I've been involved in (but did not run) another smartphone-to-postcard app, popular mostly in the German market (http://www.kartensender.de/web/us/) but also available in the US. The main difficulties we faced were payment options and lack of control over the user experience.
Payment options: While the situation is slightly better in the US, accepting micropayments is still very difficult. You can basically count on losing 25-40% of the end user price to payment processors. More if you accept credit cards. But with Mastercard Secure et al. rolled out all over Europe these are useless for mobile anyway thanks to the abysmal usability of those systems. In-app payments don't work because those are only permitted for virtual goods (though I've seen some competitors do it for a few months before being shut down). Selling batches of cards (we called them "voucher codes") is a neat workaround but customers aren't huge fans of the idea in my experience.
Lack of control over user experience: You can spend as much time and money as you want on making the app perfect and perfecting the print process (sth. the Sharktank guy didn't do--since when are postcard glossy on both sides?). In the end you hand the card to the mail carriers and those suck all. I'd estimate that 1% of cards don't arrive due to mail carrier error, with USPS causing so much trouble that the US market seemed unatttractive. Those 1% of disappointed customers whose card didn't arrive are 50% of your app store reviews and 100% of your Paypal disputes. And because a postcard is a physical product, Paypal will ask the vendor for a tracking number. Don't have one? Get your Paypal account frozen.
What surprised me in Sharktank episode is that they guy who invested seemed to consider the idea novel when in truth it's been tried and tested since the first opening of the app store. I haven't been involved with that app for several years now but they seem to still operate and last time I checked I could find around 20 competitors. Does that mean the sharks make their investment decisions without any research into the markets they are getting themselves into?
Payment options: While the situation is slightly better in the US, accepting micropayments is still very difficult. You can basically count on losing 25-40% of the end user price to payment processors. More if you accept credit cards. But with Mastercard Secure et al. rolled out all over Europe these are useless for mobile anyway thanks to the abysmal usability of those systems. In-app payments don't work because those are only permitted for virtual goods (though I've seen some competitors do it for a few months before being shut down). Selling batches of cards (we called them "voucher codes") is a neat workaround but customers aren't huge fans of the idea in my experience.
Lack of control over user experience: You can spend as much time and money as you want on making the app perfect and perfecting the print process (sth. the Sharktank guy didn't do--since when are postcard glossy on both sides?). In the end you hand the card to the mail carriers and those suck all. I'd estimate that 1% of cards don't arrive due to mail carrier error, with USPS causing so much trouble that the US market seemed unatttractive. Those 1% of disappointed customers whose card didn't arrive are 50% of your app store reviews and 100% of your Paypal disputes. And because a postcard is a physical product, Paypal will ask the vendor for a tracking number. Don't have one? Get your Paypal account frozen.
What surprised me in Sharktank episode is that they guy who invested seemed to consider the idea novel when in truth it's been tried and tested since the first opening of the app store. I haven't been involved with that app for several years now but they seem to still operate and last time I checked I could find around 20 competitors. Does that mean the sharks make their investment decisions without any research into the markets they are getting themselves into?