Across the last 15 years, the flower industry, as we originally knew, has changed, and not necessarily for the better. In a world where there used to be multiple flower shops on every block, that is no longer the case. We had a chance to read through the recent New York Times article that discusses how the flower shop has changed in the past 2 decades and that way it has impacted the bricks-and-mortar flower merchants.
Since 2000, nearly 40% of America’s floral businesses have closed. Despite there being only about 14,000 independent floral businesses left across all of the U.S., there is something even more surprising happening. It’s something you can’t necessarily see. It’s the impact that national online merchants are having on local flower shops.
We know that when the economy gets tough, luxury items like flowers often go to the wayside. However, what’s really impacting the business is the use of national merchants like 1-800-Flowers and FTD.com because it is taking a piece of the profit for every flower arrangement ordered across the country.
Independent flower shops are now frequently using middlemen like online merchants to increase a volume of orders but the increased volume of business comes at a price. The brick-and-mortar shops walk away with only about 70% of the sale price when using online merchants. This means those independent floral businesses are just about breaking even on every arrangement. There is a very small margin of profit that is almost invisible when it comes to using the online middleman.
The other piece that is also frequently overlooked is what the client receives when going through online merchants instead of directly to the flower shop that is likely providing the flowers anyways. That piece that is missing is quality. When buying flowers online through national merchants, a client can’t clarify directly for the florist on what they are looking for. They can’t specify preferences and they likely have no real idea what the arrangement they are ordering will look like.
Now you might be asking yourself, how did this happen? There were two main changes that impacted the industry forever. First and foremost, technology made it easier for customers to order flowers from anywhere. They no longer had to go to local florists for local deliveries, they could order online for any location. The other piece that impacted the industry was the ride of “order gatherers.” These are essentially virtual storefronts that advertise through search engines but don’t actually have their own flower shop. They end up as a wire service for the local flower shops and the virtual storefronts end up with about 20% of the profits, while the florist is stuck making the arrangement for no real profit margin.
This continues the aged-old question for local flower shops, should we re-consider using the online middleman?