A blooming business
Fastflowers is the internet-based flower delivery service launched in 1999 by a teenage entrepreneur for around $10,000. After lucratively growing the business, Jonathan Barouch, founder of Fastflowers, sold it to rival Jack Singleton’s 1300 Flowers. Barouch and Singleton join Peter Switzer on his Sky New Business Channel program to discuss why this business is so valuable.
Singleton set up 1300 PHONE NAMES – a business selling telephone numbers that spell words. The numbers were purchased from the Commonwealth Government, and Singleton says one of the strategies was to “purchase numbers clients would want to use”.
“Then there were some numbers that we thought we can base whole businesses around,” he explains. “The biggest flower retailer is based in the United States, and their brand is 1800 flowers.com. So we knew that if we secured 1300 FLOWERS, we had the foundation for building a successful online and telephone flower business in Australia.”
1300 FLOWERS was launched in early 2005 and up until the business acquired Fastflowers, all the florists had been contracted – “in essence, franchisees who looked after the delivery for us”. Through Fastflowers, it has now acquired shops.
When Barouch started Fastflowers, he says there was nobody selling flowers on the web – “we were one of the first online florists, if not one of the first online e-commerce players, to say, ‘Hey, there’s an opportunity here and let’s sell stuff on the web’. It was flowers where I saw an opportunity.”
The business has been through the dot com bust and the global financial crisis, but he says the internet and e-commerce are growing year-on-year.
“If you look in Australia, with all due respect to the biggest retailers in the country, I don’t think anyone has really nailed it and I don’t think anyone in Australia is doing it really [as well as] you see in the UK and the US,” he explains. “So there’s a lot of opportunity in Australia and we continue to grow; we’ve had 11 years of consecutive growth – the first two years, we lost money and the nine subsequent years we’ve made money.”
“We wanted a multi-brand strategy and rather than investing millions of dollars in creating a brand – the advertising and the marketing – this was a much smarter way to acquire one of Australia’s leading brands,” he says.
The Fastflowers network includes around 500 to 600 partner stores and also owns and operates stores.
“Basically what this acquisition has done is it has merged two supply chains to make both businesses even stronger,” says Barouch.
“From a customer’s point of view, it’s a seamless delivery – you’re dealing with Fastflowers all the way through the supply chain, but from behind the scenes we’re working with a number of partners to ensure smooth delivery.”
Singleton explains the retail value of delivered flowers in Australia is around $250 to $300 million; while the retail value of flowers bought at stores and supermarkets to be taken home as gifts is around $200 to $300 million.
“By the end of next calendar year, I’d like to think we’ll be looking at around 10 to 15 per cent of that total market will be ours,” Singleton says.
Check out Peter Switzer’s SWITZER on Sky News Business Channel, Monday to Thursday from 7pm.
And, if you’re looking to work on your business rather than being stuck in it, book in for a complimentary business assessment today with Switzer Business Coaching.
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Published on: Wednesday, November 03, 2010blog comments powered by Disqus