The Bouqs unwraps a $6 million Series A for its high-growth, farm-direct flower etailer
Everyone likes receiving flowers. Buying and having them delivered, however, is rarely a pleasant experience.
The industry hasn’t changed much in the last two decades since the arrival of 1-800-Flowers, ProFlowers, and other Web 1.0 entrants who simply added a Web or phone-based interface to the inefficient brick-and-mortar model. This did little to solve the price, transparency, and quality problems that have plagued the industry for as long as anyone can remember. Yet at $60 billion per year in global sales ($13 billion in the US alone) it’s a sizeable opportunity begging for some Silicon Valley style innovation.
Enter The Bouqs, a Venice, California-based cut-to-order online florist that sources product directly from farms around the world and delivers finished arrangements to consumers doors at a fraction of the typical retail cost. On the heels of 18 months of compelling growth, the company today announced $6 million in Series A funding led by Azure Capital Partners, with participation from KEC Ventures and existing investors, Quest Venture Partners, SG-VC, Siemer Ventures, and various angels.
“Interest from our customers has exceeded our wildest expectations. We are growing revenue at 8-10X year-over-year largely based on organic channels,” The Bouqs co-founder and CEO John Tabis tells me in an interview.
The Bouqs is unique in the ecommerce space in that it operates a lot like a marketplace, sourcing its product from third party suppliers and holding no inventory, but manages to achieve direct-to-consumer caliber margins and brand affinity. By cutting out the multiple layers of middlemen – including, at minimum, distributors and retailers – it’s able to not only reduce its own costs, but pass along those savings to both its suppliers and its customers.
“We have all of the good attributes of ecommerce – brand stickiness, ability to drive demand, and great customer service – and also some of the best things of marketplaces – scalability, efficiency, and the ability to grow big, quickly,” Tabis says. Given this blend, the startup CEO looks to a number of other successful companies for inspiration, he says, including Zulily’s on-demand supply chain, Blue Nile’s demand-driven direct to consumer model, and Warby Parker’s consumer-centric branding.
With no fixed costs and low marketing spend, not to mention rapid growth, it’s not surprising that it was the subject of competitive bidding around this latest funding round.
“This is a really capital efficient business,” Tabis says. “We still have more than half of our [$1.1 million] seed investment in the bank and have had several profitable months.” Azure partner Paul Ferris adds, “We saw strong early proof of the health of this business with 48 percent of customers becoming repeat buyers and customers that sign up for our concierge service buying an average of nine times per year. Customer lifetime value is going up by cohort as well.”
Users can purchase from the company via its website and iOS and Android mobile apps. A standard “Bouq” (bouquet) is available for a flat fee of $40, delivered, while arrangements with double and triple the stems tops out at just $70. The company also features 100 specialty designs created by florist to the stars Eric Bunterbaugh cost just $50. In all cases, these prices are 50 to 100 percent below what a consumer would pay through any other channel. All this while offering the peace of mind that comes from the freshness of a farm-direct product.
The Bouqs sources its flowers from eco-friendly farmers in North and South America – it’s particularly fond of describing flowers grown on the side of a volcano in Ecuador – and has near-term plans to expand this supply side into Europe and other global markets. Deliveries will soon extend beyond the US as well, with an initial expansion into Canada planned for later this year.
“The thing that really made this company stand out were its proprietary supply chain relationships,” Ferris says. Those relationships are possible because Tabis’ co-founder is fifth generation Ecuadorian farmer and MBA, Juan Pablo “JP” Montúfar.
“This wouldn’t be possible without him Tabis says. “This has always been a relationship-based industry, where incumbents have looked to protect their existing businesses. You could not find a better person to start this business than JP.”
The downside of The Bouq’s farm-direct model is that a large percentage of flower purchases are made last minute. Ferris acknowledged as much, saying that the company will have to evolve to better blend its international supply with domestic stock available for the inevitable rush orders. But that’s a problem to solve another day. Today, the challenge is simply about grabbing market share by entering new markets and delivering the necessary supply chain growth in parallel.
As for how to drive growth, Ferris and Tabis both cite the power of positive word of mouth and incentive-powered referral programs to attract new customers.
“We live in a viral world, but it all comes back to the quality of the product,” Ferris says. “Our customers have demonstrated that they’re willing to vouch for us.”
The Bouqs isn’t the only early stage startup tackling the flower space. In fact, it’s not even the only one based in LA’s westside. BloomNation is attacking the problem from the opposite angle, offering a marketplace for local brick-and-mortar florists, rather than building a proprietary supply chain. While that model has its own merits, Ferris describes it as a more “artisanal, Uber for flowers” approach, adding that it can’t possibly deliver the margins and capital efficiency of The Bouq’s on-demand supply chain model.
It’s not terribly surprising to see investors fighting over The Bouqs. For consumers and farmers alike, it truly is a better mousetrap. In an era where ecommerce startups are failing left and right under the burden of the high costs of customer acquisition, product sourcing, and fulfillment, The Bouqs appears to have built a business that has compelling answers for each of these core challenges.
It’s one thing to do it for a few thousand customers, but it will be an entirely different challenge to deliver the same experience at scale. Ferris describes Tabis and Montúfar’s performance thus far as “killer execution by an experienced team.” The company will need a lot more of that if it’s going to disintermediate the numerous far larger incumbents in this valuable category.
[Image via TheBouqs]