By adding new items, 1-800-Flowers is hoping to milk new revenue from loyal shoppers who want gifts but not necessarily flowers. New categories include gourmet foods, gardening, and home d?cor.
Amazon has been the most aggressive, expanding from books into music, video, software, consumer electronics, and toys on its own site. Plus it has invested in Drugstore.com, HomeGrocer, Pets.com, and yesterday in online sporting-goods discounter Gear.com.
1-800-Flowers's new lines come shortly after the company filed for an IPO, and Wall Street seems to like new revenue sources. But the floral site's executives insist that's not a consideration.
"We plan any major redesign during our slowest season, and that's summer," said senior vice president Chris McCann. "That's why we chose July for the launch."
Selling gifts has great potential for e-commerce companies, according to digital commerce analysts--especially for e-tailers that can send holiday gift reminders to registered shoppers.
"The important part is the up-sell," Jupiter Communications declared in a March report that addressed gift registry.
"Inducing consumers to make one gift purchase beyond what they had planned for can be very lucrative in the long run," wrote Jupiter analyst Ken Cassar. He cited data from Maritz Marketing Research that 56 percent of Americans set gift budgets, but that 43 percent of those consumers exceed them.
Jupiter also cites the philosophy of still-unlaunched GiftGenie.com as an example of gift registries and recommendations that e-tailers might emulate. Chief executive Annette Marino believes gift buyers are substantially different from people who buy for themselves.
"All elements of the retail experience, from merchandising to customer service to site structure, can and should be specifically tailored to the gift buyer," Jupiter writes.
GiftGenie.com may be the nightmare 1-800-Flowers is trying to avoid by repositioning itself as a gift site, but it's not experiencing many sleepless nights.
"We don't believe there will be one gifting portal; we think there will be more," McCann said.
In fact, 1-800-Flowers already was selling some items from the new lines from its Web store. This week's redesign of the Web site in part emphasizes what it was already doing, although the garden category is brand new.
Also, 1-800-Flowers's brick-and-mortar and toll-free phone operations already book $70 million in revenue for the categories it's now emphasizing online.
1-800-Flowers has long been a brand-conscious company that felt slightly constrained by its floral past. It realized by the late 1980s that it had the capabilities and infrastructure to build a gift service but was constrained by its name. The company toyed with trying a 1-800-Candy approach in categories such as baskets or gift goodies.
"But we saw that it took an extraordinary amount of time to burn those brands in," McCann said.
As 1-800-Flowers emerged as a Net brand--it's been selling online via America Online and the Internet since 1992--the company recognized a chance to extend beyond its floral roots. That is the same strategy that has carried Amazon into many categories, eToys into books, and Barnesandnoble.com into music.
"We've been waiting for the Web to happen," said McCann, noting that its customers were open to the brand extensions, too. This January, for example, the company found that more than 80 percent of its sales of nonfloral items were to people who had earlier purchased flowers. Buyers said they would return more often if the product line were broader.