It’s holiday season, and florists around the world are gearing up to meet the surge in demand. But they find themselves operating in increasingly crowded markets like Romania’s, where the first and largest online florist, the rather oddly named FlorideLux, is at a crossroads as it prepares to raise funds to expand and fight off competition.
FlorideLux (the name is a compression of “flori de lux”, which translates as “deluxe flowers”) has already taken the major step of opening its first “bricks and mortar” florists. The interview with its founder, the entrepreneur Marius Dosinescu, takes place at the Bucharest Titulescu shop, immediately to the west of the Romanian capital’s main business district. The weather has just turned cold and Dosinescu keeps his leather jacket on as he sits down, surrounded by autumn blooms.
Since its launch in 2003, FlorideLux has come a long way for a business that started out as an exercise in website building. Dosinescu, the articulate and humorous founder of a Bucharest-based web design agency, decided to start offering e-commerce sites to his clients, but needed a test run first.
At that time, online retail barely existed in Romania. “We wanted to go online and sell people things they are buying daily. We looked around on the street and saw lot of flower shops,” Dosinescu explains.
The site went live in 2004, but despite investments in advertising there were no sales at all for the first four days. He talked to industry experts without success. “Then I met this gypsy at the flower market and he told me: the reason you are not selling any flowers is because your prices are too low.” He took this advice, raising the prices that had been set below those charged by corner kiosks to better reflect the costs of providing the service. Immediately, sales took off.
Today, FlorideLux is Romania’s largest online florist with expected revenues of €1mn this year. It has expanded from selling bouquets to offering Christmas trees (again on the advice of Dosinescu’s gypsy acquaintance), funeral wreaths and gifts.
In the early years, Dosinescu ran the growing online florist business in parallel with his web design agency, but when he took an investment from Marius Ghenea in 2008, the business angel investor said it was essential to focus on a single business if he was going to grow it successfully.
FlorideLux started out working with flower shops, which delivered 80% of its orders while the company’s own fleet saw to the remaining 20%. Since 2013, FlorideLux has had its own production facilities and total office and storage space of around 700 square metres in Bucharest, Brasov and Cluj – making it the largest of any Romanian-based florist. It employs over 20 people and is in the process of recruiting another 16. “We grew very quickly, and started going to international fairs where we saw a lot of beautiful things that the flower shops were not able to produce. The only way we could evolve was by setting up our own atelier,” explains Dosinescu.
This allowed the company to stop working with local florists. It now produces its own arrangements and works with Romania’s largest courier company, Fan Courier, to deliver them to more than 12,000 locations across the country.
In the real world
The other big change was to take the business offline, though this has been a somewhat rocky process. In 2013 the first shop opened in Brasov under a franchise agreement, and in an interview with Business Review magazine Dosinescu announced plans to launch a total of 50 by the end of 2015. So far, however, only six franchises have been opened, of which two – in Arad and Pitesti – have already closed.
“We closed a few shops because while our brand is very powerful in big cities, it has problems in smaller cities where people associate us with very expensive services and products. They are scared even to enter the shops because they think they will be too expensive,” Dosinescu says. While he believes that in the longer-term shops in other cities will follow the Bucharest shop to break-even, this is a long-term perspective and most franchisees want returns fast.
Despite this, FlorideLux has not given up on having an offline business. “The bricks and mortar strategy that online businesses have adopted in the US is also happening here,” he says. This is particularly important, he believes, for a company selling something like flowers, where photos or even videos don’t fully show customers what is on offer. “Even with an online business, it’s important to give the customer the chance to touch the flowers, to discuss what they want with somebody, to pay in cash. The evolution of the internet is amazing, but I still believe the human touch is very important.”
In the longer term, he says, “I have a vision that the difference between online and offline with disappear.” However, in terms of a concrete strategy, Dosinescu is still considering the best way forward, telling bne IntelliNews that, “at this moment, we are at a crossroads in our development.”
Since FlorideLux’s launch 11 years ago, the market has become ever more competitive. When the company was launched, the entire market – including kiosks, shops and online retailers – was worth around €100m; four years later it had doubled in size. Then, with the start of the crisis, Romanians made cutbacks and stopped buying luxuries including flowers. As a result, the total market size has remained at around €200m since 2008, while the number of companies increased sharply.
There has been some change in the market dynamic as more people have gone online, and some kiosks have closed. However, in Bucharest alone there are more than 800 flower kiosks, which have relatively basic offerings and generally operate on an informal basis, but are still popular because of their convenience.
Although FlorideLux’s competitors are only local at present, Dosinescu reports that big international online florists are eying the market. “We are preparing the market for companies that want to enter Romania and CEE.”
Beyond franchises and Romania
For the moment, the company is consolidating its position on the market and investing into its business processes, while planning its future expansion strategy.
After the failure of its franchising scheme, Dosinescu wants FlorideLux to open its own flower shops. “This is something that changed from the previous strategy because we realised the small enterprises don’t have the time or the patience to wait until the business becomes profitable. They need an immediate return on their investment,” Dosinescu explains. “We have a very good business online and we can wait for the shops to become profitable. We will transform the flower shops we have, and intend to open more on a new concept – a combination of flower shop, online flower shop and gift shop.”
Meanwhile, FlorideLux is also looking at the prospect of other markets the company could enter, with plans to expand into Bulgaria, Hungary, Moldova and Poland.
To fund its ambitious expansion plans, Dosinescu says the company needs to raise funding. “We already have some investors behind us, but our development plans require cash,” he says. As such, there are plans to list FlorideLux on the AERO market of the Bucharest Stock Exchange, while also looking for equity investors.