February 28, 2024

You’re the Boss Blog: H.Bloom Wants to Be the ‘Netflix of Flowers’

Bryan Burkhart: We’re closing a quality-to-price gap.Courtesy of H.Bloom.Bryan Burkhart: “We’re closing a quality-to-price gap.”


The adventure of new ventures.

Last year, two software geeks who’d never been anywhere near the flower business — in fact, one of them is, quite literally, allergic to it — started H.Bloom, an online, subscription-based floral delivery service that operates in New York, Chicago and Washington.

Employees: 38 full time.

Location: New York.

Founders: Bryan Burkhart, 36, and Sonu Panda, 35, met in 1997 at the University of Pennsylvania and spent the next decade in the software industry. In 2009, they decided to cast off software in favor of … flowers?

What sounds like a romantic venture was actually a shrewd calculation. Neither of the guys had a green thumb (Mr. Panda is allergic to pollen), but both could spot a disruptive opportunity. They were surprised to learn how much of the $35 billion floral industry still relied on the old, brick-and-mortar economy, untouched by technology. Though companies like 1-800-Flowers.com and FTD had brought much of the floral gift-delivery market to the Web, a huge part of the industry — self-bought flowers for home and office display — still belongs mostly to bodegas, boutiques and high-end supermarkets.

Pitch: This is a subscription service. “We’re the Netflix of flowers,” said Mr. Burkhart, the company’s chief executive (he said this before Netflix’s recent struggles). “We enable customers to sign up for luxurious flowers with convenient delivery at really affordable prices.”

A basic subscription costs $29 per bouquet, including weekly, every two weeks or monthly delivery. Clients can suspend service when they’re out of town.

Running an exclusively online shop helps H.Bloom keep overhead low, Mr. Burkhart said. And in an industry where spoilage is a huge problem, the subscription model offers a distinct advantage, letting him know in advance how much inventory he should buy. Unlike traditional brick-and-mortar florists, which lose 30 to 50 percent of their products to spoilage, he said, H.Bloom has a spoilage rate of 2 percent.

Mr. Burkhart said he believed he could pass the savings along to customers and still profit: “We’re closing a quality-to-price gap.”

Traction: H. Bloom boasts 200 corporate customers and 600 consumer subscribers. The company entered its third market, Chicago, this month.

Revenue: The company started selling flowers in New York in April 2010 and brought in $342,000 in revenue for that year. Mr. Burkhart projects that sales for 2011 will top $2 million.

Financing: The company has raised $8 million across three rounds of financing. Earlier this month, H.Bloom announced the latest: a $4.7 million venture capital round led by Battery Ventures. Also participating were Brian Lee, the founder of LegalZoom and ShoeDazzle, and Anton Levy, a General Atlantic partner and Gilt Groupe board member.

Marketing: The company targets two separate audiences: companies and consumers. For its corporate line, H.Bloom hires full-time salespeople with quotas in each local market. They pound the pavement visiting businesses that include restaurants, hotels and property management offices. On the consumer side, H. Bloom relied until recently on word of mouth but just hired a head of marketing and is preparing to introduce an opening salvo of direct-mail and online advertising.

Competition: Most existing online floral subscription services – including “bouquet of the month”-style offers from companies such as Teleflora and FTD and 1-800-Flowers – target gift-givers and are packaged and priced accordingly. H.Bloom targets a different demographic, however, and it’s one left mostly untapped by Internet-based services. Eighty-four percent of H.Bloom’s subscribers receive flowers at least every other week, suggesting their subscriptions are not one-time gifts: they’re bought by the end users.

H.Bloom’s primary competitors for making nongift flower sales are all the places people buy themselves flowers already, a fragmented market including those bodegas, boutiques and high-end grocery stores. “I think we fit really nicely in between,” Mr. Burkhart said, “because we provide the luxury arrangements and convenience of delivery that a high-end boutique would offer but, because of the subscription model and being able to buy directly from the farms, we’re able to offer prices much more closely resembling a grocery store.”

Rapid growth would also help him deliver the kind of bargain that will ward off would-be competitors. “Getting to a certain volume allows price breaks that you just can’t get as a sole proprietorship,” he said.

Challenge: Staffing the planned expansion. H.Bloom wants to grow like a weed, entering 25 cities in the next five years, then tackling both smaller American markets and international markets. To that end, the company has established what it calls the SEED program to find and foster new leadership. (SEED stands for Startup Education and Entrepreneurial Development.) The first graduate was just dispatched to Chicago after completing a six-month training program in New York, where he learned skills such as how to read a profit-and-loss statement, how to hire and how to handle customer service.

“If we can do this well, first, it will allow us to succeed as a business and expand across the country, but also I think it will train a whole host of future entrepreneurs,” Mr. Burkhart said. Eventually, he said, he hopes that he will end up investing in some of their start-ups.

What do you think? Is there a need for a “Netflix of flowers,” and does the SEED program sound like good training for future entrepreneurs?

Article source: http://feeds.nytimes.com/click.phdo?i=b372e3e1d1e0ead819b2b6f5223e99d1

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