Why it matters
- Floral disruptor BloomNation’s business model bypasses local florists’ reliance on middlemen (large floral brokers) by providing an online marketplace of local florists from around the country, from which customers buy directly.
- Since 2011, BloomNation has grown to boast a network of 3,500 florists in the United States and Canada, generating average annual growth of 25% and a commitment to the multiplier effect of injecting money into local communities.
- BloomNation’s B2B arm, which helps modernize florists’ e-commerce sites, has resulted in sales growth of up to 40% for businesses, according to the company.
“No one walks into my store anymore.” That statement from his aunt about her florist business started Farbod Shoraka thinking.
The year was 2010 and consumers were turning online for purchases, including flowers. Like his aunt, other florists he spoke to were experiencing diminishing foot traffic.
Services like FTD and 1-800-Flowers acted as middlemen for a network of independent florists. Customers ordered specific floral arrangements via a website or phone from these large players, which in turn had a local florist replicate and deliver the arrangement.
The process didn’t allow independent florists much room to flex their creativity and was costly. 1-800-Flowers and FTD acted as floral brokers, taking a commission on the total amount, thus leaving the local florist with a reduced payment.
Florists “had been slow to keep up with the times as far as shifting their own businesses online,” Co-Founder and CEO Shoraka told CO—. With a background in finance and an interest in helping small businesses, he began investigating solutions.
Shoraka, an investment banker, worked with partners and friends Gregg Weisstein, a management consultant, and David Daneshgar, a World Series of Poker champion with analytical skills, to create BloomNation in 2011. (Daneshgar has since left the business, though his prowess in a poker tournament provided the company with its initial seed money.)
“We walked into flower shops around California to see if the idea had legs,” Shoraka remembered. Repeatedly, they found florists who were not happy with their current options and wanted a platform that allowed them to sell on their own.
How BloomNation works: The Etsy model
The partners created BloomNation first as a marketplace to keep florists from acting as merely order fillers for brokers. Since then, the platform has evolved to also offer a suite of tools to help them run their entire business. Today, 3,500 florists are part of BloomNation in the United States and Canada. The company has grown to $250 million annually in transactional volume, with average growth of about 25% per year.
Based on an Etsy model, BloomNation does not follow the standard formula of one design template that florists are expected to follow. In other words, traditionally, a floral customer would select a summer birthday bouquet on FTD, for example, and hope that the florist produced a result that matched the photo. With BloomNation, individual florists show off their craft and artistry by posting photos of their original designs for shoppers to peruse, and consumers select specific markets around the country depending on where they are sending the flowers.
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BloomNation unlocks B2B growth
As BloomNation evolved, the partners realized they had collected a lot of information (florists’ addresses, hours of operation, selections, and so on) that would make it relatively simple to help independents launch their own websites, modernized for e-commerce.
“They didn’t understand e-commerce, analytics, SEO,” noted Shoraka. “We could provide a solution.”
The results showed a 30% to 40% improvement in florists’ business, he reported. It eventually led to the launch of BloomNation’s B2B side, a turnkey software platform providing everything an independent florist needs to run a business — inventory management, email marketing, social media support, point-of-sale services, and delivery management.
The BloomNation platform is performance-based. Instead of charging upfront or ongoing costs, BloomNation gets a 10% revenue share each time a florist makes a sale. “The florist keeps 90% of what they receive, and our share includes credit card fees,” explained Shoraka. “[The model] incentivizes florists to grow, because that’s how they get paid.”
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‘There’s a multiplier effect of injecting money into a community.’
Helping local communities is core to BloomNation’s mission. To join, florists are required to be local and must hand-deliver arrangements. No chains or shops selling boxed flowers are allowed.
Shoraka contends that keeping it local is impactful for neighborhoods. “A customer spends money at a florist, the florist then spends it in the coffee shop, that coffee shop worker dines in a local restaurant, and so on. There is a multiplier effect of injecting money in a community,” he asserted. “Employment goes up, crime goes down. You add value versus ordering online.”
Doubling down on services and technology development to help florists thrive
BloomNation continues its expansion, recently acquiring U.K. company Floom, a similar floral platform. The Floom brand will remain intact while furthering BloomNation’s reach into Europe.
The primary focus of expansion will be on providing domestic florists with more services and technology, such as ways to improve inventory management, set up delivery routes, or provide a CRM (customer relationship management) platform. All development is done in-house.
“The point-of-sale piece is the nervous system of a florist,” said Shoraka. “We’re doubling down on offering what they need to thrive.”
Advice to online startups: The key phrase is unit economics
Shoraka offered advice to startups looking to launch an online business regardless of the category: Pencil out your unit economics, which analyzes the profitability of a business at the level of a single unit.
“How much does it cost you to make each item? And how many do you have to sell to break even? Can you start out bootstrapping, or will you seek funding? Can you make a small profit on each order and build slowly, or do you need capital? How realistic is the plan? And don’t underestimate the cost of marketing,” he cautioned. “A lot of money goes into getting attention, and consumer attention spans are smaller and smaller.”
“You can’t just dream it up,” Shoraka emphasized. “The key phrase is unit economics. To me, that is the beginning of the idea.”
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