These ‘Flower Tech’ Companies Disrupt The Status Quo

Over the past 40 years, the consumer floral category has undergone multiple technological transformations: retail stores, telephone, online – and now mobile.

1-800-Flowers has deftly adapted and flourished through each of those market shifts.

Jim McCann opened his first flower shop on First Avenue in New York City in 1976. Today, he and his brother, Chris McCann, have built 1-800-Flowers into a market leader with nearly $1.2 billion in annual sales.

The iconic brand, which has been a publicly traded company since 1999, has continued to adapt to consumer demand. While its name suggests solely a floral focus, the company has expanded beyond flowers to become a multi-brand gift leader with offerings that include gourmet chocolates, cookies and fruit. The 1-800-Flowers family now includes brands such as Harry & David, Cheryl’s, Fanny May, Fruit Bouquets and The Popcorn Factory, among others.

Flowers remain an essential part of the business, but its other brands generate the majority of revenues. The gourmet food and gift baskets business, for example, comprises 57% of the company’s annual revenues (compared with the consumer floral category at 36%).

Just like 1-800-Flowers, which has disrupted the floral industry over the past four decades, the next-generation disruptors of “Flower Tech” are shaking up the landscape.

The Bouqs Company

Meet The Bouqs Company.

Last week, the Los Angeles-based online floral retailer announced its $24 million Series C fundraising round led by new investor Partech Ventures. The Bouqs Company delivers flowers fresh from eco-friendly sustainable farms around the world to doorsteps nationwide.

You might remember the company’s CEO, John Tabis, from his unsuccessful Shark Tank pitch in 2014. Flash forward three years and Tabis has raised $43 million, achieved an annual growth rate of 200% and a cash flow positive 4Q 2016.

“It is rare to find a combination of fundamental industry disruption, rapid growth and cash efficiency due to strong operating leverage in an e-commerce business at this stage,” said Mark Menell, a general partner at Partech Ventures, in a statement announcing the company’s Series C fundraising round. “Customers absolutely love The Bouqs Company, and it’s clear they are the next generation leader in the space. With a tech-driven and proprietary supply chain, a stellar team, and a $16 billion market opportunity in the U.S. alone, we are beyond excited to support the company’s mission of building the floral brand of the future.”

Partech Ventures joined NextEquity Partners and Reimagined Ventures as well as existing investors Azure Capital Partners, KEC Ventures and Quest Venture Partners. While Tabis did not get a deal on Shark Tank, Robert Herjavec, one of the show’s sharks, is now an investor.

Founded by Tabis and his college classmate, Juan Pablo Montúfar, The Bouqs Company is disrupting the global floral industry by reinventing the traditional supply chain. By eliminating multiple overhead cost layers such as warehouses, importers, distributors and auctioneers, The Bouqs Company is using technology not only to save costs, but also to streamline the supply chain.

“We deploy our proprietary technology at farms around the world, connecting the source of our beautiful product with buyers directly,” Tabis said. “We use the data we collect on farmer crops and production, and pair it with user preferences, behaviors and attributes to make the market in real time. [This] drastically reduces the time from farm to table, virtually eliminates waste, ensures transparency of source and gets fresher flowers for less money into the hands of our clients and their loved ones.”

With its fresh capital raise, The Bouqs Company is investing in both user experience and supply chain optimization technology, with a major focus on scaling the business.

“Our brand and our supply chain really set us apart,” Tabis said. “Other players have to deal with a long, convoluted and wasteful supply chain that leads to expensive bouquets that are weeks old upon delivery. By going direct to the source, we deliver more blooms for less, and fundamentally change the price-value equation for consumers.”

Meet BloomThat

Founded by David Bladow, Matthew Schwab and Chad Powell, BloomThat began with a simple premise: deliver flowers anywhere in San Francisco within 90 minutes.

Today, the California-based BloomThat delivers nationwide with next-day delivery – with customers in New York, San Francisco and Los Angeles able to receive same-day delivery in either a burlap bag or vase. Customers can choose from several curated bouquets.

Overall, BloomThat’s founders say that the company is focused on spreading happiness for life’s big moments and everything in between.

“BloomThat was founded on the premise of encouraging people to be more thoughtful – sending blooms outside of holidays and more often celebrating the ‘just because’ moments,” said Schwab, who also serves as the company’s president.

Schwab is focused on bringing transparency back to the “outdated” floral industry, which has made Valentine’s Day “about baby’s breath, red roses and cellophane.”

“There’s been a lack of transparency – the flowers you order online are more often than not different than what your recipient gets, [while] sending flowers to someone special has become a behavior reserved for a couple holidays a year,” Schwab said. “The choices we are making as a brand are changing those behaviors and serving the evolving consumer.”

BloomThat has relied primarily on proprietary technology to drive its platform, which Schwab believes has differentiated BloomThat from its peers.

“We have built almost all of our technology and infrastructure in-house, rather than using pre-existing platforms,” Schwab said. “That decision was imperative to create a frictionless consumer experience and glean information to operate at scale. Our technology allows for a much easier, enjoyable experience. For example, our average checkout time is one minute (actually, one of our most common customer inquiries is that the user checked out so fast, they forgot to put in their promo code).”

Like 1-800-Flowers, BloomThat is evolving beyond flowers with non-floral gifting options as well as “BloomThat For Business,” which offer one-of-a-kind gifts such as thank yous for clients or a gift to welcome a new employee. Schwab is also focused on “Bloom Bars,” which are floral team-building events for corporate customers.

“In addition, we’re looking to expand the functionality of our app, exploring new ways to send blooms without the previous barriers,” Schwab said. “For example, instead of asking for someone’s address (and ruining the surprise) or digging through your inbox for an address on file, perhaps you just send us their email and we’ll be able to handle the rest. Another future focus is lowering next-day shipping costs by opening new distribution centers and perhaps adding some same-day markets across the country.”

BloomThat has attracted a bevy of top investors, including First Round, Forerunner, Vaizra Investments, Rothenberg Ventures, SherpaVentures and Ashton Kutcher’s A-Grade. Joe Montana is also an investor. BloomThat was also seeded through Y-Combinator. Most recently, BloomThat raised $5.5 million in its Series A in 2015.

Other Market Players

1-800-Flowers, The Bouqs Company and BloomThay face competition from other start-ups and established brands, including, among others:

  • Urban Stems (investors include Middleland Capital, SWaN and Legend Ventures Partners)
  • Bloom Nation (investors include Andreessen Horowitz)
  • H.Bloom (investors include Shasta and Battery Ventures)
  • FTD (founded as Florists’ Telegraph Delivery in 1910)
  • Teleflora (same parent company as POM Wonderful and Fiji Water)

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