What started out as a single flower shop on the Upper East Side of Manhattan 40 years ago developed into 1-800-FLOWERS.COM, Inc., a pioneer of same-day delivery of perishables — long before UberEats or any of the food delivery apps you use.
By continuously embracing new technology, from the World Wide Web in the 90s to mobile technology and Artificial Intelligence today, the company has been pushing the floral industry to innovate. On this episode of Mastering Innovation on SiriusXM Channel 132, Business Radio Powered by The Wharton School, we spoke with Chris McCann, President and Chief Executive Officer, 1-800-FLOWERS.COM, Inc. McCann described how his company has been able to manage the complexity of the same-day delivery business even in peak days like Valentine’s Day and Mother’s Day, reinventing the customer experience multiple times along the way.
An excerpt of the interview is transcribed below. Listen to more episodes here.
Harbir Singh: Chris, I think what I find really fascinating about your history and your success is that you’ve been doing same-day delivery for a long time, and you’ve kind of got it all worked out. Now, lots of things are being delivered to homes, right? Uber Eats is delivering food, and the delivery of perishables has risen dramatically. What are the pitfalls that people might need to overcome?
Chris McCann: Sure. So, as you mentioned, we’ve been in this business of same-day delivery capabilities, next-day delivery capabilities, and perishable products for a long time. What people underestimate is the complexity and the cost of same-day and last-mile delivery. We’ve seen this as a lot of companies have gotten into the business, and a lot have failed. What I see is that companies that set up to do same-day deliveries as an add-on feature of their existing core product line, like Uber Eats, might be able to do it. However, it will be challenging for the companies that set up just to be a distribution company, because you really have to have a large amount of demand to really make it work.
We work very closely with the folks at FedEx who are a fantastic logistical operation. And they know that last-mile delivery is the most costly and most complex, and often companies underestimate that. We’ve been doing it for a long time, and we have the ability and the fortunate pleasure to work with these local florists that are established around the country. They’ve been in the delivery business already, and we’re able to add into leveraging their creative expertise, so we’ve been very good at harnessing the capabilities of a network of businesses.
Singh: And of course, you’ve had many years to refine the execution of the operations related to that. I remember reading somewhere that in grocery delivery, for example, people lose money because of the cost of delivery. But then at the same time, it’s a convenience, and it’s a way to gain customers. So, part of what I heard you say is that, in your case, over time that has been built in, and actually the margin isn’t the flowers, and the delivery is part of the cost, right? So, there has been an equilibration already which others need to deal with now.
“People underestimate the complexity and the cost of same-day and last-mile delivery.” — Chris McCann
McCann: That’s a good comment, Harbir. I think, again, because we’ve been doing it for such a long time, we have good data behind us and we’re able to forecast what we should expect at our peak times by SKU level, by delivery date, and by zip code. We’re able to share that information with our florist partners and help them on the supply chain side of things so they can prepare for it. So, there’s a lot of moving pieces, but over time, I think as a company, we just get better and better at it.
Singh: Tell me more about broadening the portfolio to include Harry & David, and then Shari’s Berries. I can of course see the logic of those, but you need to onboard them, you need to build consistency, and you need to see where they need to be left alone. Tell us a little bit about that.
McCann: Yeah. That’s been a really strong part of our growth. It goes back to, as I mentioned during our first part of the conversation, how we make sure we stay as close to our customers as possible. We not only tried to understand how their behaviors are being changed by technology, but also, as we grew as a floral company, we asked our customers: “Well, what other products are you utilizing to express, connect, and celebrate with the important people in your lives?” And invariably, [the answer to that question] was different forms of gourmet food gifting. So, by following our customers, we were led down the path into gourmet food category, and today, 52% of our revenue is actually coming from the gourmet food brands in our collection. And as we’ve followed our customers, we’ve either birthed brands like 1-800-Baskets.com or acquired brands like Cheryl’s Cookies and Harry & David. Another one that we developed and launched ourselves is Fruit Bouquets.
The largest and latest one, which is a great example to your question, is Shari’s Berries. Shari’s Berries was a brand that was part of a collection of other companies like FTD and ProFlowers that went bankrupt, and this summer, we bought the business out of bankruptcy. Because of the platform for growth that we’ve built, we were able to go live with that business hours after their closing, on our full platform — on our integrated commerce stack, our customer database, our order management system, and our distribution platform. So, within hours of the close, we had that business running on top of our existing platform. I think it was one of the most impressive things I’ve seen from our team ever, because originally, our plan was that we might have to go dark for about six weeks, but we were able to have it up and live within about six hours.
About Our Guest
Chris McCann, President and Chief Executive Officer, 1-800-FLOWERS.COM, Inc., is responsible for the company’s operations across all of its brands and businesses. He oversees the company’s strategic, operational and organizational processes, including the development, implementation and execution of annual and longer-term strategic, operating and budget plans.
Chris joined the organization in 1984, helping lead the disruption of the flower industry with the company’s innovative use of 800# watts-line technology and subsequently helping transform the company with the adoption of online technology as a pioneer in e-commerce. He served as President of 1-800-FLOWERS.COM, Inc. for several years and was named CEO in 2016. Chris has played a pivotal role in building 1-800-FLOWERS.COM, Inc.’s reputation as one of the leading e-commerce and multi-channel retailers in the country. He is well-known for embracing technology innovations that enhance customer engagement, particularly in the areas of social, mobile and conversational commerce. Chris believes strongly in the company’s mantra that its “best product is the customer experience.” As a result of his leadership in driving a culture of innovation at 1-800-FLOWERS.COM, Inc., Chris was named to the National Retail Federation’s “The List of People Shaping Retail’s Future 2018.” Additionally, the company was named one of 2017’s most innovative e-retailers on the Internet Retailer ‘Hot 100’ list.