The e-retailer heads into the holiday shopping season behind a 30% increase in fulfillment spending and a widening net loss. North American sales increased ...
Organic Bouquet uses the web to cultivate a national market for its niche product
As 67 mayors from around the world walked out of a United Nations World Environment Day forum in San Francisco last June, they were greeted by a 300-person chorus singing a theme song-“United Nations, Together We Can”-created especially for their forum. The forum itself was generated within the halls of the U.N. amid global concerns about ecology, but the choir and the song were compliments of a startup online organic flower retailer, Organic Bouquet Inc.
“The U.N. had nicknamed the June 5th event Flower Power Day,” says Organic Bouquet founder and CEO Gerald Prolman. “When I heard that, I realized we had to become involved.” In addition to sponsoring the choir, Organic Bouquet had commissioned Grammy-winning gospel singer Edwin Hawkins to write the song, then flew him and a dozen other singers to San Francisco to join the choir.
On a mission
Prolman is a man on a mission. With a background in agribusiness, marketing and entertainment-and an eye for the business potential of organic products-he’s spent the last several years using the selling power of the Internet combined with public concerns about environmental, social and health issues to develop a national market-both supply and demand-for organically grown fresh-cut flowers and OrganicBouquet.com.
Taking a multi-pronged approach toward business development, Prolman has cajoled growers and certification bodies to expand the supply of certified organic flowers, sparked the demand side with wholesale deliveries to national chains like Whole Foods, and persuaded more than a dozen charitable organizations, including Amnesty International and the global health care organization Project HOPE, to list Organic Bouquet on their web sites as a preferred flower supplier that contributes about 15% of every sale to the charity at hand.
Although it got off to a slow start in terms of sales, Organic Bouquet expects to do about $6 million in sales this year, up from $2.5 million last year, then hit $100 million by 2010, mostly in business-to-consumer sales, Prolman says. By comparison, the company’s competitors include such retailers as 1-800-Flowers.com Inc., which sells $300 million a year in flowers and gifts and ranks No. 30 in the Internet Retailer Top 400 Guide to Retail Web Sites, and Provide Commerce Inc., No. 59 in the Guide, which sells $150 million a year, mostly in flowers, at Proflowers.com. Organic Bouquet’s sales wouldn’t get the company into the Top 400.
No daily tradition
Expecting that kind of fast growth is a huge challenge for any type of retailer, but especially for flower peddlers in the U.S., where consumers don’t buy flowers frequently, says Keven Wilder, owner of Chicago-based Wilder Inc., a consulting firm that specializes in working with start-up e-retailers. “It’s very difficult for flower retailers in the U.S., where we don’t have the customs of other countries like in Europe, where people buy flowers every day,” she says, noting that most large flower retailers have branched out with aggressive lines of non-floral gifts. “Americans figure flowers will go bad in a few days, so why spend the money.”
And that’s not to mention the challenges of selling organically grown flowers. Organic Bouquet, Wilder adds, is making a big assumption that consumers who buy organic food will also buy organic flowers. Consumers will buy organic foods, which are produced under methods that don’t rely on chemical treatments often used in conventional farming, mostly because they believe organic foods are more healthful-an attribute that can’t extend to flowers, she says. “Organic is important in food, but it won’t be important in flowers unless they can show the benefit to consumers,” she says.
Prolman, however, says his flower business is just beginning to bloom after years of establishing a market, with a current $5 million round of financial backing led by Boston-based CP Baker. Although Organic Bouquet already offers some organic chocolates and may eventually branch out into other products, he says, it still needs to shore up its reputation as the provider of organic flowers. “Right now it’s important that we remain focused on flowers, to be known for ‘eco’ flowers,” Prolman says.
Prolman is counting on the power of the Internet to aggregate splintered demand. Although he had had no e-commerce experience, he saw the web in 2001 as the central tool for creating both demand and distribution of organic flowers. The web lent itself to that market because, for one thing, there were only a few small growers of organic flowers at the time, not nearly enough to support a national market. He believed he could use the Internet to develop a direct-to-consumer business model that would support large-scale organic flower production. “I thought if you could bring the farm directly to consumers, there was a lot of margin in the middle that could be saved,” Prolman says. “We could afford to pay farmers a premium to grow flowers through organic methods, and still offer value to consumers.”
The need to combine nationwide demand into one point is underscored by the fact that by any measure, interest in organic flowers is minuscule, amounting to barely $8 million in 2003, according to the Organic Trade Association. Meanwhile, consumers spend $20 billion a year on retail fresh flowers. The Organic Trade Association expects annual growth of organic flowers of 13% through 2008.
Prolman argues, however, that those numbers belie the true potential of the market, pointing out the supposed 63 million consumers who make up the so-called “LOHAS market,” or people who purchase products designed for “lifestyles of health and sustainability.” The market amounts to about $230 billion a year for products and services ranging from organic foods and yoga classes to fuel-efficient cars and recycled blue jeans, and Prolman expects to expand it by turning more of the U.S. retail flower market into organic sales. “Nobody has been talking to LOHAS consumers about environmentally friendly flowers,” he says, “so my objective has been to find a cost-efficient way to reach them. That’s why I started OrganicBouquet.com.”
The organic background