Since I started running my own Internet company in 1995, almost everything I do is virtual. I work from home, don’t go to meetings, don’t go trade shows, and hardly ever make phone calls. I have a paperless office, and my mailing address is a P.O. Box service that scans in my all letters so I can read them online. My voice mail box even tells people to email me instead of leaving a message (if they do leave a message, it is automatically converted to an mp3 file and emailed to me). So, it is kind of crazy that in 2002 I ended up buying a retail flower shop even though I had never owned or worked in any sort of store before and knew nothing about flowers. On top of that, I bought it online without ever seeing the store in person (it was 3000 miles from where I lived). Oh, and before I even closed on the buying the first flower store, I bought a 2nd one.
Here’s what happened. For several years, I was using my GetFlowers.com domain name to sell flowers by getting a commission from another online florist for every customer I sent to their site. This made a little money for me, but there was no chance it was ever going to turn into a big flower site that way, so I decided to build my own online florist on it instead. I looked into it and figured out that most online florists were just order takers and sent out all their orders through floral networks such as FTD and Teleflora. These networks route the order to a local florist who delivers the flowers. All flower shops have a computer that runs FTD or Teleflora software, which they use to print the orders that are sent to them and also to enter orders from their own customers for out of town deliveries. For example, if you walk into a florist in New York and ask them to send flowers to your grandma in Miami, they will enter your order into their FTD or Teleflora system, and it is zapped to a florist in Miami.
The florists make a profit of around 20% for each order that they send through a floral network, plus they usually charge an extra fee (sometimes called a “service charge”) which they get to keep as a bonus. My plan for GetFlowers.com was to make it 100% automated and then to do away with any extra fees since there was no work involved for me to place each order. I would set it up so that the customer just fills out the order form on my site, and their order is sent to the floral network which then relays it to the local florist. Most other floral websites at the time were not that automated, so when they took an order, they still had to manually re-enter it into the FTD or Teleflora system. Even if I got thousands of orders a day, the only work for me would be doing the customer service.
Another goal I had was to have better customer service than other florists. Many florists are disorganized and when they make mistakes they are not willing to give refunds. They sometimes will redeliver the flowers for free if they mess up, but for example, when it is five days after your mother’s birthday that they missed, their offer does not help much. Another example of this is that they sometimes will deliver the flowers, but forget to add the balloon you ordered. Or they will forget the gift card which says who the flowers were from. I think that if a florist loses your order and makes you look like a jerk for forgetting someone’s birthday, just giving you a refund is not enough.
I decided to handle these situations differently than the other florists so as to always try to make the customer happy. If, for example, Valentine’s Day flowers were never delivered due to a mistake the local florist made, I would give the customer a full refund refund and pay out of my own pocket for the local florist to deliver an apology bouquet to the recipient. If it was just a partial screw up, then most of the time I ended up giving my customer at least double the discount the local florist gave me. Sometimes the local florist wouldn’t give me any discount, but I still gave the customer a full refund.
Anyhow, to sell flowers at GetFlowers.com, I needed to be a member of the FTD or Teleflora networks, and when I contacted them they told me it was a requirement that I own a real flower store, not just a website that took orders. So to start my GetFlowers.com website, I realized that I needed to buy a florist. Even though I knew nothing about running a flower store, I thought that maybe I could use my business and computer knowledge to make a struggling flower store more profitable. I would then buy more florists and make the operation into a big business. If eventually I had 100 flower shops, each making a few thousand dollars a month profit, I would be rich.
I checked out flower shops for sale on several of the leading business broker sites and found one for sale for $40,000 in Huntington Beach, which was near my office in California (this was an office I had never been to because I ran it remotely) and had one of my employees (a web designer with no floral or retail experience) drive by and take a look. He liked the location, so I bought the store. As part of the sale, the previous owner agreed to work at the store full time and run it for me.
Then, while I was working on buying the Huntington Beach florist, I happened to see a listing for a flower shop for sale in Sacramento for only $20,000, and the woman managing the store was interested in running it for me after the sale. There was no need at all for me to buy two florists, but it seemed like a good deal, so I purchased this one also. I figured there would be some economies of scale in running 2 florists instead of 1, since certain costs (websites, marketing, payroll company, etc.) could be shared. Also, if I had only one florist and it failed, I might not know if the problems were related to that store in particular (like the location), and I still would have dreams of running a giant floral empire, so if I had two florists that failed, at least I would get it out of my system once and for all and be done with it.
After I bought the florists, I was able to launch my GetFlowers.com website, although running the site really had nothing to do with the stores. I advertised GetFlowers.com in search engines, and it started getting several dozen orders a day. A few years later I bought the domain CheapFlowers.com (I paid around $35,000 for it) and set it up as an alternate version of my GetFlowers.com website on it. I gave the CheapFlowers.com website a more wholesale look, with a long explanation about why I was able to offer such low prices. Although CheapFlowers.com was a catchier, more memorable domain, I was worried customers would be turned off by it because they might think it was a scam, or would worry about what to say if the person they sent flowers to asked where they bought the flowers (“Honey, I bought your flowers at CheapFlowers.com” does not sound so good), so I made sure the credit card billing still showed the name “GetFlowers.com”. Over time CheapFlowers.com has attracted more repeat customers, so that is the domain I have focused my efforts on.
Running the two retail stores turned out to be an adventure. Most florists run the store themselves and use the profits to pay their salary, but as an absentee owner, all the profits went to paying people to run the stores for me. That was fine with me though, since my main goal was to make money from my flower websites and not the stores. The problem was that managing the stores was a lot of work for me, and there was little hope of making any significant money from them. I computerized both the stores, setup websites for them, did lots of online and offline marketing, tried to get more wedding and corporate business, joined additional floral networks, created coupons, and even setup a flower kiosk in a mall, but none of that did much to help. The Sacramento store was in a mall that pretty much died after a few years, so sales dropped and the store began to lose money. The Huntington Beach store did better, but still never did more than break even.
In some ways, owning the stores was actually easier than I expected. Rarely did something come up that I could not handle, and the existing employees in each store did a good job running things. But, just like with any business, there were constantly things that the owner (me) had to handle, like filling out paperwork, hiring and firing, advertising, bill paying, payroll, dealing with suppliers, computer issues, insurance, sales tax, delivery van problems, etc. And there were frequently personnel issues I had to deal with, such as employees not liking each other, having personal problems, and accusing each other of things like stealing, lying, and drug use.
If the stores were making money, I could have hired somebody to handle all the “owner” stuff, but for me it was just a big hassle. I had hundreds of websites to run, in addition to doing all the mundane tasks of managing my company. My Internet projects had much more income potential than running real stores, so after a few years I shut the stores down. I was losing $5,000-$10,000 per month combined on them and could not afford to keep them open any longer. Luckily, I was doing a large volume of flower orders by then on my website, and FTD and Teleflora were more accepting of Internet florists, so they did not care anymore if I had stores or not. Also, I hired the manager of one of my stores to work full-time doing customer service for me.
Like with any online store, the flower websites still have problems, such as fraud, server downtime, website errors, supplier issues, and more, but it is much easier to run an online florist then it was to run the retail stores. Overall, I am still glad I bought the flower shops, because without them, I would not have the online flower business that I have today. And although I did not become a retail flower tycoon like I had hoped, the important thing is that I gave it a try.
Thanks for sharing.
Will save others time and money if they are smart enough to read it
Knowledge & Wisdom
Great article Eric.
Overhead on most retail stores are very high, the electric bill alone to run the air conditioning runs at least a $1000 and up, and with Flowers you need refrigeration which is even more… You have to be doing a lot of business to stay in business, especially in Orange County.
I’m quite taken back that a domainer took the leap and opened these stores, most wouldn’t dare, their far too fixated on making their wealth from a computer screen. Kudos to you for actually doing this, Profit or loss, what you learned from it will benefit you immensely in your next endeavor.
Thanks for sharing Eric, good luck.
Thanks for sharing your story Eric. I not only enjoyed the flower shops, but your automated snail mail etc was fun too. I’d love to hear more about how you have streamlined your work. Thanks for sharing!
Interesting story, Eric. I especially like how you treat your customers. I will try to order my flowers from your site in the future.
Eric, this was a fascinating article to read.
Even though everything doesn’t goes as planned, your risks gave you a lot of insight into running a florist, and the nature of the business, and ultimately were able to give you success with the websites.
Eric, good article. Elliot, hope all is well with you. Bill Mac