BloomNation is an online platform that connects local retail florists with customers seeking flower arrangements. BloomNation’s CEO, Farbod Shoraka, says that it is “like Etsy for flowers” since local florists can post pictures and prices of their floral arrangements directly to the website. BloomNation aims to disrupt the traditional floral industry leaders, including FTD and 1-800-Flowers, by providing a more tailored approach for customers and offering better rates (10% commission fee compared to existing 20-50% commission fees from larger players) and a suite of ecommerce tools for florists. BloomNation not only provides online marketing for florists, but also offers website development services, a POS system, email marketing, and tools to track and manage their delivery services.
BloomNation’s competitors are the three large players in the floral industry, 1-800-Flowers, FTD, and Teleflora, which own nearly 2/3 of online flower sales. These sites have catalogs online that display generic floral arrangements which customers can select. Once a customer places an order, the order is sent to a local flower shop to fulfill. The local florist is expected to match the generic image exactly to deliver to the customer. These middlemen players take a 20-50% commission, which significantly limits the value that local florists are able to capture and leaves a lot to be desired for both the customer and florist. For example, customers are frequently disappointed with orders from 1-800-Flowers due to the lack of quality control and inability of florists to replicate an image nationwide. Furthermore, florists are unable to offer customers unique vases or fresh flower shipments since they cannot contact the customer and floral artists are severely limited in their ability to express creativity.
BloomNation’s value creation for customers
BloomNation captures value for customers since customers can view constantly updated images online of the exact floral arrangement that they will receive, eliminating the chance that customers will be disappointed with their arrangement. The catalog is highly localized so that customers can see unique offerings from their local florists and customers can even receive a BloomSnap, which allows florists to send a photo of the arrangement prior to delivery so that the customer can confirm the arrangement they are about to receive.
BloomNation’s value creation and capture for florists
BloomNation creates value for florists since it provides online marketing through its catalog and it offers a suite of services for florists to improve their business. It provides an easy way for florists to set up a custom online presence through website development, a POS system, search engine optimization, and analytics to help florists better understand their business. BloomNation allows florists to see their own data as well as data nationwide from other florists in order to understand what price points are selling best and trends that are arising. BloomNation enables florists to maintain their unique artistry while also improving business operations. It allows florists to capture more value since its commissions are lower than traditional players and BloomNation captures the value it creates through its 10% commission fee.
Scalability and sustainability
BloomNation’s platform provides significant value for the floral industry, but it may face challenges as a platform due to network clustering and vulnerability to disintermediation.
BloomNation’s strengths as a platform include:
- Cross-side network effects: The more BloomNation customers there are shopping on the platform, the more attractive it is for florists to join, and the more florists are on the platform, the more valuable it is for customers since they have more choice. As BloomNation scales, its platform will become more valuable for both sides.
- Same-side network effects: There are direct network effects for florists since more florists on the platform allows BloomNation to capture more data that can be used to better inform other florists about industry trends and customer preferences. Florists can better understand their customers and change their business to meet customer needs, however, more florists on the platform creates greater competition, so the same-side effects are relatively weak.
BloomNation’s risks as a platform include:
- Network clustering: BloomNation is highly fragmented into local clusters that are isolated from one another, making it vulnerable to competitors that can reach critical mass in a local market and expand based on a differentiated offering.
- Disintermediation: Since BloomNation creates connections between customers and local florists, it is risky that customers and florists will leave the platform once the initial connection is established. Since BloomNation provides additional value-added services to florists, it has mitigated this risk and it is likely that florists will choose to remain on the platform to continue receiving those benefits.
BloomNation continues to onboard more florists, which attracts more customers to its platform, but it may face challenges as it continues to scale nationwide. It can potentially mitigate risk through network bridging (e.g., diversifying into other delivered gifts such as food), but it will need a high number of users to connect across multiple networks.