By Jin Wu
According to IBIS World, by January 2015, there are more than 35,000 offline florists and more than 3,000 online flower shops in U.S. In spite of this strong competition, with only a few thousand dollars invested to start the business, Chicago-based Flowers for Dreams LLC was profitable even in its first year.
The 2-year-old Chicago’s online flower store Flowers for Dreams made more than one million dollars in revenue since it was founded. In 2014, it gained more than $100,000 in profit and a quarter of it, $33,608, was donated to 12 charities. It doubled the number in 2013. Its past Valentine’s Day sales was six times of last year’s Valentine’s Day sales, according to Steven Dyme, co-founder of the business.
Dyme said their company’s secret sauce is minimizing spoilage close to zero: “Average local florists, according to the major trade association, spoil one third of their inventory on an annual basis. So about 33 percent of their inventory dies before sale. That’s a big loss to business.”
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To eliminate inventory spoilage, Flowers for Dreams offers only six product choices on its website based on different themes. Consumers can decide which theme they would like to send, however, specific flowers vary from day to day.
“All of our inventory is bought just in time. It’s kind of like a made-to-order service,” said Dyme. “We don’t guarantee recipes. So when you order a product from us, you are not ordering some specific recipes such as 10 roses, five lilies. That’s not a case at Flowers for Dreams. You order based on the sentiment of sending flowers, and our designer helps you to create a perfect bouquet.”
With the warehouse on West Hubbard Street, which is near not only Kennicott Brothers Co. where the company gets its flowers, but also Phillip’s Flowers & Gifts and Ajf Wholesale, Dyme and his team have confidence that even a run out happens, the flowers can still be delivered in time. “We are located in the middle of the flower district in Chicago,” he said. “If we ever run out, the wholesale stores are just two blocks away. It’s within walking distance to pick up more flowers.”
Dyme likes to use his restaurant analogy to illustrate the uniqueness of Flower for Dreams. “When you go to a restaurant, you open the menu and all you see are chef’s recommendations. That’s exactly what our menu is. Instead of holding all kinds of flowers in case they get ordered, we buy most accessible ones with best prices every morning.”
Joseph Dickstein, co-founder of Flowers for Dreams, said the idea of offering limited product options resulted from a previous market research conducted by him and Dyme.
Whether the choice limitation becomes a drawback, Casey Goldberg, a regular customer of Flowers for Dreams for two years, said it actually helps him to make decisions. “I don’t know much about flowers,” he said. “If I was offered too many options, I would be overwhelmed. I think Flowers for Dreams gives you the perfect amount of choices and each one has a unique feel to it.”
The charity program is where the “dreams” extend. Every year, Dyme and his team pick 12 causes they believe in and support them, one per month, with a quarter of its profits. In just two years, Flowers for Dreams has contributed more than $63,000 to local charities.
“That’s a great cause,” said Goldberg, “That’s how it separates from other companies.”
According to Dyme, the flower delivery business has grown by 337 percent since May of 2014, when the company re-launched its newly-designed website with a group of extra flower choices.
“In 2013, flower delivery still represented less than a quarter of our total business,” Dyme said. “In 2014, it represents about 55 percent; and in 2015, we expect it to be possibly as much as 70 percent or three quarters of our business.”
Currently, free delivery is limited to Chicago; for suburbs in Illinois, a $10 delivery fee is charged. But Dyme expects to expand coverage of free delivery when the number of orders is big enough to centralize delivery routes.
Dyme said Flowers for Dreams combines advantages of both local florists and e-commerce websites to make it competitive: “The big e-commerce florists have to share their margin with local florists as their commissions. The local florists have their own problems too. They cannot deliver flowers outside their neighborhood and provide consumers an easy process with consistency. We are in the middle, to integrate both convenience and quality.”
Two delivery shifts are scheduled every day. Flowers for Dreams can take orders up to 2 p.m. and have them delivered by 4 p.m.
“From 2012 to the beginning of 2014, we were entirely bootstrapping but we were profitable because we didn’t pay ourselves much,” said Dyme. “Until last year, we decided to raise some money if we want to grow the way we thought we could and then we could bring more money to the bottom line.”
In 2014, Flowers for Dreams raised hundreds of thousands dollars from a small groups of investors who are also its customers. Right now, Dyme and his team are considering another round of fundraising in order to expand.
Currently, the company has five fulltime employees and three consistent part-time employees, composing what Dyme called “the core team.”
“We hired our first employee in April or May of 2014,” Dyme said. “So it hasn’t even been a full year of having a full-time team. We did grow a lot in the past nine months.”
Now Flowers For Dreams has a 100-day hiring plan, aiming to double its core team, from eight to 14, within the next three months.
Although the business exploded in the last two years, Dickstein said they would still stay focused and expand their business in Chicago. He said their next plan it to actively promote a weekly subscription service.