Nationwide phone setup peddles hearts and FLOWERS
Florists are trying to plant some new ideas into buyers' heads this Valentine's Day. Here's one: a nationwide telephone floral service, open 24 hours a day, seven days a week, with the telephone number 1-800-FLOWERS. William E. Alexander, a venture capitalist running an auto insurance business, thought it had real potential. But he was not the first to have either the number or the idea.Skip to next paragraph
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When Mr. Alexander called 1-800-FLOWERS (356-9377), Curt Jahn of C&R Trucking in Madison, Wis., answered. Mr. Jahn didn't want to give up his number. It took 2 1/2 years to persuade him to do so. Now Mr. Jahn is a partner of the new company, 800-Flowers Inc., and still operating C&R Trucking.
800-Flowers Inc. is only one of three ''acronym numbers'' for flowers that have come from ''the growing consumer shift toward convenience,'' says Robert Zwerneman, director of marketing for a second such service, Florafax. The third, Felly's Flowers Inc., is now available only on the West Coast.
People sending flowers for Valentine's Day needn't use the phone book or call during business hours. The switchboards at 800-Flowers Inc. are open around the clock. So are those at Felly's Flowers Inc., reached by dialing 1-800-FLORIST ( 356-7478). At Florafax Inc.'s toll-free number, 1-800-FOR-LOVE (367-5683), operators take orders between 7 a.m. and midnight.
The good news is that convenience does not necessarily cost more than other wire services, which operate only when flower shops are open, say between 9 a.m and 5 p.m. (Or, as one florist dryly observed, ''between 10 and 3, except Wednesdays, possibly Thursdays, Saturday afternoons, and Sundays.'')
The reason is that ''acronym'' companies eliminate a step in the flower-sending process. In traditional wire service systems, such as Florists' Transworld Delivery Association (FTD), a person places an order with his or her local florist, who then enters the order into the FTD system (by phone or computer). This ''originating florist'' gets 20 percent of the sale. FTD gets 6 percent, and the ''delivering florist'' gets 74 percent.
But with 800-Flowers Inc., Felly's Flowers, and Florafax, the person sending flowers calls the network directly. For example, 800-Flowers Inc. takes 20 percent of the sale and the delivering florist gets 80 percent - 6 percent more than he would through the FTD system.
FTD isn't concerned about this new competition, says William Maas, its executive vice-president.''Mail order . . . is too risky with flowers. They aren't prepackaged items, like chocolate. With FTD, you know what you're sending.'' FTD's 20,000 member florists carry a book from which the sender can choose arrangements.
Al Felly's system, however, is plugged into the two largest networks - FTD and Teleflora - which together have more than half of the 45,000 florists as members. The Florafax FOR-LOVE system has 15,000 member florists. Mr. Alexander's organization has 500 members, and plans to sign up another 1,000 in the next two weeks.
Alexander says exclusive membership is his company's main selling point. After hiring a consultant to find the most ''creative'' florist in each city, he offered to channel all his business for that city to the selected florist. The florist gets additional sales, he reasons, and 800-Flowers Inc. has a rein on quality.
Although the acronym companies are only in the testing stage, they have met with ''very encouraging'' results. In a two-week, $200,000 advertising blitz that started Feb. 1, 800-Flowers Inc. is airing every morning on ''The CBS Morning News'' and ''The Today Show,'' as well as the Friday night ''David Letterman Show.'' On the initial day of advertising, Mr. Alexander recalls, ''The first commercial aired at 9:45 a.m., the second at 9:50, and by 9:55 I couldn't get through to the operators. I thought, 'We've got a tiger by the tail.' ''
Mr. Felly and Mr. Alexander expect to reap big profits. ''I think we can increase the intercity wire market considerably on a national basis - eventually , perhaps, 30 percent,'' Mr. Felly says. That would balloon revenues for wire services to more than $950 million from today's $722 million. Within the next 18 months, he hopes to seize 1 percent, or $7 million, of the current market. His present sales are estimated at $2.5 million.
Mr. Alexander has somewhat grander designs: at least $400 million. ''We can attack 100 percent of the floral market,'' he asserts, and not just the intercity wire service business, which is only about 13 percent of total floral revenues. ''If people remember our number, we can put not just San Francisco in touch with Dallas, but Dallas in touch with Dallas.'' According to the Society of American Florists, the total spent on flowers last year was $5.6 billion. Within just two years, Alexander projects, his company will have captured 10 percent, or $560 million.
Florafax's Mr. Zwerneman doubts the new companies will be able to convert enough people to ordering over the telephone from actually visiting the florist. For example, it costs about $7.95 to use Florafax's toll-free number, including tolls, wages, etc. ''Now if I'm going to buy my wife some flowers, I'm going to walk down the street to my local florist rather than spend an extra $7.95.''
And ''FTD isn't going to let anyone take 10 percentage points away from it,'' he continues. The industry giant has 52 percent of all wire service revenues.
Mr. Alexander counters: ''We don't think we'll do anything to FTD. We'll just expand the market.''
Alexander may be more concerned about his competitors come summer. In the early 1970s, Al Felly had tried to obtain the 800-FLOWERS number. Failing to get the number, he got the copyright on the name ''Dial 1-800-Flowers'' in 1972. Though the phone company gave him the 1-800-FLORIST number last spring, he has not forgotten his first choice, or his trademark. His suit against 800-Flowers Inc. goes to the Wisconsin federal court in July.