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November 10, 2008 |
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GROWING YOUR BUSINESS TOGETHER |
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contents
CBC`s Dragons Den Backs Canadian Flower Shop Proposal
Toronto based florist, who runs flowerscanada.com could get up to $500,000 to launch `What A Bloom`
Seek Redemption with Holiday Gift Cards
66% of consumers will be handing out these presents
History and Legend of the Poinsettia
Poinsettia's are the plant of choice for 83% of consumers
Flowers Sales Boost United Online Earnings
Acquiring FTD helped United Online`s shares rise almost 9%
1-800-Flowers Sales Dropping
In the first quarter by a 4.7% decrease in floral sales
2 for 1 On Every Purchase
Customers pay for one item by trying or buying something else
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cbc`s Dragons Den back Canadian flower shop proposal
The Pitch
Cesario Ginjo is a man on a mission. One that would see What a Bloom, his online flower store, become the go-to florist for Canadians across the country. With eight years in the flower business, a warehouse in Toronto, a traditional walk-in flower shop downtown and several online companies, including FlowersCanada.com, he already has a national Internet presence. But he wants to back up his virtual empire with real world stores coast to coast.
"The idea is to roll out locations across Canada based on the strength of new business contracts we already have [that came to fruition after the show taped]," Mr. Ginjo says. "This allows us to bypass a year or two of losses while we build up a local business." He says he can hit the ground running, open a new location and do $200,000 to $300,000 a year in business.
"The contracts we were speculating on when I was on Dragons' Den are now in place. We have already launched in Ottawa, Toronto and Winnipeg," Mr. Ginjo says. "So there is no reason for me not to have a retail presence in those cities. Otherwise I'm giving the orders to another florist and taking a percentage when I can keep the entire amount. With that base of sales you have the volume and the buying power to compete with the entire market. It would be like a chain store coming into the market. If you start plopping stores in seven to eight major locations in Canada, which is my idea. Now you can say, "We are a national brand."
That will allow him to take on the likes of U.S.-based floral retail giant FTD. He is a member of FTD and fills orders for FTD.com, but he wants more. "Once I've filled a lot of orders and they see what I'm doing ... once I become a thorn in their side -- and mark my words, this is going to happen -- they will buy me out. That's my exit strategy."
Of course, that dream will only happen if he can get financing. "The banks will lend you the money to open up the stores, but not to cover cash flow for smaller businesses, unless you have 100% security," he says.
 The Deal
Mr. Ginjo asked for $400,000 for 20% of his company. Kevin O'Leary, Jim Treliving and Brett Wilson agreed to $500,000 for a 50% stake. Since the taping of the show, Mr. Ginjo has signed new business contracts and on the basis of those contracts has upped the ante, negotiating with the Dragons for $900,000 for a 40% to 50% stake.
The challenges
Kevin O'Leary would like to see all the assets consolidated under one corporation. "When you have multiple entities and you are trying to make an investment, that means you have to pro-rate your investment across different structures -- very complicated," he says. "We want to look at one share, one vote, one structure. I'm a simple guy, and I like to understand what I'm buying. But this isn't the biggest issue."
Mr. O'Leary points to Mr. Ginjo's goal to become the Canadian equivalent of FTD. "He is already one of the distributors for FTD. Are you biting the hand that feeds you? In effect, you are saying, "I want to support you my competitor, but I also want to compete against you." That's not unusual in the online world but it is a concern in the valuation of the business. It's a delicate balance. It's one of the questions we have to get our heads around."
Mr. O'Leary and Mr. Treliving are not convinced Mr. Ginjo needs to move into bricks and mortar. "Why would you need to set up a flower shop?" Mr. Treliving asks. "There's one on every corner, plus grocery stores sell flowers, too. We can't be in a situation where we are a startup thinking it might work. We should be taking this to another level. It's eight years old and hasn't taken off. Why? Is it a great idea and it's a small business or is it a great idea and a big business? That's what the due diligence will tell us."
Perhaps their biggest question is, with all of his other companies and ideas, will Mr. Ginjo be able to stay focused on What a Bloom?
The expert's opinion
Chris Van Staveren, partner, transaction service, KPMG Enterprise Services, says there are several questions here: "How do you know when to invest in a physical presence versus taking a commission through another distributor? There is a volume play and an infrastructure question as to when it makes more sense to go at it alone. Ideally, the volume is already there to support the profitability rise by going direct versus using a third party. How recession-proof is this product? What are the spending patterns in this type of business in a down economy? The events don't change: Mothers Day, Valentine's Day, so consumers will at least contemplate those purchases. The question is, do those purchases happen at a lower price point?"
Source: Financial Post
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seek redemption with holiday gift cards
Greetings, card! Say hello to a season of gift cards which the little plastic presents not only continue their reign as the No. 1 gift purchase before the holidays but also waste no time in getting redeemed.
Almost two-thirds (66 percent) of consumers surveyed in Deloitte’s 23rd Annual Holiday Survey of retail spending and trends plan to buy gift cards, just slightly below last year’s 69 percent of consumers.
Consumers are responding to the shaky economy with “laser-like focus,” a shopping philosophy that draws them to high-value, low-risk cards,” says Stacy Janiak, Deloitte’s Retail Leader. Gift cards fit the bill, and in a shift from previous years, will actually be used more often to pay the bill.
Nearly half of consumers (47 percent) have at least one unused gift card, and about a quarter (24 percent) have had at least one card expire before they could use it. This year’s pinch on discretionary spending may change that.
“With the growing number of unused gift cards, and given the current economic environment, we could see a higher gift card redemption rate in January as gift card recipients make sure they use their cards while they can,” Janiak says. And retailers need to make sure they turn those recipients into customers by implementing more creative and aggressive gift card redemption programs, she says.
Try This:
• Start by making the conditions and expiration dates clear to the purchaser and obvious to the recipient.
• Consider making cards completely non-perishable, as 25 of the top retailers have done by removing date limitations
• Offer discounts for additional purchases that exceed the gift card amount and coupons for additional buys made later in the year.
• Cater to gift card recipients online by retrofitting your site to welcome them exclusively, writes interactive marketing analyst Brendan Regan. Create a microsite and/or 1-800 number that’s 100 percent dedicated to gift card redemption, with the option of seeing only those products that fit the price range of the card’s value and with a checkout customized for using gift cards.
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history and legend of the poinsettia
`Tis the season to get to the point — well, at least when it comes to promoting poinsettias. Poinsettias account for up to 83 percent of flowering plant purchases at Christmas and Hanukkah. Keep that chunk of the purchasing pie large (and make your slice even heftier) by reminding customers that university research proves poinsettias are as safe as they are beautiful. The Poinsettia Update was created especially for your customers and includes year-round care-and-handling tips and scientific evidence to help debunk the toxicity myth
 Joel Robert Poinsett, who was an amateur botanist and the first ambassador to Mexico, first introduced poinsettias to the United States in 1825. He introduced the plant to the United States when he brought some cuttings to his plantation in Greenwood, South Carolina. December 12 is National Poinsettia Day, an official day set aside to enjoy this symbol of holiday cheer. It was established upon the death of Mr. Poinsett to honor him and the plant he made famous. He died in 1851. Poinsettias are native to Mexico, where they grow wild. The enchanting legend of the poinsettia dates back several centuries, to a Christmas Eve in Mexico when a little girl named Pepita had no gift to present to the Christ child. Her cousin Pedro urged her to give a humble gift. So, on her way to church she gathered some weeds she found along the road. As she approached the altar, a miracle happened: The weeds blossomed into brilliant flowers. Then they were called Flores de Noche Buena – Flowers of the Holy Night. Now they are called poinsettias.
Poinsettia Care Tips
Poinsettias are one of the longest-lasting blooming plants available to consumers. To choose the perfect poinsettia and keep it blooming all year long, follow the care tips listed below:
Choosing the perfect poinsettia:
- Pick a plant with small, tightly clustered buds in the center.
- Look for crisp, bright, undamaged foliage.
- Avoid plants displayed in drafty or crowded areas.
To keep the poinsettia blooming:
- When surface soil is dry to the touch, water thoroughly. Discard excess water in the saucer.
- To prolong color, keep a temperature range of 60 degrees for night and 72 degrees for day. High humidity is preferable.
- Place plant away from hot or cold drafts, and protect from cold winds.
To rebloom for the next season:
- During winter, continue to follow holiday upkeep tips.
- March 1 (St. Patrick’s Day): When bracts fade, cut stems back to eight inches above soil line.
- Continue to water regularly.
- Lightly fertilize with a balanced all-purpose plant food every three to four weeks.
- When temperatures are warm, place plant outdoors; first in indirect, then direct sunlight. Avoid temperatures below 50 degrees throughout the summer.
- July 4 (Independence Day): Cut back new growth stems. Repot if needed.
- Early September (Labor Day): Move plant inside. Provide six or more hours of direct light.
- October 1 through December: Confine plant to complete darkness for 14 hours, giving it 10 hours of natural light daily. This will set the buds and cause bracts to color.
Poinsettia Toxicity Myth
The poinsettia is the most widely tested consumer plant on the market today, proving the myth about the popular holiday plant to be false:
- Scientific research from The Ohio State University has proved the poinsettia to be non-toxic to both humans and pets. All parts of the plant were tested, including the leaves and sap.
- According to POISINDEX, the national information center for poison control centers, a child would have to ingest 500-600 leaves in order to exceed the experimental doses that found no toxicity.
- A study from the Children’s Hospital in Pittsburgh and Carnegie Mellon University found that out of 22,793 reported poinsettia exposures there was essentially no toxicity significance of any kind. The study used national data collected by the American Association of Poison Control Centers.
- As with any non-food product, however, the poinsettia is not meant to be eaten and can cause varying degrees of discomfort; therefore, the plant should be kept out of the reach of young children and curious pets.
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flower sales boost united online earnings, stock takes off
The stock market tanked again today, but for one SoCal Internet company everything came up roses. United Online's shares rose nearly 9%, a day after it said third-quarter sales bloomed thanks in large part to its recently acquired FTD business unit.
United Online has been best known for its dial-up Internet access services, including NetZero and Juno, but that's dying out as the world moves to broadband. So the Woodland Hills company has been diversifying by snapping up businesses such as Classmates.com, a social networking service, and FTD, the seller of flower products.
The company said Wednesday in its earnings report that net income rose 16% to $16.2 million, or 21 cents a share, and revenue rose 33% to $169.2 million. The FTD acquisition, completed in August, contributed $48.3 million in sales. Without it, United Online's revenue would have fallen 5% year-over-year.
It also got help from Classmates.com, which helps people connect with old school chums. The service added 278,000 paying subscribers. Revenue for Classmates Media, which also includes the My Points loyalty online marketing service, rose 18% to $58.7 million. That almost offset a 19% drop in revenue from the Internet access business. To give an indication of how progress is viewed in the dial-up business these days, during a conference call with analysts Chief Executive Mark Goldston bragged that the company lost only 91,000 Internet access subscribers, which he said was the "first time in a long, long time that we’ve been below 100,000 in net subscriber declines."
"Good results at Classmates Media and prospects for growth/margin improvements at FTD are helping the company move further away from its access roots and into growth opportunities," Youssef H. Squali, an analyst with Jefferies & Co., wrote in a report today. He said he was optimistic about the company's prospects for driving sales by promoting FTD through other United Online businesses, but he noted that the company's $423 million in debt has made it a riskier investment.
United Online's shares gained 60 cents, nearly 9%, to $7.40 today. Still, the stock is down more than 57% in the past year. | |
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1-800-Flowers floral sales dropping and more headwind predicted
1-800-Flowers.com reported a 4.7 percent drop in floral sales in the first quarter of its fiscal 2009 and analysts predict a headwind into the second quarter, where a slow holiday season challenges all retail segments.
1-800-Flowers.com on Oct. 23 reported revenues in its floral category of $83.5 million for the quarter ending Sept. 28, compared to $87.6 million in the same period last year. The Carle Place, N.Y.-based company, which starts its fiscal year in late June, noted that it usually sees a drop in first-quarter sales because of the lack of gift-heavy holidays in the summer.
The floral category's gross margin slipped to 38 percent, compared to 38.9 percent the same time last year. 1-800-Flowers.com representatives attribute that to promotional pricing and higher fuel surcharges on direct-ship products from the company's third-party shipping vendors.
"These latest data suggest that the downward trend in floral sales, which industry watchers began cautioning about earlier this year, appears to be accelerating," says Eugene Bukovecky, an investment researcher for Investopedia.com. "The sales slump began last Christmas and continued through Valentine's and Mother's Day."
1-800-Flowers.com reported an 8.4 percent growth in revenue, to about $158 million, attributing much of that to the acquisition of DesignPac Gifts, a designer and assembler of gourmet gift baskets and sets, and growth in its BloomNet Wire Service business. BloomNet revenues increased 58.9 percent to $15.7 million, compared with $9.9 million in the same period a year ago.
"We are keenly aware of the uncertainty facing consumers and businesses alike in today's economic landscape," Jim McCann, CEO of 1-800-Flowers.com, said in a release. "We continue to be highly focused on achieving our bottom-line growth goals by leveraging our business platform to reduce our operating expense ratio."
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2 for 1 with every transaction
Atimi to incorporate TrialPay payment system into clients' products
Canada-based contract software developer Atimi has signed an agreement with alternative payment method TrialPay.
Under the terms of the agreement, Atimi is to prequalify complementary services for its clients' software. In addition, Atimi is also to provide alternative online payment options via TrialPay.
TrialPay is an alternative payment platform that enables customers to pay for one item by trying or buying something else. The system is used by merchants to provide users with free trials in exchange for participating in deals from their advertising partners. The platform allows users to interact with one of 2,000 blue-chip advertisers and as a result, they can send flowers from FTD, sign up for Blockbuster or buy clothes from Gap. Shoppers are to receive their original product for free by completing one offer from blue-chip advertisers.
TrialPay works with over 6,000 premium merchants, including McAfee, The Wall Street Journal, Skype, Match.com and other industry leaders in software, games, publishing, online services and retail. TrialPay currently has over 12 million registered users.
Atimi Software develops Macintosh applications, porting applications from Windows to the Macintosh, and mobile applications for smartphones.
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