The new marketing channel

Ready Flowers accept online orders for flowers, forward the orders to florists for fulfillment and delivery, and appear to have grown very quickly.  From a company established in Perth, WA in 2005 to now a multinational operating in 90 countries with 4000 local florists (according to their Facebook page), it seems that all is coming up roses for Managing Director Thomas Hegarty.

That is, until we dig a little deeper.  Earlier this year there was quite the media uproar after a bunch of customer complaints in regard to non-delivery, late delivery and poor quality of flowers on both Valentines and Mother’s Day.  This unearthed a number of florists that were waiting on long overdue payment from Ready Flowers, and others sprouted up that were refusing orders as they could not fulfill them at the rate Ready Flowers were offering.  And according to other online articles and customer reviews on a popular review site this has cropped up each year since 2012.

Ready Flowers is an interesting new business type called an ‘order gatherer’(OG).  These type of businesses have flourished due to technology and ease of access to the internet.  Not sure what an OG is?  Steve White from Tesselaar Flowers explains:

So, Ready Flowers don’t actually sell flowers, they sell the promise of flowers, that they then desperately hope they can get filled and delivered by a florist; and of course they take their ‘cut’ of the sale price first.  Typical marketing channel explanations and diagrams mention wholesalers, retailers and agents, however an OG does not fit any of those definitions.  The Kotler and Keller definition of agent comes the closest; ‘search for customers and may negotiate on the producer’s behalf but do not take title to the goods’ (2012 p.438), however an agent is selling a product that actually exists, and is doing so at the behest of the producer.  In the case of Ready Flowers, they have cultivated their own catalogue of product examples, and when they harvest an order they try and find a florist who will fill and deliver it.  This yields the following adapted distribution channel where the florist is a hybrid of the manufacturer and the retailer, and the OG is a grey area off to the side:

Channel diagram

Source: Image adapted from Iacobucci (2013, p.128)

In the instance of flowers, it is the intention of an OG to take a product that historically was marketed via a push strategy and turn it around into a simple product marketed via a pull strategy (Achenbaum & Mitchel 1987, p.38).  Prior to the growth of the OG and the internet, a consumer wanting flowers would be required to visit a florist and have a discussion about their complex purchase, and it would be up to the florist to both advertise and be the sales force.  The cropping up of the OG via the internet has resulted in the product becoming widely available, with no/little sales force required, and easily transportable worldwide.  Ready Flowers anticipated they would process 80 000 orders with 20 staff in 2010.

One of the key factors in the intensive distribution model that Ready Flowers is favoring is that big volume sales are required with a margin sufficient to cover more than costs.  From florist’s comments in the media it appears that Ready Flowers is wielding coercive power by continually shopping around their orders to florists who will accept them with a lower fill price.  However, it seems that florists are fighting back by not accepting orders that result in them losing money (Klara 2014); Ready Flowers is wilting because of it.

 Written by: Connie Sirmans

Student ID: 213219051

FURTHER READING

http://www.syracuse.com/entertainment/index.ssf/2015/05/syracuse_flower_business_destroyed_by_internet_order-gatherers_florists_say.html

 

REFERENCES

Achenbaum, A, & Mitchel, E 1987, ‘Pulling away from push marketing’, Harvard Business Review, vol. 65, no. 3, pp. 38-40, Business Source Complete, EBSCOhost, viewed 15 May 2016

Iacobucci, D, MM4, Student edn, South-Western, Mason, Ohio.

Klara, R 2014, ‘Valentine’s Day Profits? Florists Say They’re Getting Clipped’, Adweek, vol. 55, no. 6, p. 14, MasterFILE Premier, EBSCOhost, viewed 16 May 2016.

Kotler, P, Keller, K 2012, Marketing Management, 14th edn, Pearson Education, Essex, UK.

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