Cut flowers account for an estimated $7 billion to $8 billion in annual sales by florists nationwide. Despite the wealth of opportunity that figure seemingly represents for budding businesses, entrepreneurs have to compete with behemoth online retailers like FTD, Teleflora, and 1-800-Flowers.
Although these big companies often rely on small florists to fulfill customer orders, they typically take huge commissions and require the use of their branding, which deprives local merchants of the chance to cultivate relationships with customers. Enter BloomNation, which aims to re-create the customer experience of visiting a local flower shop in its online marketplace.
The Intuit Small Business Blog recently caught up with BloomNation CEO Farbod Shoraka (pictured), who co-founded the company in 2011. We asked how he and his partners plan to eliminate the “mass-marketing middlemen that get between the florist and customer” and transform the floral industry.
ISBB: You’ve described your business model as similar to Etsy’s. What inspired you to create BloomNation?
Shoraka: Though my personal background is in investment banking, BloomNation was really born from the frustration of trying to send flowers online: Finding the same cookie-cutter designs across the internet and having them look nothing like the pictures when they were delivered.
Like most people, [my business partners and I] had no idea how the industry worked, but I do have an aunt who is a local florist. After learning more about how brands like FTD, 1-800-Flowers, and similar middlemen are structured (by conducting industry research) and speaking to her and other local florists, we realized that most floral internet sites are just online brokers that buy and sell orders for a commission. There was a moment of clarity when we realized that we should take the same marketplace model that has been successful for brands like eBay, Etsy, and Amazon and apply it to flowers.
How do local florists benefit from working with BloomNation? Why do local florists need to work with you at all?
We are trying give florists a stage [on which] to show off their true creative talents. The middleman model makes them feel like employees of the company, simply filling orders by “recipe” and never connecting to the customer. With BloomNation, the florist snaps a photo of the designs that he or she actually makes, so customers can get a sense of the florist’s style, brand, and inventory.
We feature various florists on the site and include other important aspects that customers want to know when buying local, including Yelp reviews. When a customer buys from a middleman service, he or she has no choice as to which florist [receives] the order, and the florist has no control over the design.
Worse yet, half of the money from the order goes to the broker to cover operational expenses, processing fees, etc. At BloomNation, we don’t charge monthly fees or contracts, and we pay the florist 93 percent of the order. It’s a much more efficient model.
What are the main challenges you’ve faced in getting the business started?
Technology has been a challenge — especially with three co-founders having zero tech experience. Luckily, we have built an amazing engineering team that is coding out our vision.
With floral middlemen having a powerful brand and massive marketing budgets, educating the marketplace is also a huge challenge. If we could sit everyone down and explain how the industry works, no one would ever use those services. But it’s tough. We are focusing a lot of effort on PR and marketing to let customers know about the importance of shopping local and to find ways to communicate that in a sustainable way.
It’s also a shift for many local florists. We are giving them promotional tools through BloomNation, like the ability to easily establish a website and conduct email marketing, but we are relying on them to take photos of their designs to list in the marketplace, which is challenging for some florists. We are striving to build technology that is simple for the florist to use and gives us accurate information about their inventory.
You recently raised $1.65 million in funding. How’d you do that — and what is your next plan for growth?
We’ve had a great network of mentors and advisers who put us in touch with the right people, including Andreessen Horowitz, Spark Capital, Chicago Venture Partners, and CrunchFund. They shared our vision of BloomNation and how it can change the way flowers are sold online. In the end, though, our growth really stems from florists who use our platform to power their online business.
This is something of a sidebar, but we wonder: How are florists are able to turn a profit when the masses celebrate only a few key “flower days” a year?
Although florists do a lot of business on big holidays like Valentine’s Day and Mother’s Day, a majority of their revenue actually comes from birthdays, weddings, events, and funerals.