1-800FLOWERS.

COM

COMPANY ANALYSIS

Table of Contents

About 1-800-FLOWERS.com, Inc................................2

Business Environment..............................................2
Competitors Overview..............................................3
SWOT Analysis.........................................................4
Business Strategy....................................................5
Financial Analysis....................................................6
Operations and Customer Service.............................9
1-800-FLOWERS.com Website Evaluation.................11
Conclusions............................................................14
Appendix: Financial Statements..............................16

About 1-800-FLOWERS.com, Inc.

1-800-FLOWERS.com, founded in 1976, is a gift retailer located
throughout the United States and is headquartered in Carle Place, New
York. It is a family-run business that offers a variety of products such as
fresh flowers, gifts, popcorn, gourmet foods, cookies, wines, and
chocolates. Products can be bought from several channels such as the
internet, franchise stores, and retail floral stores. 1-800-FLOWERS.com
operates 1 fulfillment center, 2 floral retail stores, and 104 franchise
stores. It is one of the first retailers that used the internet to sell
directly to their customers. In the year 1999, the company went public
on the NASDAQ stock exchange (ticker symbol FLWS).

Business Environment
1-800-FLOWERS.com is the worlds #1 florist with over 2.5 times
higher market share than their next biggest competitor in the US. It is
one of the top 50 on-line retailers and one of the first companies who
took their business model on-line back in the 90s. In addition, 1-800FLOWERS.com was the first company to sell products through
Facebook. 1-800-FLOWERS.com has over 32 million customers; their
website attracts more than 57 million visitors each year.

Consumer floral, gourmet foods and gift baskets, and BloomNet Wire
Service

business

are

the

three

business

segments

of

1-800-

FLOWERS.com.
The consumer floral segment is part of the namesake 1-800FLOWERS.com, and accounts for more than half of companys total
revenues. They offer all types of flowers and floral arrangements to
provide to customers for any type of occasion.
Gourmet foods and gift baskets are operated by 1-800-BASKETS.com,
Fannie May Confections, The Popcorn Factory, and The Winetasting
Network. It accounts for more than a third of company's total revenues.
They offer wines, gourmet gift baskets, chocolate, candy, and popcorn
that are packaged in all sorts of customizable tins and baskets.
BloomNet Wire Service is the companys electric communication
system that allows over 3,000 of the florists in its network to contact
each other to send and receive orders. It accounts for nearly 10% of
the company's total revenues and has the highest gross margin among
the three business divisions.

Competitors Overview
1-800-FLOWERS.coms main competitors are FTD, Inc., Harry & David
Holdings, Inc., and Teleflora LLC. FTD, Inc. is owned by United Online
3

(UNTD), which also partners with Interflora. FTD, Inc. offers floral
arrangements, gourmet foods, greeting cards, balloons, candles, and
etc. Harry & David Holdings, Inc., a private company, offers gift
baskets, chocolate, fruit, wine, and etc. Lastly, Teleflora LLC focuses on
just floral arrangements and is a privately held company.
1-800-FLOWERS.com is not only competing with them but is also
competing with local floral stores in peoples neighborhoods and
grocery stores. Many people buy their flowers from local flower shops
in their city because of the convenience and price. The customer is
able to pick out exactly it is what they want and they know the
condition of the flowers that they are sending. In addition, people pick
up floral arrangements at grocery stores either for the cheap price or
they are shopping last minute and it is on their way. However, they are
not getting the best quality and freshness that 1-800-FLOWERS.com is
able to offer.

SWOT Analysis

Strengths

Unique fulfillment
system - includes its
BloomNet network of
approximately 3,000
florists around the
country & own
distribution facilities

Wide range of products

Strong marketing and

promotion

Gift services division company partners with

many Fortune 1000
companies

Database of more than

32 million unique
customers

Opportunities

Weaknesses

Geographic
concentration in the US
only

Late payment for the

florist chain

Absence of contingency
plans for uncertain
conditions that may
occur that would affect
the business.

Threats

Online growth

Increasing competition

Increase in home
improvement
expenditures

Slowdown in US economy &

discretionary spending

Transportation expenses

Growing specialty stores

Promotional
opportunities

Business Strategy
5

The business strategy for 1-800-FLOWERS.com describes how they run

their business, how they intend to succeed in the market and how they
are able to stand up against their competitors; it represents the
management attempt in securing the current and future goals.
To explain the business strategy used at 1-800-FLOWERS.com we will
start with the competitive advantage that they have; they are
providing the right and original products and services with excellent
quality and value which gives them power in the market (specific
product features aimed at satisfying specific market needs).
What differentiate 1-800-FLOWERS.com from their competitors are the
marketing strategies they adapt and the investment in technology to
improve their brand and in expanding their market share. One of their
strategies is to leverage the significant web traffic, multi-million
customer base and having a dual-branded website for baskets and
other brands. Also, they have a social responsibility in investing and
developing a training center that is educational for community building
programs in the floral industry which affects their reputation and
perception among customers.
Their sales strategy plays a very important role in maximizing their
profits; their position in the market is reflected by the strong returns on
their investments on the brands they have acquired and those they
have launched internally. They focus on multi-channel retailing with an
6

emphasis on ecommerce as well as their decision to be vertically

integrated where appropriate which enabled them to become leaders
in the market. 1-800-FLOWERS.com will continue to focus on the
specific areas of their business where they believe they can exert
control

and

achieve

enhanced

results,

bearing

in

mind

some

improvements and opportunities they need to develop.

Recommendations
Few of the improvements needed to refresh their business strategy
are:

To invest more in the promotional and marketing strategies to

expand their market and respond to customer demands with no

restrictions.
To stay up-to-date with what is new in the market and adapt to

the economy circumstances in their pricing and cost structure.

To create and design line extensions by engaging directly with

their customers to deepen their relationship with them.

To invest more in the Social and Mobile marketing and commerce
initiatives,

1-800-Baskets.com

business,

Celebrations.com

content and media business.

Financial Analysis
Trend Analysis

Net Revenues
Cost
Sold

of

Goods

Expenses
Net Income (Loss)
Assets
Liabilities
Stockholders
Equity
Cash from
Operating
Activities
Cash from
Investing
Activities
Cash from
Financing
Activities

2011

2010

689,78
7
409,70
3
684,06
5

667,71
0
401,90
8
671,93
1

5,722

(4,221)

256,95
1
115,29
0
141,66
1

256,08
6
123,46
0
132,62
6

30,725
(21,495
)

Increase/
Decrease

Percent
Change

22077

3.31%

7795

1.93%

12134

1.81%

9943

Not
meaningful

865

0.34%

(8170)

(6.62%)

9035

6.81%

40,028

(9303)

(23.24%)

(6,518)

(14977)

Not
meaningful

19598

Not
meaningful

(15,631 (35,229
)
)

Net revenues have increased by 3.31% from 2010 to 2011; while

cost of goods sold has only increased by 1.93% and expenses
increased by 1.81%, the company is increasing revenues at a
higher rate than expenses which resulted in an increase of their

net income.
Total assets did not change much from 2010 to 2011, but they
have managed to reduce their liabilities by 6.62% by paying
long-term debts. Stockholders equity has increased by 6.81%

from 2010 to 2011 due to not paying any dividends in 2011 and

the additional paid-in capital by the investors.

Cash from operating activities has decreased by 23.24% from
2010 to 2011; the main reason of the decrease is the rise of
inventory which predicts a slump in in profits and the need for
external financing. Management should manage assets and
liabilities more efficiently.
Cash used in investing activities was higher in 2011 due to the
acquisitions and capital expenditures of the companies for the
year 2011.
Cash used in financing activities was lower in 2011 mainly due to
the repayment of bank borrowings.

Key Ratios
July 3, 2011

June 27, 2010

0.8%
2.2%
0.81

(0.6%)
(1.6%)
0.93

Profit Margin
Return on Assets
Debt to Equity

Profit Margin: the companys profit margin was negative in

2010 which indicates a decline in sales and increase in expenses.
In 2011, the company was able to increase its profit margin to
0.8% (each dollar of their sales generated 0.8 cents of profit).
They were able to increase their revenue in 2011 at a higher rate
than expenses, which resulted in a positive net income. It seems
that the company has looked into its pricing strategy and made
the necessary amendments.
9

Return on Assets: this ratio shows how effective the company

is in utilizing its assets to generate profit. 2010 shows a negative
ratio because of its net loss, but 2011s ratio of 2.2% indicates
that the company is not utilizing its assets effectively to generate
profit, for every 1 dollar of assets the company is only generating

2.2 cents.
Debt to Equity: this ratio measures the financial flexibility and
the long-term capital structure of the company. Debt to equity
ratio decreased from 0.93 in 2010 to 0.81 in 2011. The decrease
of this ratio is due to the disposal of unproductive assets and
using proceeds to liquidate debts.

Operations and Customer Service

The

1-800-Flowers.com

Consumer

Floral

category

includes

the

operations of the 1-800-Flowers brand which derives revenue from the

sale of consumer floral products through its E-Commerce sales
channels (telephonic and online sales) and company-owned and
operated retail floral stores, royalties from its franchise operations, as
well as the operations of Fine Stationery, an e-commerce retailer of
personalized stationery, invitations and announcements.
The Gourmet Food & Gift Baskets category includes the operations of
1-800-Baskets, Cheryl's (which includes Mrs. Beasley's), Fannie May
10

Confections, The Popcorn Factory, Winetasting.com, Stockyards.com

and DesignPac businesses. Revenue is derived from the sale of gift
baskets, cookies, baked gifts, premium chocolates and confections,
gourmet popcorn, wine gifts and prime steaks and chops through its Ecommerce sales channels (telephonic and online sales) and companyowned and operated retail stores under the Cheryl's and Fannie May
brand names, as well as wholesale operations
As the companys primary objective has always been to provide the
best possible customer experience in every channel, they decided to
implement LivePersons live chat program to better serve their
customers immediate needs in real time. Their main goal in
implementing the program was to engage and connect with customers
at the most helpful moment in their shopping experiencewhen they
would benefit the most from an interaction.
One of the reasons they chose this program is because they need to
connect with customers at the right time, and LP Chat has the
intelligence to proactively deliver chat invitations at the best possible
moment, based on a visitors onsite behavior. Some of the companys
most successful use cases include leveraging LP Chats geo-location
intelligence to help customers pick the best delivery options based on
their area and to successfully complete their orders.

11

The 1-800-Flowers.com has different delivery options; same day

delivery and a florist guarantee on same day delivery, they also deliver
to countries outside the US. Their delivery method could be Direct
(from growers), or Network (local florists). 1-800-FLOWERS.COM can
deliver floral items almost anywhere in the world through a number of
international affiliations.
Their accepted methods of payments: American express, Visa, Master
Card, Bill Me Later and PayPal. There also sell their products through
their Facebook page.

Recommendations
To improve operations and customer service, the company should build
its business on the philosophy that success is defined as helping
customers express themselves perfectly by leveraging a wide variety
of original arrangements with the ultimate goal of delivering smiles to
the important people in their lives. To accomplish this goal across all
channels, they must realize that they need an integrated customer
service program to assist their online shoppers.

1-800-FLOWERS.com Website Evaluation

12

1-800-FLOWERS.coms website is very important to the business; it is

their main interaction point with the customers and very crucial to
their success. Below we discuss the most important factors that make
their website successful.
Informational:
1-800-FLOWERS.com are making an effort to showcase items that are
likely to be of interest to visitors, obviously with the intention of
helping visitors to find something they will buy. 1-800-FLOWERS.com is
using a large area on the homepage to promote current sales, new
product lines. Moreover, they update the homepage more often in
order to promote different occasions such as Mothers Day.
Ease of purchase:
In 1-800-FLOWERS.coms website, once the visitor adds an item to the
cart, he/she will immediately see the contents of the shopping cart.
They will be presented with the options to continue shopping or to
checkout. If they chose to checkout, the visitor can login as an existing
customer or create a new account. The checkout involves a minimal
amount of steps thus it is as easy as possible for shoppers.
Simple graphics:
1-800-FLOWERS.com includes many different pictures of products. The
pictures even show how the products are packed up. Potential buyers
13

will be able to get a very good feel for the product based on these
photos as selling online is different than selling in a physical store
because the buyer cannot touch the product or see it in person before
making a buying decision.
Ease of navigation:
1-800-FLOWERS.com uses a drop down navigation menu to help
visitors find what they are looking for. The navigation menu contains
links to the major product types that are available on their site, and
roaming over a link will bring up the drop down menu that helps to
narrow it down to find more specific products. Effective navigation is
important for their website and critical for their success (Figure 1).

Figure 1

Redundant navigation:
Although navigation is critical for making it easy on visitors to find
what they want, there is still the need to allow them to search. Some

14

visitors will still have trouble finding a specific product even with good
navigation, and with larger e-commerce sites it may often be more
feasible to simply do a search than to move through several layers of
links. 1-800-FLOWERS.com offers a search bar that helps the users to
find redundant ways to reach their desired products.
Legible text:
The design and color scheme of their website does a good job of
matching up with their products. The website also looks professional
and appealing to the users who are interested in their products.
Multi-browser functionality:
1-800-FLOWERS.coms website supports most of the browsers such as
Internet Explorer, Firefox, Chrome 6 and Safari 5.
Functionality:
The website is very user friendly and its design and features is
appealing to visitors, thus visitors normally do not have any problems
within the site. The website also provides clear image and additional
information on products. Moreover, the website loads its pages quickly
and does not take time when it navigates between pages.

Recommendations

15

Let

the

customer

compare

between

products:

1-800-

FLOWERS.com website will benefit from letting their users

compare two or more products.

Make the website available in other languages such as Spanish
to allow non-English speakers to navigate through the website

easily and use its services.

Include videos about production: an easy way to gain the
customers trust is by introducing videos that explains how the

main products are being created.

Improve Internet marketing and search engine optimization.

Conclusions
Assuming a stable to better US economy, we believe 1-800FLOWERS.com will show more positive results and success in the
upcoming years. Their diversified product portfolio will allow them to
grow and reach more customers. 1-800-FLOWERS.com continuously
adds florists to its fulfillment system network to be able to respond to
customer orders and guarantee their satisfaction. Their success
depends on satisfying customers in an efficient and effective manner.
Another factor that will help 1-800-FLOWERS.com succeed even further
is to expand to other US states and even other countries. Their current
geographic concentration is limiting them from reaching customers
and giving their competitors the opportunity to increase their market
share.
16

1-800-FLOWERS.com is known for its strong marketing and promotional

activities which have helped them attract millions of customers. They
were the first to use Facebook to sell products which gave them a
competitive advantage over their competitors. If they continue with
their innovation especially in utilizing mobile e-commerce to target
customers they will definitely increase their profits and succeed.
1-800-FLOWERS.com had previously adopted several technologies in
order to improve the way they conduct business; for example, they are
using cloud computing to cut IT costs costs, increase efficiency and
productivity. They plan to invest in other technologies and make
enhancements to the current technologies they use; this should enable
them to cut costs, increase productivity and efficiency and therefore
increase revenues.

1-800-FLOWERS.com is very customer-focused and their business

model is built around guarantying the customers satisfaction and a
100% smile; all their future initiatives should be carefully studied and
planned to continuously ensure customer satisfaction and fulfillment.

17

Appendix: Financial Statements

18

19

20