US INDUSTRY (SPECIALIZED) REPORT OD5069 Online Flower Shops
Still budding: The prevalence of online services is expected to continue, benefiting online flower shops Brigette Thomas | November 2020
IBISWorld.com +1-800-330-3772 [email protected] Online Flower Shops OD5069 November 2020 Contents
About This Industry...... 5 Competitive Landscape...... 26
Industry Definition...... 5 Market Share Concentration...... 26 Major Players...... 5 Key Success Factors...... 26 Main Activities...... 5 Cost Structure Benchmarks...... 26 Supply Chain...... 6 Basis of Competition...... 30 Similar Industries...... 6 Barriers to Entry...... 31 Related International Industries...... 6 Industry Globalization...... 32
Industry at a Glance...... 7 Major Companies...... 33
Executive Summary...... 9 Major Players...... 33 Other Players...... 35 Industry Performance...... 10 Operating Conditions...... 37 Key External Drivers...... 10 Current Performance...... 11 Capital Intensity...... 37 Revenue Volatility...... 39 Industry Outlook...... 15 Regulation & Policy...... 40 Industry Assistance...... 40 Outlook...... 15 Performance Outlook Data...... 17 Key Statistics...... 42 Industry Life Cycle...... 17 Industry Data...... 42 Products and Markets...... 19 Annual Change...... 42 Key Ratios...... 42 Supply Chain...... 19 Products and Services...... 19 Additional Resources...... 43 Demand Determinants...... 21 Major Markets...... 22 Additional Resources...... 43 International Trade...... 23 Industry Jargon...... 43 Business Locations...... 23 Glossary Terms...... 43
2 IBISWorld.com Online Flower Shops OD5069 November 2020 About IBISWorld
IBISWorld specializes in industry research with coverage on thousands of global industries. Our comprehensive data and in-depth analysis help businesses of all types gain quick and actionable insights on industries around the world. Busy professionals can spend less time researching and preparing for meetings, and more time focused on making strategic business decisions that benefit you,your company and your clients. We offer research on industries in the US, Canada, Australia, New Zealand, Germany, the UK, Ireland, China and Mexico, as well as industries that are truly global in nature.
3 IBISWorld.com Online Flower Shops OD5069 November 2020 Covid-19
Coronavirus IBISWorld's analysts constantly monitor the industry impacts of current events in real-time – here is an update of how this industry is likely to be impacted as a result Impact Update of the global COVID-19 pandemic:
• The Online Flower Shops industry is expected to experience a decline in demand as consumer spending decreases, thus causing a decline in consumer discretionary spending, which include industry products. For more detail, please see the Curent Performance chapter.
• The industry is expected to be negatively affected due to social distancing restrictions as large events and weddings are postponed or cancelled. For more detail, please see the Products and Services chapter.
• The industry is expected to experience growth over the five years to 2025 as the economy begins to recover from the COVID-19 (coronavirus) pandemic. For more detail, please see the Industry Outlook chapter.
Note: The content in this report is currently being updated to reflect the trends outlined above.
4 IBISWorld.com Online Flower Shops OD5069 November 2020 About This Industry
Industry Definition This industry retails flowers online, with industry operators receiving orders and payments through respective websites and then using either a network of local florists or growers to fulfill and deliver the order. This industry primarily includes revenue from fresh-cut flowers, floral arrangements and potted plants; internet florist network membership dues; and gift baskets sold online. Revenue from in- person orders is excluded from this report.
Major Players 1-800-Flowers.Com Inc.
FTD Companies Inc.
Main Activities The primary activities of this industry: Retailing cut flowers via online platforms
Retailing floral arrangements via online platforms
Retailing plants via online platforms
Retailing gift ware via online platforms
Managing networks of florists
Delivering fresh flowers to consumers
The major products and services in this industry: Arranged cut flowers
Unarranged cut flowers
Potted plants
Gift baskets and other
Floral network services
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Supply Chain
SIMILAR INDUSTRIES
Plant & Flower Growing in Flower & Nursery Stock Nursery & Garden Stores in Florists in the US the US Wholesaling in the US the US
E-Commerce & Online Auctions in the US
RELATED INTERNATIONAL INDUSTRIES
Flower Retailing in Australia Garden Centres & Pet Shops Florists in the UK Florists in Canada in the UK
6 IBISWorld.com Online Flower Shops OD5069 November 2020 Industry at a Glance
Key Statistics Key External Drivers % = 2015-2020 Annual Growth -6.3% 2.8% $5.2bn Demand from florists Per capita disposable income Revenue 1.3% 8.2% Annual Growth Annual Growth Annual Growth Consumer spending Percentage of business conducted online 2015-2020 2020-2025 2015-2025 Industry Structure 8.5% 2.0% POSITIVE IMPACT
$196.1m Life Cycle Regulation Profit Growth Light
Annual Growth Annual Growth Globalization 2015-2020 2015-2025 Low 7.4% MIXED IMPACT
Revenue Volatility Concentration 3.8% Medium Medium Profit Margin Technology Change Annual Growth Annual Growth Medium 2015-2020 2015-2025 -0.2% NEGATIVE IMPACT
Capital Intensity Industry Assistance 1,037 High Low Businesses Barriers to Entry Competition Low High Annual Growth Annual Growth Annual Growth 2015-2020 2020-2025 2015-2025 Key Trends 2.7% 2.3% The industry has benefited from increases in the number of services conducted online 3,432 The industry is highly competitive Employment The industry has been able to quickly adapt to changing opportunities Annual Growth Annual Growth Annual Growth External competition will stem from Amazon adding flowers 2015-2020 2020-2025 2015-2025 to its product portfolio 3.4% 2.2% Both internal and external competition will remain high for the industry As per capita disposable income increases, demand for $138.2m flowers will likely increase also Wages Over the past five years, an increase in the number of industry operators has increased internal competition Annual Growth Annual Growth Annual Growth 2015-2020 2020-2025 2015-2025 1.6% 2.1%
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Products & Services Segmentation
22.9% 18.3% 36.4% 15.4% 7.0%
Arranged cut flowers Unarranged cut flowers Potted plants Gift baskets and other Floral network services
Online Flower Shops Source: IBISWorld
Major Players % = share of industry revenue SWOT
STRENGTHS Growth Life Cycle Stage Low Imports High Profit vs. Sector Average Low Customer Class Concentration Low Product/Service Concentration
WEAKNESSES Low & Steady Barriers to Entry Low & Steady Level of Assistance High Competition High Capital Requirements
OPPORTUNITIES Very High Revenue Growth (2005-2020) High Revenue Growth (2015-2020) High Revenue Growth (2020-2025) High Performance Drivers Demand from florists
THREATS Low Outlier Growth Consumer spending Percentage of business conducted online
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Executive The Online Flower Shops industry retails flowers online using local Summary florists to fulfill orders.
For the majority of the period, the industry experienced steady revenue, aided by a growing e-commerce market which helped capture significant market share from brick-and-mortar florists as more consumers shop online. Additionally, a healthy economy for the majority of the period supported growth as per capita disposable income and consumer spending increased, boosting demand for industry products. The COVID-19 (coronavirus) pandemic in 2020 is expected to negatively affect the industry, although at a less significant rate than many industries, as consumer spending decreases and the economic environment remains uncertain. Despite the pandemic, strong growth in the rest of the period is expected to support industry growth. Consequently, over the five years to 2020, industry revenue for the Online Flower Shops industry is expected to increase an annualized 8.5% to $5.2 billion, including a decrease of 4.4% in 2020 alone. Conversely, industry profit has decreased.
Over the past five years, an increase in the number of industry operators has increased internal competition. While the industry competes on the basis of many factors, having a good reputation for quality and customer service gives industry operators a strong competitive edge. Over the five years to 2020, wages have increased an annualized 1.6% totaling $153.6 million, as operators hired more highly skilled employees with industry experience. These higher wages are also being paid out to internet developers, who have become responsible for providing user-friendly and attractive interfaces on operators' websites and mobile applications.
Over the five years to 2025, the prevalence of online services is expected to continue, benefiting online flower shops. As the economy recovers from the pandemic, consumer spending and demand from florists are expected to increase, supporting industry growth. However, growth will likely be slow, not surpassing pre- pandemic levels until 2023. Furthermore, 2021 has a slight expected decrease of 0.5% as negative effects from the coronavirus are anticipated to carry over. Additionally, growth may be subdued as the industry becomes more saturated and mature, following the large growth during the previous five-year period. As a result, over the five years to 2025, IBISWorld estimates that industry revenue will increase an annualized 2.0% to $5.7 billion.
9 IBISWorld.com Online Flower Shops OD5069 November 2020 Industry Performance
Key External Consumer spending Drivers Demand for industry products generally increases with an increase in consumer spending and decreases with a decrease in consumer spending. Flowers are considered a discretionary good and therefore, demand often fluctuates with the economy. Consumer spending is expected to decrease in 2020.
Percentage of business conducted online The percentage of services conducted online represents consumers' and businesses' increasing use of the internet for services typical of brick-and-mortar stores. As the percentage of services conducted online increases, demand for the industry will likely increase since it indicates that more consumers are comfortable making e-commerce purchases. The percentage of service conducted online is expected to increase in 2020, representing a potential opportunity for the industry.
Demand from florists Online flower shops collect commission fees from the brick-and-mortar florists that fulfill the orders. Moreover, online flower shops use the national advertising and marketing platform to gather orders and pass them on to local florists for a fee. Demand from florists is expected to decrease in 2020, posing a potential threat to the industry.
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Per capita disposable income Demand for flowers and plants is highly discretionary. Therefore, a rise in disposable income increases the propensity for customers to purchase industry goods, leading to growth in demand. Per capita disposable income is expected to increase in 2020.
Current Over the five years to 2020, the Online Flower Shops industry has Performance benefited from the extensive marketing power of the internet and has been successful at leveraging national brand names to increasingly capture market share from brick-and-mortar stores.
Furthermore, due to the discretionary nature of the industry's products, the increasing level of per capita disposable income during the five-year period has enabled the industry to blossom. Increasing demand for online-based services, along with a strengthening economy for the majority of the period, has supported industry growth. However, the COVID-19 (coronavirus) pandemic is expected to have a negative effect on the industry due to uncertain economic conditions and a decrease in consumer spending. Nonetheless, the strong growth during the first four years of the period are expected to support the industry. As a result, industry revenue is expected to increase at an annualized rate of 8.5% to $5.2 billion over the five years to 2020, including a decline of 4.4% in 2020 alone.
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Although most industries are experiencing major declines in demand due to the coronavirus and the subsequent decrease in consumer spending, online flower shops are expected to have less significant decreases. Due to social distancing regulations, many consumers are choosing to shop online rather than going into stores, which will likely benefit the industry. Furthermore, as most in person events were canceled, many people resorted to sending flowers in lieu of attending, therefore demanding industry products. However, the overall decline in economic conditions is expected to have an overall negative effect on the industry in 2020. Nonetheless, the positive growth during the majority of the period is expected to support the industry.
Planting roots
Consumer spending patterns, which influence the purchase of flowers, gift baskets and other industry products, are sensitive to disposable income levels, consumer debt and overall consumer confidence.
Industry operators rely on discretionary spending to drive sales, particularly for special occasions such as birthdays, graduations and holidays, such as Valentine's Day and Mother's Day. Over the five years to 2020, per capita disposable income has increased at an annualized rate of 2.2%, while consumer confidence has stagnated at 0.0%, although it should be noted that for the majority of the period it increased. These two economic drivers have propelled the industry's growth during the five-year period, as consumers with deeper pockets are more likely to make flower purchases. Furthermore, industry products range in price from inexpensive, unarranged cut flowers to mid-priced bouquets to expensive gift baskets; increases in disposable income and consumer confidence during the period encouraged shoppers to trade up to premium purchases, driving industry growth.
The industry has also significantly benefited from increases in the number of people with an internet connection and the number of services conducted online. Consumers are increasingly turning to the internet for shopping needs rather than visiting brick-and-mortar stores. This benefits the industry, as online-based florists compete with the brick-and-mortar Florists industry (IBISWorld report 45311) and the Supermarkets and Grocery Stores industry (44511). As the percentage of services conducted online has increased at an annualized rate of 8.2% over the five years to 2020, the industry has benefited from increased consumer acceptance of e-commerce, which boosts overall industry demand.
Cost structure
The industry is highly competitive, with the most successful online companies investing heavily in marketing campaigns and search engine optimization (SEO) strategies to increase online visibility.
The nature of the internet as a marketplace facilitates comparative shopping. As the number of companies operating in the industry increased at an annualized rate of 2.7% to 1,037 companies over the five years to 2020, industry operators focused on marketing budget to more effectively compete for consumer dollars.
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As the industry has become increasingly competitive, providing a stellar consumer buying experience has become more and more crucial. Customers are most likely to make repeat purchases from a company that offers superior customer service. Therefore, the average industry operator has invested more capital into hiring experienced and skilled workers. Over the five years to 2020, IBISWorld estimates that industry wages have increased at an annualized rate of 1.6%, totaling $138.2 million. While some wages are paid out to the florists themselves, a large portion of wages are paid to customer-service representatives, management and internet developers.
Increased wages and marketing expenses have contributed to the decreased average operator's profit margin. Over the five years to 2020, the elimination of tariffs on flower purchases has decreased industry costs, which has cut purchase expenses and made room for profit growth. However, the negative effects of the coronavirus has hindered profit. Industry profit, measured as earnings before interest and taxes, has decreased from 4.0% of revenue in 2015 to 3.8% of industry revenue in 2020.
Market share
The Online Flower Shops industry has gained significant ground over the five years to 2020 and has been able to quickly adapt to changing opportunities and customer preferences.
This is because the industry benefits from significant competitive advantages over brick-and-mortar florists. Similar to other e-commerce industries, online flower shops can offer reduced prices by using a website as the storefront and delivering from central warehouses, thereby reducing the costs associated with operating a physical retail store.
The order-gathering business model adopted by many online flower shops, through which companies use a national online presence to gather orders and then pass them on to local retail florists for a fee, has also helped the industry gain market share over the past five years. For example, national brands 1-800-Flowers.com Inc. and FTD Companies Inc. have strengthened its market positions over the past five years by transferring orders among florists for a fee. Industry players are also increasingly using the internet to market and advertise the services nationwide to secure orders. This model enables online flower shops with strong brand names and high online visibility to capture market share from local florists and increase revenue from fees associated with passing on orders, which can be as high as 20.0% per order.
Historical Performance Data Year Revenue IVA Estab. Enterprises Employment Exports Imports Wages Domestic % services Demand conducted online ($m) ($m) (Units) (Units) (Units) ($m) ($m) ($m) ($m) (%) 2011 2,158 200 808 801 2,726 N/A N/A 116 N/A 18.3 2012 2,403 243 884 877 2,894 N/A N/A 129 N/A 19.2 2013 2,628 264 877 871 2,898 N/A N/A 123 N/A 20.3 2014 2,964 270 885 879 2,892 N/A N/A 125 N/A 21.2 2015 3,438 306 914 907 2,909 N/A N/A 128 N/A 21.4
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Year Revenue IVA Estab. Enterprises Employment Exports Imports Wages Domestic % services Demand conducted online ($m) ($m) (Units) (Units) (Units) ($m) ($m) ($m) ($m) (%) 2016 3,997 390 946 939 2,949 N/A N/A 122 N/A 21.4 2017 4,610 349 995 989 3,372 N/A N/A 132 N/A 22.9 2018 5,206 512 1,013 1,003 3,387 N/A N/A 137 N/A 23.4 2019 5,396 536 1,048 1,037 3,506 N/A N/A 142 N/A 24.8 2020 5,160 397 1,045 1,037 3,432 N/A N/A 138 N/A 29.6
14 IBISWorld.com Online Flower Shops OD5069 November 2020 Industry Outlook
Outlook Over the five years to 2025, IBISWorld expects that the Online Flower Shops industry will return to growth as the economy recovers from the COVID-19 (coronavirus) pandemic.
Although the beginning of the period may still have some carry over effects from the pandemic with a slight decrease expected in 2021. However, increased consumer spending and continued increases in the percent of business conducted online is expected to support industry growth. As US consumers become increasingly comfortable making online purchases, the e- tailers in this industry will siphon a larger share of flower demand from brick-and-mortar florists and grocery stores. An increased number of internet users and the ongoing shift in consumer shopping habits toward the internet will mean fewer walk-ins for traditional florist shops and more sales for successful floral websites. Additionally, many companies are making websites mobile and more user-friendly to capture a growing share of demand from tech-savvy consumers who purchase flowers from cellphones while on the go. However, growth is expected to be slower than during the previous period due to increasing market saturation. Overall, IBISWorld estimates that industry revenue will increase at an annualized rate of 2.0% to $5.7 billion over the five years to 2025.
Determining demand
As the US economy strengthens, per capita disposable income is estimated to increase at an annualized rate of 2.1% over the five years to 2025.
Although consumer spending is expected to increase, it is likely that consumers may still exercise caution while making discretionary purchases due to continued economic uncertainty from the pandemic. As a result, consumers will search for discounted products and increasingly turn to the internet to find deals on flowers and gifts. This will serve as both a boon and a detriment to the industry; while the increase in online shopping will benefit industry operators, online florists will also be negatively affected because consumers with tighter purse strings will be more likely to trade down to lower-value goods that come with a lower price tag. This will cause revenue to increase, though at a slower rate than the previous period.
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Competition
Both internal and external competition will remain high for the industry over the five years to 2025.
The consumer market for flowers and gifts is highly competitive since consumers can buy these products from many sources, including traditional local retail florists, supermarkets, mass merchants, gift retailers and floral mass marketers. As more retail florists develop e-commerce sites and transfer significant portions of the business online, competition for online flower orders will increase. In particular, the industry will contend with intense competition from supermarkets, which will increasingly offer inexpensive and convenient flowers, including elaborate bouquets that consumers can pay for and take home right away.
Over the five years to 2025, external competition will stem from Amazon.com Inc. (Amazon) adding flowers to its product portfolio. Amazon has creditability in many other product lines and is targeting new markets, such as the market for online flower purchases, which it added in 2013. The company currently has limited floral arrangements and delivery options to choose from; however, shipping is free. Amazon's business model encourages consumers to buy floral arrangements on impulse with other purchases in different product lines. As a potential downside, consumers may worry that purchasing flowers from Amazon is not as tasteful as purchasing from other industry operators such as FTD Companies Inc., or other companies that specialize in flowers.
Industry expansion
As per capita disposable income increases, overall demand for flowers will likely increase with it; this will encourage all retailers of flowers, including competing industries such as the brick-and- mortar Florists industry (IBISWorld report 45311), to expand its share of the overall floral market as much as possible.
This will encourage brick-and-mortar florists to expand into the realm of e- commerce to increase its consumer pool, which will effectively enter them into the Online Flower Shops industry. This will cause the number of companies operating in the industry to expand at an expected annualized rate of 2.3% to 1,161 companies over the five years to 2025. Similarly, wages will grow alongside the increased need for brick-and-mortar stores to hire internet developers for the newly established websites and mobile applications. This will likely cause wages to increase at an annualized rate of 2.1%, totaling $153.6 million. Despite increasing wages, an increase in demand will permit profit to increase. Industry profit, measured as earnings before interest and taxes, is expected to account for 6.6% of industry revenue in 2025.
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Performance Outlook Data Year Revenue IVA Estab. Enterprises Employment Exports Imports Wages Domestic % services Demand conducted online ($m) ($m) (Units) (Units) (Units) ($m) ($m) ($m) ($m) (%) 2020 5,160 397 1,045 1,037 3,432 N/A N/A 138 N/A 29.6 2021 5,136 388 1,059 1,053 3,450 N/A N/A 139 N/A 29.1 2022 5,283 431 1,088 1,081 3,546 N/A N/A 142 N/A 30.3 2023 5,433 508 1,116 1,110 3,646 N/A N/A 147 N/A 31.4 2024 5,576 575 1,144 1,137 3,745 N/A N/A 150 N/A 32.5 2025 5,697 596 1,168 1,161 3,821 N/A N/A 154 N/A 33.5
Industry Life Cycle The life cycle stage of this industry is Growth
LIFE CYCLE REASONS The industry has a stable product market with clearly segmented products
The industry’s product portfolio has expanded to include specialty food and wine
Increasing external competition is expected to slow industry growth
The Online Flower Shops industry is in the growth phase of its life cycle. Industry value added (IVA), a measure of an industry's contribution to the overall economy, is expected to increase at an annualized rate of 6.9% over the 10 years to 2025. In contrast, US GDP is expected to increase at an annualized rate of 1.9% during the same period. Generally, an IVA that is growing faster than the overall economy is indicative of a growing industry.
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Although the industry is currently in its growth stage, it is on the precipice of entering maturity. Evidenced by IVA growth of 9.6% over the five years to 2020, the industry is coming off of a period of rapid gains; however, the industry is expected to slow over the five years to 2025, with IVA growing at a slower annualized rate of 4.3%. The switch to IVA growth that is closer in line with the overall economy indicates that the industry is becoming more saturated and maturing.
The industry also has a stable product market with clearly segmented products. While the specific types of flowers and plants retailed by each operator vary by season, most industry products have changed little over the past five years. IBISWorld expects that no new products will change the industry landscape over the five years to 2025. However, online flower shops will continue to package gifts and food with flower offerings in unique ways to increase sales.
18 IBISWorld.com Online Flower Shops OD5069 November 2020 Products and Markets
Supply Chain KEY BUYING INDUSTRIES KEY SELLING INDUSTRIES 1st Tier 1st Tier Consumers in the US Florists in the US Flower & Nursery Stock Wholesaling in the 2nd Tier US Florists in the US Nursery & Garden Stores in the US
2nd Tier Plant & Flower Growing in the US E-Commerce & Online Auctions in the US Confectionery Wholesaling in the US
Products and Services
Although the full effects of the COVID-19 (coronavirus) pandemic remain unknown, IBISWorld expects that the Online Flower Shops industry will experience declines in demand.
The negative trend is expected to be consistent throughout the industry product segments as each segment is considered a discretionary purchase. However, some segments may be affected more depending on final use. For example, arranged cut flowers are often used in weddings and other large events. Due to social distancing regulations, most large events were postponed or cancelled which will likely decrease demand for the arranged cut flowers segment. Conversely, gift baskets may have less significant declines as people who are unable to be with loved ones
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for celebrations may send them in lieu of being there. However, overall demand for all industry products is expected to decline.
Potted plants
Online Flower Shops industry operators provide potted plants, which include orchids, gardenias and bonsai trees.
This product segment represents the highest share of industry revenue in 2020, driven by the high price tag associated goods in the category. Plants, especially orchids, have increased in popularity over the past five years, and have become a favored gift option for people looking for something more long-lasting than cut flowers, which perish relatively quickly. As a result, this segment's sales have increased over the past five years to account for 36.4% of total revenue.
Arranged cut flowers
Arranged cut flowers represent the second-largest product segment in the industry, accounting for an estimated 22.9% of revenue in 2020.
Products in this segment include bouquets made from a various mix of flowers, such as roses, lilies, orchids, tulips and daisies. These arrangements are typically given as gifts, used in weddings and funerals or purchased as decoration for households and offices.
Over the five years to 2020, online flower sales have somewhat declined as a share of revenue as online florists have continued to expand product portfolios to include potted plants and other giftware. This segment is expected to decrease slightly as a share of revenue over the next five years as the gift baskets segment grows.
Unarranged cut flowers
Unarranged cut flowers are expected to account for 18.3% of total sales in 2020.
These flowers are typically purchased for self-arrangement at homes. Consumers with less disposable income typically opt for unarranged cut flowers due to the lower price point. However, supermarkets and online retailers that provide similar goods at much lower prices have captured a significant share of such demand. Therefore, this segment has experienced a significant leakage in revenue to externally competing industries over the past five years.
Gift baskets and other
Gift baskets, which may include an assortment of candy, chocolates, popcorn, stuffed animals, fruits and other food, are expected to account for 15.4% of industry revenue in 2020.
This segment has increased as a share of revenue as retailers have implemented various value-added propositions.
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Industry operators increasingly boost revenue through the giftware segment by packaging flowers with wine, balloons, plush toys, chocolate, cards and other gifts, and selling special occasion themed gift baskets. This segment will continue to add product variety and increase its share of industry revenue over the next five years.
Floral network services
The larger industry players (e.g. FTD Companies Inc.
and 1-800-Flowers.com Inc.'s subsidiary BloomNet) provide services that facilitate the order exchange and fulfillment between local florists and third-party sales agents of floral products, transferring orders between florists across geographic divides. Floral wire service providers take a percentage of the value of the order as a fee for sending the business to the receiving florist. These services are often provided to floral networks, where retail florists become members and pay fees to benefit from other related services which can include credit card processing, national advertising, marketing and internet advertising, among other benefits. These services are expected to account for 7.0% of revenue in 2020.
Over the past five years, more local flower shops have chosen to bypass network membership through national online flower shops by establishing their own e- commerce websites and attracting consumers directly to the online businesses. As a result, this market is expected to remain flat as a share of revenue over the five years to 2025.
Demand Demand for Online Flower Shops industry products is tied closely to Determinants disposable income, as households and individuals with higher levels of disposable income are more likely to make discretionary purchases.
This is particularly relevant for flowers, and especially arranged flowers, due to being discretionary items that carry a high price tag. When per capita disposable income rises, so does industry demand.
The industry is also particularly affected by the number of individuals with internet connections and the percentage of services conducted online. As consumers become increasingly comfortable using the internet for shopping needs, industry revenue will increase, as this industry relies on shoppers making internet purchases. Furthermore, greater access to the internet will boost sales, as more shoppers will be able to conveniently use industry websites.
Additionally, fluctuations in the price of flowers is a significant demand determinant. Budget-conscious consumers often choose lower-priced arrangements or forego purchasing flowers entirely. Some industry revenue has swung to supermarkets over the five years to 2020 since supermarkets can offer low prices for fresh flowers without the delivery or shipping costs. Demand for flowers also depends on the prices of other gift items, such as wine and fine chocolate. While these items are often sold with floral bouquets, consumers may decide to buy substitute gifts instead, depending on the price.
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Special occasions and seasonality
Demand for merchandise covered by this industry is largely seasonal.
According to the Society of American Florists, flowers are the top gift choice for romantic situations. Consequently, industry demand reaches its high in late winter to spring, during the months that contain Valentine's Day and Mother's Day. Successful floral establishments must manage sufficient inventory to account for these peaks in demand.
The number of weddings and funerals each year contributes to demand for flowers as well. Large online flower orders for weddings are most prevalent in July and August. Meanwhile, many other weddings and funerals happen throughout the year, making demand difficult to estimate. Other special occasions, such as birthdays and anniversaries, are also spread throughout the year and boost demand for industry products.
Major Markets
The COVID-19 (coronavirus) pandemic is expected to have an overall negative effect throughout the major market segments. Consumers under age 29 will likely have the largest decrease in demand for industry products due to generally being the most financial unstable group. The uncertain economic conditions brought by the pandemic will likely discourage consumers with less money to spend on industry products.
Consumers under age 29
Consumers under the age of 29 are expected to represent 29.0% of total Online Flower Shops industry sales in 2020. As a technologically savvy generation, this consumer segment is prone to turning to the internet for shopping needs, which increases the segment's share of industry demand. However, most consumers in this age demographic do not have stable sources of income or significant others, which detracts from the ability and desire to purchase industry products. IBISWorld
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expects that this consumer demographic's share of industry revenue will remain stable over the five years to 2025.
Consumers aged 30-49
Consumer between the ages of 30 and 49 are expected to account for 39.7% of industry revenue in 2020 and make up the largest share of industry revenue. Consumers in this age demographic typically have stable jobs with a consistent source of income, which increases propensity to buy discretionary products such as flowers. Furthermore, because these consumers are relatively young, they are likely to be tech savvy and comfortable making purchases online. Over the five years to 2025, IBISWorld expects that this market will remain relatively consistent as a share of industry revenue.
Consumers aged 50-64
IBISWorld estimates that consumers between the ages of 50 and 64 years represent the second-largest demand for industry goods, with 31.3% of industry revenue coming from this demographic. Consumers in this age range tend to be more emotionally connected to flowers and generally buy flowers as traditional holiday or special occasion gifts. Furthermore, individuals in this segment typically have higher incomes than the younger counterparts and have steady income streams, enabling them to spend more freely on industry items. This market is expected to remain relatively unchanged over the five years to 2025.
International Exports in this industry are Low and Steady Trade Imports in this industry are Low and Steady
The Online Flower Shops industry does not participate in international trade. Although some companies operate internationally, products are sourced from local florists. As a result, trade in flowers is accounted for in the Plant and Flower Growing industry (IBISWorld report 11142). Over the past five years, flower imports from South America increased significantly due to free trade agreements. For example, floriculture imported from Bolivia, Colombia, Ecuador and Peru is duty free according to the Andean Trade Promotion and Drug Eradication Act.
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Business Locations
Although the Online Flower Shops industry operates through online sales, most companies run the websites from an office or brick-and-mortar storefront. The distribution of industry establishments shows that the dispersal of online flower shops depends on population, disposable income and the location of florists, which are also spread out similarly to the population. Consumers with a higher disposable income can afford larger, more intricate floral arrangements, which encourages industry operators to locate the establishments in these wealthy areas.
The Southeast region houses an estimated 24.8% of total industry establishments, which is the highest proportion of any region. This region also accounts for 25.8% of the US population. Due to the favorable weather conditions in this region, flowers are easily able to be grown which makes sense as industry operators tend to locate close to floral sources.
The Mid-Atlantic region accounts for an estimated 17.9% of total industry establishments in 2020. Within this region, New York alone accounts for an estimated 8.1% of total industry establishments in 2020. This region holds high
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concentrations of wealth and has densely populated metropolitan areas including New York City and Philadelphia.
The Great Lakes region accounts for an estimated 16.2% of total industry establishments in 2020. This region holds a large share of the US population, accounting for an estimated 14.4% of the population. Within this region, Illinois alone accounts for an estimated 4.6% of total industry establishments.
The West is the fourth-largest region by establishment, accounting for an estimated 13.0% of total industry establishments in 2020. This region accounts for 17.2% of the population and is home to California, making it an attractive place for industry operators. California alone is the largest state by establishment, representing an estimated 8.9% of total industry establishments in 2020. California has many large metropolitan cities such as Los Angeles, San Francisco and San Diego which all have high concentrations of wealth.
25 IBISWorld.com Online Flower Shops OD5069 November 2020 Competitive Landscape
Market Share Concentration in this industry is Medium Concentration The Online Flower Shops industry has a low level of market share concentration. IBISWorld estimates that the top four players in the industry will generate 36.4% of revenue in 2020. In general florists, even online-based florists, tend to be small in size, serving mainly the local region or city. Additionally, florists can belong to several networks of online flower shops and have its own online store, which further fragments industry revenue. Industry operators must minimize delivery time and costs while maintaining the freshness of the products to remain competitive.
Concentration for this industry has risen over the five years to 2020, as the industry's two largest companies have made acquisitions to substantially increase market share. For example, FTD Companies Inc. (FTD) acquired Provide Commerce, a San Diego-based internet retailer of flowers, in 2016. The acquisition significantly boosted FTD's revenue and lifted the company's market share during the period.
Key Success IBISWorld identifies 250 Key Success Factors for a business. The most important for this Factors industry are: Membership of joint marketing/distribution operations: Being a member of a major flower delivery network, such as 1-800-Flowers.com Inc. and FTD Companies Inc., helps online flower shops boost revenue through brand recognition.
Ability to quickly adopt new technology: Ever-changing software systems, internet speeds and personal information security systems require online flower shops to continually update their business to keep pace with recent technology.
Provision of superior after sales service: Operators that provide superior after-sales service, including offering refunds or exchanges, attract repeat business and have more potential for revenue growth.
Ability to control stock on hand: Floral products are perishable and require sound management of inventory. It is also important to have sufficient stock on hand during peak purchasing times, such as Valentine's Day and Mother's Day.
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Cost Structure Benchmarks
Profit
Industry profit, defined as earnings before interest and taxes, is estimated to total 3.8% of revenue in 2020. The profit margin for this industry is generally slightly higher than the retail sector's average because of the relatively low costs associated with running an online- based business. Operators in this industry typically pay less for rent and utilities than brick- and-mortar retailers and can provide lower wages since employees do need to work with customers in person. Nonetheless, over the past five years, profit margins have decreased slightly from 4.0% of revenue in 2015
Wages
Compared with the sector's average, wages make up a relatively small share of industry revenue; in 2020, wages represent 2.7% of the average industry operator's total revenue. While many companies hire top-notch client services professionals and website designers, other hire less-skilled workers who do not have prior experience in the field. Since most of the work for an online-based company is done in a nonclient-facing environment, very little training is involved and operators can therefore pay their employees lower wages.
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Purchases
Although large online flower shops depend on network members to store and deliver bouquets, many companies in the industry also own brick- and-mortar locations. As a result, purchases are estimated to make up 65.8% of revenue in 2020, just slightly up from 65.3% of revenue in 2015. Purchases for industry operators include flowers, paper and string for wrapping, chocolates, teddy bears, balloons, gift cards and bottles wine and champagne. Over the five years to 2020, regulation has helped lower the cost of flowers by eliminating tariffs on flower imports, contributing to the minimal increase in purchase costs.
Depreciation
Depreciation is expected to account for 1.2% of industry revenue in 2020.
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Marketing
Marketing and advertisements are key to industry operators. In 2020, marketing costs are expected to comprise 4.0% of industry revenue. This segment has increased slightly over the past five years as operators continue to focus on having an online presence, therefore, marketing campaigns are essential for growth. Without the natural advertising that comes from a brick-and-mortar storefront, operators have to market their product to the public via TV, radio, mass market fliers, SEO or email.
Rent
Rent is expected to account for 1.3% of industry revenue in 2020.
Utilities
Utilities are expected to account for 0.3% of industry revenue in 2020.
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Other Costs
Industry players also incur a variety of other expenses related to the daily costs of operating a business, which are expected to account for 20.9% of industry revenue. These costs include professional service fees, telecommunications, warehousing and transportation.
Basis of Competition in this industry is High and Steady Competition Internal competition
Online Flower Shops industry operators compete based on location, price and quality.
Although websites can reach a wider range of consumers, flower shops are limited by delivery networks. A larger delivery network can significantly increase an online flower shops' market.
Companies compete on price since it is easy for consumers to compare prices online. Operators price products to maximize returns, while remaining conscious of prices charged for similar items by rival competitors. Low prices can make a particular operator more desirable than a rival that retails products at a relatively higher price. However, if not monitored closely, price competition can squeeze profit margins too thin, forcing underperforming stores to close. Many consumers also factor in shipping costs when buying online, so companies further compete based on the price of the shipping provider.
This industry also competes based on website quality, customer service and products. Since operators sell through online stores, competitors depend on search engine optimization, detailed descriptions and pictures to show the products to clients. Additionally, website functionality, such as load time and the ease of navigating, factor into online sales. According to a research company specializing
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in website and product usability, User Interface Engineering, a website's design is crucial to its success. For example, a company that took away a registration button and replaced it with a “guest” login system boosted its sales significantly simply by eliminating the extra step of registering for users.
Good customer service is essential for online flower shops to retain customers. Users with a positive experience are most likely to return to the same online flower shop for future floral purchases. The timeliness of delivery is also key to the customers' satisfaction.
Similarly, the quality of products is critical for customer satisfaction. Flower storage and delivery requires specific knowledge about plants to ensure the health upon delivery. The design of bouquets and availability of add-ons, such as greeting cards or teddy bears, can determine which online flower shop a consumer chooses to order from.
External competition
Online flower shops compete with a variety of brick-and-mortar retailers.
Although local florists are more limited based on location, these have the benefit of a live display and in-person client relations. Additionally, traditional florists may have long-established networks of clients that trust the quality of the products. This industry also contends with high competition from grocery stores and supermarkets. In particular, large chain stores can maximize cost savings by having established relationships with growers and wholesalers; these relationships enable chain grocery stores to pass cost savings along to consumers, which often enables them siphon sales from industry operators.
Barriers to Entry Barriers to entry in this industry are Low and Steady
The Online Flower Shops industry is highly fragmented, with a large number Barriers to entry checklist of small and independent players. This Competition High is reflective of low barriers to entry; Concentration Medium prospective players can establish e- commerce sites without much difficulty. Life Cycle Stage Growth Nonetheless, incumbent players can still Technology Change Medium benefit from reputations as reliable operators that supply merchandise of an Regulation & Policy Light acceptable quality. Existing operators Industry Assistance Low have also had to gain the trust of consumers with regard to providing high quality products and services and secure websites for credit card details.
Store reputation may be considered a barrier to entry into this industry. Existing players have already established names in respective product offerings and geographic locations, so new entrants will have to invest considerable resources to gain customer loyalty. New online flower shops must also carry out a strategy to
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attract traffic to the website since it cannot rely solely on a brand name. Consequently, many new companies invest in search engine optimization (SEO). As new players in the industry, these will need to prove to consumers that it offers a broad product range and that the goods are competitively priced. Furthermore, retailers have to ensure customer loyalty and repeat buyers.
The established distribution networks between operators and suppliers may sometimes be viewed as a barrier to entry. Existing operators benefit from the relationships with suppliers that were built over time. As a result, these may be offered better lines of credit and low-priced and high-quality stock compared with new players entering the industry.
Industry Globalization in this industry Low and Increasing Globalization The majority of Online Flower Shops industry operators are domestically owned and operated, due to catering products and services to consumers in the United States. However, a great number of the industry's major companies, including 1-800- Flowers.com Inc., do provide international flower delivery services. Since disposable income growth abroad is expected to exceed US disposable income growth, the foreign market for flowers is expanding at a faster pace than domestically. As a result, companies in this industry are expected to increasingly invest in foreign operations over the next five years.
32 IBISWorld.com Online Flower Shops OD5069 November 2020 Major Companies
Major Players 1-800-FLOWERS.COM INC.
Market Share: 26.5% 1-800-Flowers.com Inc. (1-800-Flowers) is one of the most recognized brands in the Online Flower Shops industry and is headquartered in Carle Place, NY. This public company sells a range of flowers, plants and complementary products, such as gourmet popcorn, cookies, premium chocolate, wine and gift baskets. These products are then sold via two channels: its online operation and retail floral stores. All online orders are filled through a network of local florists (i.e. BloomNet members) that pay a membership fee to the business, or through nine company- operated stores. The company has over 4,300 full- and part-time employees. On August 3, 2020, the company completed its acquisition of PersonalizationMall.com LLC (Personalization Mall), a leading ecommerce provider of personalized products, which continues the company's pattern of acquisitions. In 2019, 1-800-Flowers reported $1.5 billion in total company revenue.
In response to the COVID-19 (coronavirus) pandemic, 1-800-Flowers has stated that it experienced an increase in demand during its fourth quarter of 2020. The
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company attributes this to customers using the expanded product offerings to help them connect and express themselves during the pandemic, with a specific increase in the “everyday gifting” product line. Although the effects of the pandemic are difficult to forecast, the company believes that sales will continue to go well especially during the holidays.
Financial performance
Over the five years to 2020, IBISWorld estimates that 1-800-Flowers's industry- relevant revenue will increase at an annualized rate of 9.1%, totaling $1.4 billion. Growth can be attributed to the improvement of merchandising programs and marketing campaigns; in 2017, advertising costs represented 11.5% of 1-800- Flowers's total revenue. IBISWorld estimates that the company's margins will be in line with the industry, with industry-specific operating income standing at 6.3% of industry-relevant revenue in 2020, totaling $86.5 million.
1-800-Flowers.com Inc. (US industry-specific segment) - financial performance* Year** Revenue Growth Operating Income Growth ($m) (% change) ($m) (% change) 2015-16 882.8 N/C 32.6 N/C 2016-17 896.8 1.6 34.8 6.7 2017-18 921.8 2.8 32.8 -5.7 2018-19 998.4 8.3 36.1 10.1 2019-20 1230.4 23.2 66.4 83.9 2020-21 1365.7 11.0 86.5 30.3 Source: Annual report and IBISWorld Note: *Estimates; **Year-end June
FTD COMPANIES INC.
Market Share: 7.5% FTD Companies Inc. (FTD), which spun off from United Online in 2013 to be a publicly traded company, is a worldwide marketer of flowers and specialty gifts. FTD is a typical floral wire service, as the company receives payment for floral and specialty gift orders through its online and telephone operations. FTD then uses its network of an estimated 13,800 North American retail florists to fulfill and deliver orders. The company also generates revenue through its floral network business, which helps its floral network members promote sales and enhance operating efficiencies. These practices include various marketing and advertising campaigns, credit card processing services, e-commerce website services, transmission and clearinghouse services and point-of-sale-related technology. The company, which recently moved its headquarters from Downers Grove, IL, to Chicago, does not operate any retail stores. In 2018, FTD employed over 1,500 people and took in $1.0 billion in total company revenue (latest data available). The company went private again after 2018.
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In response to the COVID-19 (coronavirus) pandemic, FTD has released statements on health precautions taken and about the company's Florist Assistance Program. The company has implemented an assistance program for member florists to assist in covering some costs. For example, the company offered 20.0% off fresh flowers through April 30 and gave reduced costs on some orders. Along with this, the company is adhering by health standards, such as offering no contact deliveries.
Financial performance
Over the five years to 2020, IBISWorld estimates that FTD's industry-relevant revenue will decrease at an annualized rate of 5.2%, totaling $385.8 million. Additionally, aided by improving per capita disposable income and consumer confidence, the company has expanded its network of retailers and product lines. In recent years, industry-relevant revenue has slightly contracted, as the company has settled following extremely high gains from an acquisition just before the current period. FTD is expected to represent 7.5% of the industry market share in 2020.
FTD Companies Inc. (US industry-specific segment) - financial performance* Year Revenue Growth Operating Income Growth ($m) (% change) ($m) (% change) 2015 503.4 N/C -30.0 N/C 2016 457.6 -9.1 -32.9 9.7 2017 459.5 0.4 -113.9 246.2 2018 414.5 -9.8 -91.8 -19.4 2019 397.3 -4.1 -122.3 33.2 2020 385.8 -2.9 -118.8 -2.9 Source: Annual report and IBISWorld Note: Estimates*
Other Players TELEFLORA LLC
Teleflora LLC (Teleflora), a subsidiary of The Wonderful Company, is a global florist network with an estimated 13,000 florists in Canada in the United States. Founded in 1934 and headquartered in Los Angeles, the company also provides national advertising campaigns and local marketing tools to its network retail florists and technical support through automated business management systems. Consequently, the company is increasing its market presence through advertising campaigns and acquisitions. Teleflora has even produced Super Bowl commercials to increase its brand awareness. Additionally, just before the start of the period, the company acquired Flowerbuyer.com, an online wholesale flower-buying service based in Toronto. Teleflora's parent company is privately owned and operated, which limits the availability of its financial data. However, IBISWorld estimates that Teleflora will generate $91.5 million in revenue in 2020.
THE BOUQS COMPANY
Founded in 2012 and based in Los Angeles, The Bouqs Company is a cut-to-order flower delivery service that operates exclusively online. The company prides itself on its easy-to-use format, superior customer service experience and its farm-direct
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and eco-friendly products. The start-up company began with $1.1 million in seed money, but has since raised $42.0 million in series A, B and C funding rounds; its lead investors are Partech and Azure Capital Partners. In 2020, IBISWorld estimates that The Bouqs Company will take in industry-specific revenue of $36.7 million.
36 IBISWorld.com Online Flower Shops OD5069 November 2020 Operating Conditions
37 IBISWorld.com Online Flower Shops OD5069 November 2020
Capital Intensity The level of capital intensity is High
The Online Flower Shops industry has a high level of capital intensity. IBISWorld estimates that for every dollar spent on wages, industry operators will spend $0.46 in capital investment. Over the past five years, capital intensity has increased. Much of the industry's capital investment stems from investments in computers and proprietary management software; operators are expected to keep up to date with the latest in website technology, and software programs in this field depreciate rapidly. Capital requirements for establishing and maintaining databases include computers, printers, software programs for an electronic payment system and firewalls.
Operators in the Online Flower Shops have benefited from computer-literate generations over the past few years.
Millennials and Gen Z customers favor using the internet and prefer shopping online. As online shopping is growing in popularity, more customers are willing to shop for live plants and flowers online, reducing the time and cost of traveling to a brick-and-mortar flower shop. Industry players also offer same-day delivery, ensuring recipients receive fresh flowers quickly. Consequently, as these incumbent players overcome common problems associated with online shopping and adopt the latest technology in inventory management and delivery, these are expected to blossom in the future.
The level of technology change is Medium
The rate of technology change in the Online Flower Shops industry is moderate.
Technology is crucial to the success of industry operators and encompasses an internet selling platform and the hardware and software required to increase the quality of the user experience. Online flower shops have to make sure their sites can handle high volumes of traffic without crashing, and contend with the challenge of showcasing flowers, gift baskets and other products in an effective way through digital photography. Moreover, technological advancements are enabling operators
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to increase the scope and efficiency of communication within national and international florist networks.
Successful industry operators have developed proprietary technology platforms that enable efficient order processing, order transmission and customer service systems that provide communication to floral network members and third-party suppliers. Software enhancements have also improved the functionality of certain components of industry website services, including connectivity, secure billing and payment processing, secure storage of private customer information, customer support, customer loyalty applications and targeted advertising.
More and more, industry operators are also incorporating mobile commerce applications and social networking strategies into marketing plans. Some companies have turned to social media platforms such as Facebook for advertising, and many have developed applications for smartphones, tablets and other devices that enable consumers to view and make flower purchases from their phones. The development and maintenance of websites and smartphone applications do not often require new technology, as their maintenance can be performed through existing computer programs.
Revenue Volatility The level of volatility is Medium
Note: Revenue growth and decline reflective of 5-year annualized trend. Y-axis is in logarithmic scale. Y-axis crosses at long-run GDP. X-axis crosses at high volatility threshold.
The Online Flower Shops industry is characterized by a medium level of revenue volatility.
Revenue volatility for the industry is largely dependent on consumer trends such as market acceptance of e-commerce, available leisure time and feelings of financial security. As consumers become increasingly comfortable turning to the internet for their shopping needs, revenue will expand for this online-based industry.
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Furthermore, as consumers' schedules tighten, more shoppers will purchase flowers online due to the convenience, which stimulates revenue growth. Industry demand is also dependent on per capita disposable income and consumer confidence; the progressive improvement of economic conditions over the past five years have translated to steady growth for the discretionary goods retailed by this industry.
Regulation & The level of regulation is Light and is Steady Policy Online Flower Shops industry operators are subject to several federal, state and local laws and regulations, including those relating to taxation, bulk e-mail or "spam," advertising, user privacy, data protection and consumer protection.
The industry also relies upon patent, trademark, copyright, trade secret, domain name laws and contract laws to protect intellectual property and proprietary rights. Changing tax laws relating to e-commerce businesses significantly affect industry players. Currently, industry operators are only required to collect sales tax if the business has a physical presence in a state the purchase was made in; however, this law is subject to change. Thus, online retailers could potentially see declining profit by having to assume the additional cost of the tax or passing the cost on to consumers, who may consider opting for an alternative or less expensive product.
Floral retail regulations are enacted on the state level, and only Louisiana requires a license to retail flowers. Yet, many states have enacted their own antitrust laws to ensure that the general public is provided with the best prices, quality and choice. Companies must comply with the Fair Labor Standards Act and various state laws that govern matters such as minimum wages, overtime and other working conditions.
COVID-19
The COVID-19 (coronavirus) pandemic has introduced new regulations that have affected the industry.
Although operators in this industry operate through an online platform, operators still have had to comply with new regulations. For example, social distancing regulations have affected how business is conducted in physical locations. Face coverings have become a normal requirement for public places, although regulations may vary depending on local and state governments. Furthermore, the number of customers permitted in stores or offices at once is another regulation implemented at many locations. Although these regulations do not solely affect the Online Flower Shops industry, it is expected to affect the way operators conduct business.
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Industry The level of industry assistance is Low and is Steady Assistance The Online Flower Shops industry does not receive any specific government assistance.
While some tariff rates apply to certain products that the industry sells, this factor is of little significance at the retail level, since operators purchase goods after the tariff has been applied.
Associations
The American Floral Endowment (AFE) is the leading not-for-profit, non-governmental source for floriculture and environmental horticulture research and development.
The AFE funds research and educational development in floriculture and environmental horticulture designed to produce solutions to floral industry needs. It also promotes the growth and improvement of the floral industry for the benefit of growers, wholesalers, retailers, allied segments and consumers. However, it does not offer industry-specific resources.
The Society of American Florists (SAF) is the largest all-floral organization in the United States. It links all areas of the flower industry, from growers, wholesalers, retailers, mass-marketers and floral schools. SAF members receive information on customer purchasing trends, shifting industry landscape and current legislations that may affect a company's operations and sales. The organization also promotes consumer spending on industry goods through its website, Aboutflowers.com. The website provides tips for buying flowers for special occasions, such as weddings, and gives information on the health benefits of flowers and plants.
COVID-19
Due to the COVID-19 (coronavirus) pandemic, many businesses received money from the Paycheck Protection Program (PPP).
The PPP is a loan designed to provide a direct incentive for small businesses to keep workers on the payroll. This was implemented in response to the coronavirus as many small businesses were forced to close down due to decreased demand or not being considered an essential business. The PPP provided low-interest loans that were eligible for forgiveness if the borrower used 75% or more of it to maintain payroll. Texas, California and Florida were the states with the highest number of approved loans. Additionally, the Coronavirus Aid, Relief and Economic Security Act (“CARES” Act), was signed into law on March 27, 2020 in an attempt to provide economic assistance for United States workers, families and small businesses. Although neither of these programs are specific to the industry, both will likely have an effect.
41 IBISWorld.com Online Flower Shops OD5069 November 2020 Key Statistics
Industry Data Year Revenue IVA Estab. Enterprises Employment Exports Imports Wages Domestic % services Demand conducted online ($m) ($m) (Units) (Units) (Units) ($m) ($m) ($m) ($m) (%) 2011 2,158 200 808 801 2,726 N/A N/A 116 N/A 18.3 2012 2,403 243 884 877 2,894 N/A N/A 129 N/A 19.2 2013 2,628 264 877 871 2,898 N/A N/A 123 N/A 20.3 2014 2,964 270 885 879 2,892 N/A N/A 125 N/A 21.2 2015 3,438 306 914 907 2,909 N/A N/A 128 N/A 21.4 2016 3,997 390 946 939 2,949 N/A N/A 122 N/A 21.4 2017 4,610 349 995 989 3,372 N/A N/A 132 N/A 22.9 2018 5,206 512 1,013 1,003 3,387 N/A N/A 137 N/A 23.4 2019 5,396 536 1,048 1,037 3,506 N/A N/A 142 N/A 24.8 2020 5,160 397 1,045 1,037 3,432 N/A N/A 138 N/A 29.6 2021 5,136 388 1,059 1,053 3,450 N/A N/A 139 N/A 29.1 2022 5,283 431 1,088 1,081 3,546 N/A N/A 142 N/A 30.3 2023 5,433 508 1,116 1,110 3,646 N/A N/A 147 N/A 31.4 2024 5,576 575 1,144 1,137 3,745 N/A N/A 150 N/A 32.5 2025 5,697 596 1,168 1,161 3,821 N/A N/A 154 N/A 33.5
Annual Change Year Revenue IVA Estab. Enterprises Employment Exports Imports Wages Domestic % services Demand conducted online (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) 2011 11.8 10.3 10 10 -0 N/A N/A -2.27 N/A 5.17 2012 11.4 21.7 9 9 6 N/A N/A 10.5 N/A 4.91 2013 9.34 8.64 -1 -1 0 N/A N/A -4.12 N/A 5.72 2014 12.8 2.46 1 1 -0 N/A N/A 1.37 N/A 4.43 2015 16.0 13.4 3 3 1 N/A N/A 2.15 N/A 0.94 2016 16.2 27.3 4 4 1 N/A N/A -4.23 N/A 0.00 2017 15.3 -10.6 5 5 14 N/A N/A 7.84 N/A 7.00 2018 12.9 46.8 2 1 0 N/A N/A 3.78 N/A 2.18 2019 3.64 4.74 3 3 4 N/A N/A 3.57 N/A 5.98 2020 -4.38 -26.0 -0 0 -2 N/A N/A -2.61 N/A 19.4 2021 -0.46 -2.37 1 2 1 N/A N/A 0.36 N/A -1.69 2022 2.84 11.2 3 3 3 N/A N/A 2.73 N/A 4.12 2023 2.84 18.0 3 3 3 N/A N/A 2.87 N/A 3.63 2024 2.62 13.1 3 2 3 N/A N/A 2.66 N/A 3.50 2025 2.17 3.58 2 2 2 N/A N/A 2.05 N/A 3.07
Key Ratios Year IVA/Revenue Imports/Demand Exports/Revenue Revenue per Wages/Revenue Employees per Average Wage Employee estab. (%) (%) (%) ($'000) (%) 2011 9.25 N/A N/A 791 5.40 3.37 42,737 2012 10.1 N/A N/A 830 5.36 3.27 44,471 2013 10.0 N/A N/A 907 4.70 3.30 42,581 2014 9.12 N/A N/A 1,025 4.22 3.27 43,257 2015 8.91 N/A N/A 1,182 3.72 3.18 43,933 2016 9.76 N/A N/A 1,355 3.06 3.12 41,506 2017 7.56 N/A N/A 1,367 2.86 3.39 39,146 2018 9.83 N/A N/A 1,537 2.63 3.34 40,449 2019 9.94 N/A N/A 1,539 2.63 3.35 40,473 2020 7.69 N/A N/A 1,503 2.68 3.28 40,268 2021 7.55 N/A N/A 1,489 2.70 3.26 40,203 2022 8.16 N/A N/A 1,490 2.70 3.26 40,186 2023 9.36 N/A N/A 1,490 2.70 3.27 40,208 2024 10.3 N/A N/A 1,489 2.70 3.27 40,187 2025 10.5 N/A N/A 1,491 2.70 3.27 40,199
42 IBISWorld.com Online Flower Shops OD5069 November 2020 Additional Resources
Additional Wholesale Florist & Florist Supplier Association Resources http://www.wffsa.org Society of American Florists http://www.safnow.org
Master Florists Association http://www.masterfloristsassn.org
American Institute of Floral Designers http://www.aifd.org
World Flower Council http://www.worldflowercouncil.org
International Floral Distributors http://www.ifd-inc.org
Industry Jargon BRICK-AND-MORTAR Stores that have a physical presence and location, as opposed to online retailers.
E-COMMERCE The buying and selling of goods and services online.
E-TAILER A retailer that primarily sells goods and services via the internet. Many of these companies do not have brick-and-mortar locations.
FLORAL WIRE SERVICE A company that takes floral orders from consumers, primarily via internet or phone, and uses local florists to fulfill those orders.
FLORICULTURE The cultivation and management of flowers and plants.
SEARCH ENGINE OPTIMIZATION (SEO) The process of improving the visibility of a website in search engines.
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Glossary Terms BARRIERS TO ENTRY High barriers to entry mean that new companies struggle to enter an industry, while low barriers mean it is easy for new companies to enter an industry.
CAPITAL INTENSITY Compares the amount of money spent on capital (plant, machinery and equipment) with that spent on labor. IBISWorld uses the ratio of depreciation to wages as a proxy for capital intensity. High capital intensity is more than $0.333 of capital to $1 of labor; medium is $0.125 to $0.333 of capital to $1 of labor; low is less than $0.125 of capital for every $1 of labor.
CONSTANT PRICES The dollar figures in the Key Statistics table, including forecasts, are adjusted for inflation using the current year (i.e. year published) as the base year. This removes the impact of changes in the purchasing power of the dollar, leaving only the "real" growth or decline in industry metrics. The inflation adjustments in IBISWorld’s reports are made using the US Bureau of Economic Analysis’ implicit GDP price deflator.
DOMESTIC DEMAND Spending on industry goods and services within the United States, regardless of their country of origin. It is derived by adding imports to industry revenue, and then subtracting exports.
EMPLOYMENT The number of permanent, part-time, temporary and seasonal employees, working proprietors, partners, managers and executives within the industry.
ENTERPRISE A division that is separately managed and keeps management accounts. Each enterprise consists of one or more establishments that are under common ownership or control.
ESTABLISHMENT The smallest type of accounting unit within an enterprise, an establishment is a single physical location where business is conducted or where services or industrial operations are performed. Multiple establishments under common control make up an enterprise.
EXPORTS Total value of industry goods and services sold by US companies to customers abroad.
IMPORTS Total value of industry goods and services brought in from foreign countries to be sold in the United States.
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INDUSTRY CONCENTRATION An indicator of the dominance of the top four players in an industry. Concentration is considered high if the top players account for more than 70% of industry revenue. Medium is 40% to 70% of industry revenue. Low is less than 40%.
INDUSTRY REVENUE The total sales of industry goods and services (exclusive of excise and sales tax); subsidies on production; all other operating income from outside the firm (such as commission income, repair and service income, and rent, leasing and hiring income); and capital work done by rental or lease. Receipts from interest royalties, dividends and the sale of fixed tangible assets are excluded.
INDUSTRY VALUE ADDED (IVA) The market value of goods and services produced by the industry minus the cost of goods and services used in production. IVA is also described as the industry's contribution to GDP, or profit plus wages and depreciation.
INTERNATIONAL TRADE The level of international trade is determined by ratios of exports to revenue and imports to domestic demand. For exports/revenue: low is less than 5%, medium is 5% to 20%, and high is more than 20%. Imports/domestic demand: low is less than 5%, medium is 5% to 35%, and high is more than 35%.
LIFE CYCLE All industries go through periods of growth, maturity and decline. IBISWorld determines an industry's life cycle by considering its growth rate (measured by IVA) compared with GDP; the growth rate of the number of establishments; the amount of change the industry's products are undergoing; the rate of technological change; and the level of customer acceptance of industry products and services.
NONEMPLOYING ESTABLISHMENT Businesses with no paid employment or payroll, also known as nonemployers. These are mostly set up by self-employed individuals.
PROFIT IBISWorld uses earnings before interest and tax (EBIT) as an indicator of a company’s profitability. It is calculated as revenue minus expenses, excluding interest and tax.
45 IBISWorld.com Online Flower Shops OD5069 November 2020
REGIONS West | CA, NV, OR, WA, HI, AK
Great Lakes | OH, IN, IL, WI, MI
Mid-Atlantic | NY, NJ, PA, DE, MD
New England | ME, NH, VT, MA, CT, RI
Plains | MN, IA, MO, KS, NE, SD, ND
Rocky Mountains | CO, UT, WY, ID, MT
Southeast | VA, WV, KY, TN, AR, LA, MS, AL, GA, FL, SC, NC
Southwest | OK, TX, NM, AZ
VOLATILITY The level of volatility is determined by averaging the absolute change in revenue in each of the past five years. Volatility levels: very high is more than ±20%; high volatility is ±10% to ±20%; moderate volatility is ±3% to ±10%; and low volatility is less than ±3%.
WAGES The gross total wages and salaries of all employees in the industry.
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