for pet-friendly users, Zazzle has unveiled a line of custom dog apparel, letting sellers put the same designs on items for both dogs and humans.

Zazzle allows anyone the opportunity to become product designers and to earn money by selling designs on a variety of items displayed in custom store fronts, free of charge to the seller. Designs and images can be screen printed or embroidered on items. Sellers earn royalties from the sale of products they design and can also allow consumers to further customize their creations.

The design site has also unveiled a suite of new “seller-friendly” tools to spice up sellers’ offerings. Sellers can now uber-customize their online storefronts, creating a branded destination for their products. Sellers can also enable a a filtering mechanism to specify which designs can be featured in different products in various colors. Additionally, Zazzle has implemented a Flash-powered bulk image upload tool that is compatible with Macs and PCs.

It’s good to see that Zazzle is growing by expanding its reach and offerings. Earlier this year, the startup underwent a round of layoffs, letting 15% of the company’s staff go due to the sluggish economy. Competitors include CafePress and Spreadshirt, which both have an international presence.

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The company also lets private individuals and commercial organizations set up their own online merchandising outlets as resellers of the Spreadshirt service.

Spreadshirt says the financing will be used to develop its online platform and its push into the North American market, where its two main competitors, venture-backed CafePress (Foster City, CA) and Zazzle (Redwood City, CA) are based.

According to a January company blog post, 1 million t-shirts were sold in 2008 via Spreadshirt. They’re also open about the missed growth estimates put forward at the end of 2007: growth was at 40% for the year instead of the aimed-for 50-80%. As a result, the company was recently forced to do a round of lay-offs and reorganize some of its departments.

(Source: Deutsche Startups)

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Zazzle, the online shop that lets you order custom-decorated clothing, mugs, and a variety of other items, has laid off nearly 40% 25% of its corporate staff and 15% of the overall company, which includes workers in its manufacturing factory. The corporate office was hit hard, with over 30 28 of 110 employees cut, primarily in business development, marketing, and engineering. Cuts were also made in the company’s factories, which houses 140 workers (some of which are working under contract).

In an official blog post, the company’s founders write that the site has seen strong growth over the past year, but that the sluggish economy forced them to make cuts in order to ensure the company’s continued profitability. The company says it will continue to sell products currently available on the site, but has cut some projects that have yet to appear and will continue to drop products that aren’t performing well.

Update: Chief Product Officer Jeff Beaver says that the Zazzle representative I spoke to earlier was misinformed, and that 28 out of 110 corporate employees were laid off, representing around 25% of the corporate office. He confirmed that 15% of the staff overall had been laid off.

The news has been added to the Layoff tracker.

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Taking a page from Threadless, Mozilla is opening up its own online store featuring crowdsourced Firefox T-shirt designs. You can upload your own design, or pick from the gallery.

The store is built on Zazzle’s platform, which handles the printing, shipping, and billing. Zazzle is rolling out partner stores focused on other online communities as well, but this could turn out to be the best example.

T-shirts are always a good money-maker on the Web. But how much of those Google subsidies can be replaced by T-shirt sales?

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Launched in 1999, CafePress enables its users to design, buy and sell expressive merchandise such as t-shirts, hats, bags, mugs, bumper stickers and the likes. CafePress handles the merchandising process and returns a cut of the revenue from sold inventory to its users. The company boasts serving a network of over 6.5 million members trading 150 million+ products, and also claims to receive 11 million unique visitors per month on average.

CafePress even made its first acquisition last Summer, and a significant one at that, buying Imagekind for $15-$20 million in cash and stock. The company has recently announced plans to expand internationally by taking its marketplaces to other English speaking nations like the UK, Canada and Australia.

CafePress claims to be profitable, which of course raises the question why the extra funding was needed to begin with. Most likely, the investors are providing CafePress with a safety cushion for the future consequences of the current economic downturn, as well as the necessary capital for the company to expand its base operations into even more countries.

For the sake of comparison: $28.3 million is only half of the backing that head-to-head competitor Zazzle has received to date, yet both Compete and Quantcast suggest that it receives twice as much traffic. Spreadshirt is another noteworthy player.

Update: CafePress has responded, saying that this story is incorrect:

We did not raise venture funding, nor have we raised funding from Sequoia since our series B in 2005. The Form D notice was filed with the SEC because we issued $8.29 million shares of stock back in July.

PEHub mistook a Form D notice which was filed with the SEC because CafePress issued $8.29 million shares of stock back in July.

Update 2: Dan Primack at PEHub explains what went wrong.

Update 3: Below is the SEC Reg. D filing in question, which does clearly state that the company sold $8.3 million worth of securities in July (page 3) to investors including Douglas Leone (a VC at Sequoia Capital) and OpenTable CEO Jeff Jordan. But as indicated above, this was actually an issuing of existing shares rather than a sale of new ones. The new SEC form that CafePress used does not make this clear. So much for transparency.

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Zazzle, the site that lets you custom-design and sell everything from T-shirts and hoodies to sneakers and skateboards, has launched a new feature that may well put it leagues ahead of its competitors: embroidery. And while the prospect of having an embroidered shirt may not sound appealing at first (I’ve always associated embroidery with tacky nametags emblazoned on polo shirts), Zazzle’s new feature is very impressive and will likely draw a large number of new customers.

In the past, most custom shirt designs from Zazzle and its competitors have used flat prints that are essentially glued on top of the fabric (these are higher quality than the iron-on products you’ll find in stores, but look similar). These look fine enough on T-shirts, but tend to look much cheaper (and tackier, depending on the item of clothing) than designs that are actually sewn into the fabric, and don’t hold up as well to multiple washings. Now, Zazzle’s new embroidery option is giving users the chance to have their designs sewn into their clothes, resulting in items that are much better looking and durable.

The process for producing an embroidered item is a bit more involved than for a standard Zazzle order. After selecting a suitable (non-copyrighted) logo or design, users upload their image to Zazzle and choose how large they’d like it to appear on their pieces of clothing. Zazzle then has to “digitize” this image – converting it into a format that is compatible with their automated sewing machines. To do this Zazzle uses a computerized system that does around 50-70% of the work, and then passes the files on to a large team of human workers who manually ensure that every design accurately reflects the image that was uploaded. Prices to have an image digitized vary depending on the number of stitches required (average prices seem to be around $10-$20), and the process takes 24-48 hours. But you only need to do this once for each image – once you’ve got your digitized file, you can apply the same stitching to any item of clothing on Zazzle without having to go through the process again.

The digitization process is simple for the user (you just upload the image), but Zazzle’s Bobby and Jeff Beaver say that the technology behind it is very complex – a team of Zazzle engineers has been working on it for over two years (surprisingly enough, this custom clothing company has a heavy focus on technology, with around 30-40 engineers). The difficulty associated with the embroidery technology ensures that it will be hard to replicate by competitors, and the team has also protected its IP where appropriate. Each image has to be converted to an instruction set of stitches, maintaining the complexity of the original design while still restricting the final output to fall within the physical limitations of the sewing machines.

To ensure that the customer will be satisfied with the final product, Zazzle has built what amounts to a sewing machine emulator – you can watch a clip of how the stitching will be done in the machine, and see exactly what the final product will look like down to each individual thread. These movies are a great safeguard for customer satisfaction, but they’re also really cool – I never thought I’d find myself watching a sewing video for fun (you can see a sample movie above).

As with other Zazzle items, users will be able to sell their creations on the Zazzle marketplace. The Beavers say that besides their mainstream customers, this option will give professional embroiderers a place to showcase their wares, explaining that they haven’t really had a place to do so online.

Zazzle’s embroidery option is likely to be a big seller, especially as the holiday season approaches – a custom embroidered jacket or shirt makes for a great gift. The new technology also helps separate Zazzle from competitors like CafePress (which only does pseudo-embroidery using sew-on patches).

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Under the deal, musicians and bands on MySpace will have the immediate ability to create products and sell merchandise by putting the Zazzle Merch Booth widget on their MySpace profile. Zazzle’s “Model Realview” technology allows artists to display their very own branded merchandise three dimensionally, on real models in their profile. The Zazzle Merch Booth widget will also enable placement of the artist’s merchandise in a Zazzle gallery, their own websites, fan sites and blogs.

MySpace said the deal was part of their “commitment to offer tools and services to the music industry that benefit artists and consumers alike.”

The Kleiner Perkins backed Zazzle appointed Jim Heckman, formerly of Fox Interactive (the News Corp arm that owns MySpace) as Chief Strategy Officer Saturday and was rumored to have closed a second round of $30 million in July.

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Heckman was most recently at Fox Interactive Media; he joined Fox when his company, Scout.com, was acquired by them in 2005 for $60 million. Heckman was also the chief negotiator at Fox in their $1 billion search deal with Google.

In other words, they made a heavyweight addition to the management team. Kleiner Perkins’ John
Doerr supposedly recruited him personally.

Heckman isn’t the only Fox Interactive exec to leave the company recently. Former SVP Corporate Development Heather Harde is now our CEO, and former Fox Interactive President Ross Levinsohn is now running a buyout fund called Velocity Investment Group with Jonathan Miller, the former Chairman and CEO of America Online.

Zazzle competes with Ponoko, Cafepress and Goodstorm, among others.

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The company competes with CafePress and others.

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So my question is, why don’t CafePress and Zazzle implement Flash tools to help people create customized products as well? Zazzle’s Ajax tool is pretty nice and allows some basic resizing and movement of images, plus the addition of text. Imagecafe is stuck in the nineties – their product creation tool has next to no flexibility at all. Neither are anywhere near offering what TheChipLab does.

Adobe has created awesome tools that tiny ecommerce companies like TheChipLab can use to provide a cool service to customers. It’s time for the VPs of Product at CafePress and Zazzle to wake up and reinvent their products, too. Adobe has done all of the heavy lifting, all they have to do is implement it.

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As with all of these services, they do all the hard work – producing and shipping the item, and collecting the money. All the seller has to do is market the shop, set prices and collect their share of the money.

GoodStorm was founded by Yobie Benjamin and August Capital’s Andy Rappaport in October and launched on December 14, 2005 (there are good pictures of the team at that link as well). Their business model is designed to cater specifically to nonprofits. They keep only 30% of the profits on a sale (giving the rest to the seller), and also donate a portion of profits to charity. Like I said, it’s hard not to like this company.

Currently they are working with sellers one-one-one, but will eventually launch a self service store creator.

The company is built on the Drupal open source content management system. GoodStorm says they will be donating chunks of code back to the project as well.

Stefanie Olsen at CNET wrote about Goodstorm earlier this week and has additional information.

Launched: 1999 (zazzle.com launched 2003)

Status: Announced $16m Series A on July 18, 2005

What is it?

Zazzle let’s customers create customized products, ranging from tshirts to stamps, and sell them on the zazzle website.

In their own words, “Zazzle is the leading customized products marketplace for consumer enthusiasts to share and celebrate their interests by creating apparel, posters, cards, stamps and more. We combine on-demand manufacturing, a robust community, the largest online collection of customizable digital images and unmatched personalization tools to empower you to create your own products. In addition, you can choose to become a contributor by sharing your unique creations in Zazzle’s public galleries. Within these galleries, you can browse, comment and connect with others who share your interests. Contributors also earn royalties every time their creations are purchased by others. For anyone who wishes to create, wear, display, sell or celebrate their interests, Zazzle provides a compelling interactive marketplace to a worldwide audience.” Link

Creating Products:

Creating products is a relatively straightforward process of choosing prodcuts (apparel, posters, stamps, etc.), uploading images, and pricing the items. Zazzle claims that they have “over 500,000 totally unique, user-created products, available in billions of variations”. Link

Zazzle Stamps:

Zazzle Stamps is really interesting. Within certain parameters, users can upload their own images, or use stock zazzle images (like disney images), and create actual postage stamps. A sheet of 20 first-class stamps will sell for $16.99, 130% more than “normal” stamps. Zazzle Stamps is possible via a partnership with Pitney Bowes.

FYI, Stamps.com has a similar program and will be partnering with cafepress, a zazzle competitor.

Relevant Links:

About, News, Blog, B2Day, New Persuasion Blog, Alarm:Clock, New Media Musings, Somewhat Frank, RSSWay, Traders Trade, CNET, Ben Barren, Alarm:Clock

Tags: zazzle, , zazzle.com, pitneybowes, cafepress, stamps.com, stamps, ecommerce, techcrunch, web2.0